Nevada Mechanics Lien: Protect Your Property. Protect Your Work.

  • September 15, 2017

Protect your property. Protect your work.

Property renovation is a trend that is on the rise in our area.  One consideration that homeowners often overlook when hiring a contractor and considering renovation work is the contractor’s right to record a mechanics lien against the homeowner’s property in the event that the homeowner does not pay the contractor.  A mechanics lien, in certain circumstances, may be recorded against a homeowner’s property to protect the contractor’s rights and ensure payment for the contractor’s services.  If the contractor follows the proper procedures and remains unpaid, the contractor may be able to foreclose and force the sale of the property in order to obtain payment for the contractor’s work.  It is not only important for contractors to have a solid understanding of these procedures, but homeowners should know them as well.

In Nevada, NRS Chapter 108 governs mechanics liens.  In general, a contractor or supplier is authorized by statute to record a lien if an owner fails to pay when:

  1. They have provided work or materials valued at $500.00 or more for the repair or improvement of the property;
  2. They are licensed to perform the work;
  3. They timely provide a “Notice of Right to Lien” if the contractor does not have a direct contract with the homeowner;
  4. The contractor provides a “Notice of Intent to Lien” fifteen (15) days before recording his mechanics lien;
  5. The contractor timely records his mechanics lien (formally called a “Notice of Lien”); and
  6. The contractor timely file a lawsuit to foreclose the mechanics lien within six (6) months of recording the lien.

The “Notice to Right to Lien,” is commonly referred to as pre-lien notice.  A pre-lien notice puts the homeowner on notice that the contractor may have a right to a lien on the property in the event that the contractor is not paid by the homeowner for work performed or materials delivered.  Previously, even though contractors did not always deliver this required pre-lien notice, mechanics liens were still routinely enforced based on the Nevada Supreme Court’s rulings that “[t]he failure to serve the pre-lien notice does not invalidate a mechanics’ or materialmen’s lien where the owner received actual notice.”  Fondren v. K/L Complex Ltd., 106 Nev. 705, 710, 800 P.2d 719, 721-22 (1990).  Mechanics lien statutes are “remedial in character and should be liberally construed, allowing substantial compliance with the statutory requirement as long as the property owner is not prejudiced.”  Las Vegas Plywood & Lumber, Inc. v. D&D Enters., 98 Nev. 378, 380, 649 P.2d 1367, 1368 (1982).  The case law stated that so long as the homeowner had “actual notice of the potential lien claim,” it was “not prejudiced” by not receiving the pre-lien notice.  Board of Trustees of the Vacation Trust Carpenters Local No. 1780 v. Durable Developers, 102 Nev. 401, 410, 724 P.2d 736, 743 (1986).  The Supreme Court of Nevada has clarified that “a lien claimant cannot invoke the actual notice exception to NRS 108.245 unless the property owner (1) has actual notice of the construction on his property, and (2) knows the lien claimant’s identity.  Iliescu v. Steppan citing Hardy Companies, Inc. v. SNMARK, 126 Nev. 528, 542, 245 P.3d 1149, 1158 (2010).

This decision makes it vital for contractors to follow the appropriate procedures with regard to their mechanics lien rights in Nevada.  It is worthwhile for a homeowner to understand that they can condition a partial or full payment on a partial or full lien release.  It is also important for homeowners to understand that the contractor has a limited time period in which to record a valid lien.

Before beginning a renovation project, a homeowner should consider meeting with his/her attorney to discuss the terms of the contract with the general contractor, mechanics lien rules and procedures, and other considerations to ensure maximum protection for the homeowner.

As expected, California has its own set of mechanics lien rules that differ in many respects from Nevada.  Stay tuned for an upcoming Clarity blog post on California mechanics lien laws.

Are Your Bed Bugs for Rent?

  • April 14, 2017

The California legislature isn’t taking bed bugs lying down. California has enacted new landlord/tenant laws relating to bed bug infestations in rental properties. It is important for landlords to take note of the new provisions relating to bed bugs and to consult with their attorneys to make sure they are in compliance with these new provisions.

