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Mirror, Mirror on the Wall, What Statute is Changed More than All?
By Nancy Quon
In 1991, the Nevada Legislature adopted the Uniform Common-Interest Ownership Act (UCIOA), which was codified as NRS 116. It became effective on January 1, 1992. In 1994, the National Conference of Commissioners on Uniform State Laws met to provide commentary to the purpose and meaning of each section of the UCIOA.
The Commissioner's Comment to Section 1-110 of the UCIOA states:
This Act should be construed in accordance with its underlying purpose of making the law uniform with respect to all forms of common interest communities, as well as the purposes stated in the Prefatory Note of simplifying, clarifying, and modernizing the law of common interest communities, promoting the interstate flow of funds to common interest communities, and protecting consumers, purchasers and borrowers against common interest community practices which may cause unreasonable risk of loss to them. Accordingly, the test of each section should be read in light of the purpose and policy of the rule or principle in question, and also of the Act as a whole. [emphasis added].
(See Comment, UCIOA Section 1-110 (1994)).
NRS 116, et seq. as originally adopted generally mirrored the Uniform Common-Interest Ownership Act (the "Act"). The Act is a lengthy but thorough set of laws, that is meant to provide uniformity between states and regulate common interest communities. The Act deferred in many instances to the Covenants, Conditions, & Restrictions (CC&R's) which were drafted specifically for a development and recorded against the property. Since its adoption, however, NRS 116 has been consistently amended by the Nevada Legislature. The statute now, in many instances, has superseded the CC&R's recorded against a property. Many argue that it now has become micro, rather than macro, management. Has the Legislature gone too far?
In the 2007 legislative session several bills from both the Assembly and Senate were introduced that would once again amend NRS 116. Eventually, all of the bills were rolled into AB 396. Many amendments to AB 396 were made at the very end of the session and did not receive debate or discussion. The bill passed literally at the close of session and was placed on the Governor's desk to be signed into law.
The proposed law immediately received an outpouring of concern from homeowners residing in common-interest communities. The Governor's office was flooded with e-mails and phone messages to veto the bill, which opponents said gave residents of associations too much power.
One of the main concerns was Section 8.5 of the bill that would allow an owner to install shutters on property that was defined as common-area. Opponents claimed that the provision amounted to an unlawful or unconstitutional taking of real property and was a lawsuit waiting to happen. In the end, it was this argument that the Governor seized to veto the bill.
Others' concerns of the bill surrounded Section 5 that would prohibit an association from enforcing moving violations on its own private streets; Sections 22 and 23 that would amend previous legislation regarding reserve accounts; Section 23.7 that provided that the sale of a unit as a result of a foreclosure of a lien is subject to an equity or right of redemption (which could have a chilling effect on foreclosure sales and would necessarily reduce the number of bidders and the sale price of common-interest community property).
Proponents of the bill state that it contained many consumer-friendly changes to the current law. Even the opposition agreed that there was good legislation contained in the bill, but the bad outweighed the good.
Both sides realize that the fight to amend NRS 116 is far from over. Because the bill was vetoed after the 2007 session was closed, it will be placed in front of the Assembly and the Senate at the opening of the 2009 legislative session to determine whether the veto should be over-ridden. NRS 116 et seq. has come a long way from the uniformed Act from which it was originally adopted. It is yet to be seen if the constituents in Nevada, hundreds of thousands of whom now reside in common-interest communities, believe that enough is enough . . .
Nancy Quon, Esq. is the managing partner of Quon Bruce Christensen, a law firm that represents homeowner associations in both general counsel and construction defect matters.