CCC §1954.602, which became effective on January 1, 2017, states:

  • A landlord shall not show, rent, or lease to a prospective tenant any vacant dwelling unit that the landlord knows has a current bed bug infestation.
  • This section does not impose a duty on a landlord to inspect a dwelling unit or the common areas of the premises for bed bugs if the landlord has no notice of a suspected or actual bed bug infestation. If a bed bug infestation is evident on visual inspection the landlord shall be considered to have notice pursuant to this section.

In addition to the requirements set forth in §1954.602 above, effective July 1, 2017, landlords must provide written notice, as prescribed by the California Civil Code, to prospective tenants with general information about bed bug identification, behavior and biology, the importance of cooperation for prevention and treatment, and the importance of and for prompt written reporting of suspected infestations to the landlord.  This notice provision will apply to all existing tenants effective January 1, 2018.

In addition to the foregoing, the legislature has incorporated the new bed bug statutes into those that govern landlord retaliation (prohibiting a landlord from retaliating against a tenant who gives notice to the landlord about the suspected presence of bed bugs).  Additional provisions have been added to the Civil Code that govern access to the premises to inspect for bed bugs as well as a requirement to provide a report to the tenant within two business days of receipt of the report from the pest control operator.

So, what about Nevada?  Just because a landlord is in Nevada does not mean that he/she cannot learn from the new laws and procedures that govern California landlords.  Even without a specific bed bug statute in Nevada that apply to landlords, a landlord may be sued for a number of causes of action for failure to remedy a known or suspected bed bug infestation (i.e. constructive eviction, breach of warranty of habitability, breach of the covenant of quiet enjoyment, nuisance, among others).  Therefore, it may be less expensive in the end for a landlord to routinely order pest inspections of rental properties to avoid the risk of litigation that could stem from bed bug or other infestation of rentals properties.

California Commercial Property Owners – Lease Updates Needed

  • February 9, 2017

On September 16, 2016, Governor Jerry Brown signed Assembly Bill 2093, which amended California Civil Code Section 1938 placing increased burden on commercial property owners when leasing their property.  Those who ignore or who are unaware of the amended statute are exposed to substantial financial risk for their non-compliance.

The law requires every rental agreement, signed on or after January 1, 2017 to advise the tenant in advance as to whether the subject premises has undergone an inspection by a Certified Access Specialist (CASp).  A CASp inspector inspects buildings and sites for compliance with applicable state and federal construction-related accessibility standards under the ADA and state equivalents.

Where property has undergone a CASp inspection and received a disability access inspection certificate, it is advisable to provide the appropriate notices and reports to the tenant within the specified timelines.  In the event the subject premises has not been issued a disability access inspection certificate, the commercial property owner is required to state the following on the lease form or rental agreement:

“A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.”

Failure to comply with Civil Code Section 1938 may allow a commercial tenant to rescind the lease agreement.  Of greater concern may be the question of who must pay for the improvements required by the CASp inspection report.  Unless otherwise specifically agreed between the landlord and tenant, the presumption is that the commercial property owner shall pay for both the report and any required repairs set forth in the report.

The law requires different notices be provided from landlord to tenant based on whether there has been a CASp inspection and whether a disability access inspection certificate has been granted.  Additionally, if a CASp inspection or certificate has not been issued, landlords may wish to consider including specific in the lease agreement with regard to payment of costs regarding the inspection if one has not already taken place as well as the costs of bringing the property in compliance if it turns out not to be in compliance.

If you need more information or have any questions regarding how the new law may affect your business, do not hesitate to contact Incline Law Group, LLP for some clarity on the subject.

New Implications for California Brokers and Dual Agency

  • December 6, 2016

On November 21, 2016, the California Supreme Court issued a ruling in Horiike v. Coldwell Banker Residential Brokerage Company that is likely to have far reaching implications for California real estate brokers in terms of dual agency. As we have written about in the past many states, including Nevada and California, allow real estate brokers and sales persons to represent both a buyer and seller in a real estate transaction provided that proper disclosures are made to the parties.

While dual agency statutes generally impose fiduciary duties of care, integrity, honesty and loyalty in dealings with both parties, we have often raised the effectiveness of these duties to overcome the inherent conflict of interest presented by dual agency. In fact, when enacting the current dual agency statutes in California, the California Legislature noted that the proposed statute could not cure “the fundamental problem in dual agency relationshdual-agency-2ips – potential and sometimes unavoidable conflicts of interest” but rather was “simply [a] ‘disclosure’ bill intended to inform the buyers and sellers in a real estate transaction of the possible agency relationships and duties owned by a realtor…” (Sen. Rules Com., Bill No. 3349 (1985-1986 Reg. Sess.)).

Often as one way to mitigate some dual agency conflicts, different agents working under the same broker will each represent one party in the transaction rather than having one agent represent both parties. This is the type of relationship that was at issue in the Horrike case.

Horiike, filed suit after discovering a significant discrepancy between the actual square footage of his new condominium and the square footage that was represented by the marketing materials. The Court, in deciding the very narrow question of whether the listing agent, working under the same broker as Horiike’s agent, owed Horiike a duty to learn and disclose all information that could materially affect the value or desirability of the property, concluded that he did.

The Court interpreted the statute to mean that an agent’s duties are equivalent to the duty of the broker for whom s/he functions. i.e. a real estate agent does not have an independent agency relationship with the client of the broker, rather the agency relationship with the client is derived from the agency relationship between the broker and the client. As a result, the relationship between broker and agent cannot be uncoupled.

Therefore, when the broker agrees to act as dual agent for both buyer and seller, both broker and the agents assume all of the duties of dual agency, including those statutory fiduciary duties to investigate and disclose material information.

It will be interesting to see if the California Legislature takes another look at dual agency in light of this case. We will be sure to inform you if they do.

Dual Agency

  • December 6, 2016

I recently obtained a full dismissal of all charges brought by the Nevada Real Estate Division (NRED) against one of my clients for alleged violations of Nevada broker licensing laws. In my opinion, NRED was reaching on a number of issues, and was bowing to some uneducated political pressure by bringing the cases in the first place. My client was not the only broker or agent subjected to these charges and it bears noting that most of the cases were fully dismissed before hearings (including that of my client), two after a hearing and another two cases are pending judicial review. There were a number of important issues at stake in these cases. One of which was the propriety of dual agency.

Dual Agency refers to the situation in which the same real estate agent represents both the seller and the buyer in a real estate real-estate-dual-agency-buyers-and-sellerstransaction. Dual Agency is legal in Nevada, however, under NRS 645.252, if an agent acts on behalf of more than one party to the transaction they must obtain written consent from each party which must include: (i) a description of the real estate transaction; (ii) a statement the agent is acting for two or more parties who have adverse interests and that in acting for those parties the agent has a conflict of interest; (iii) a statement that the agent will not disclose confidential information for 1 year after the transaction unless compelled by a court to do so or given written permission by the party to do so; (iv) a statement that the party is not required to consent to the dual agency and v) a statement that the party is not being coerced into consenting and understands the terms of the consent. NRED has prescribed forms for these disclosures.

Where a broker assigns two different agents, who both work under the same broker, to a single transaction, this is not referred to as dual agency and does not require the same disclosures as set forth above.

Dual Agency representation by realtors is a practice that may be questionable in, or outside of, the context of short sales because of the inherent conflicts of interest. The policy implications are significant to the protection of buyers and sellers.

Regardless, it is legal in the state of Nevada and neither our legislature nor the local realtor boards have sought to make changes to this practice. As with many aspects of contracts, and law in general, parties to a transaction or contract are advised to be aware of their rights and what they are contracting for.

Is the HOA super-priority fight over?

  • September 19, 2016

During the economic downturn we saw many Homeowner’s Associations (“HOA”) pursue foreclosure against member homeowner’s for failure to pay assessments. Nevada state law provides HOAs with a super priority lien right entitling HOAs to recover nine months of dues in the event of a foreclosure sale.

In September 2014, the Nevada Supreme Court in SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408, ruled that when an HOA forecloses on an assessment lien, that super priority lien right actually wipes out a mortgage lender because it is deemed a right that is senior to the mortgage loan.

foreclosuresuperleinhoaThis means that the purchaser at an HOA lien foreclosure sale could pick up a property for the amount of past due assessment (often only a few thousand dollars) and take the property free and clear of any mortgage lien.

For obvious reasons, lenders were not too happy about this interpretation of the law and in 2015, the Nevada legislature amended provisions of Chapter 116 (which governs HOAs and common interest communities) to allow lenders to “opt-in” to receive notice of HOA foreclosure sales.

Lenders receiving notice of HOA lien foreclosure sales could then bring the assessments current, avoid being wiped out by the sale and could then pursue their own foreclosure sale on the mortgage.

Since the SFR decision, a battle has raged in the courts regarding the nuances of that decision. On August 12, 2016, the United States Court of Appeals for the Ninth Circuit in Bourne Valley Court Trust v. Wells Fargo Bank, NA, definitively held that the Nevada “opt-in” statute facially violates a lender’s constitutional due process rights under the Fourteenth Amendment to the Federal Constitution, and remanded the case for further proceeding consistent with that decision.

It is interesting to note that the Ninth Circuit also found that long standing statutory language found in NRS Chapter 107 which applies notice requirements for defaults under a deed of trust to foreclosure notices of HOA liens, “would impermissibly render the express notice provisions of Chapter 116 entirely superfluous.” Bourne Valley at P. 11.

The dissenting opinion vehemently disagreed with this application of what is knowns as the “surplusage cannon” (which provides a framework for statutory interpretation that, in essence, suggests that words do have meaning and they would not have been used in a statute if they were not intended).

The Ninth Circuit Bourne Valley decision follows several decisions by the Nevada Supreme Court that favor lenders in this epic battle over lien rights.

While the Bourne Valley decision my signal the beginning of the end of the battle, there is no doubt there is more to come, if not from the courts then perhaps from the Nevada legislature which will meet in 2017.

**This post originally appeared in the Sierra Sun/Tahoe Bonanza.

How Should I/We Hold Title to My/Our Property?

  • March 10, 2016

How Should I/We Hold Title to My/Our Property?

When you get to the closing on your new home, the escrow company will often ask, “How do you want to hold title?” The answer to this question may depend on a number of factors, such as whether you are married, whether you are purchasing the property with someone else or whether you have a trust for your estate. There may be other factors such as whether this is a property intended for investment or whether you are purchasing in the name of a corporation or LLC.

But for most individuals, the most common options are fairly straight forward. It should be noted that the discussion below is not exhaustive and that there may be other forms of vesting that could be of benefit in your specific circumstances.  Similarly,Holding Property Titles not all states are community property states and for those that are, the existence and terms of pre or post-nuptial agreements are critical to vesting decisions. Vesting is the way we describe how the title to the property is held – with different forms of vesting comes different rights and obligations of joints owners that are not discussed here. It is important that you consult with an attorney to determine the best form of vesting for your circumstances.

This post is broken up into 4 parts which are intended to cover the most common forms of vesting in the four most common circumstances: Part I) if you have a trust; Part II) if you are purchasing property in your name only; Part III) if you are unmarried and purchasing with another person; and Part IV) if you are married. As a bonus, since we are talking about title(s), if you can name the artists for each of these songs titles, please post your answers!

Part I: A Matter of Trust

Generally if you have a trust, and the property is intended as your primary residence, you will likely title it in the name of the trustee of your trust. This is true whether you are single or married and often if you are purchasing with someone else to whom you are not married. You should always consult with your estate planning attorney when transferring property into or out of your trust.

Part II: All the Single Ladies

If you are purchasing property as an unmarried person and in your name only, the vesting is pretty much just that, as an individual (you may see this written as a an unmarried woman/man or single woman/man which is a coded reference to whether you are divorced or never married – if you object to this, as I do, you can simply request that title be vested in your name as an individual).

If you are married, but you are purchasing the property as your separate property, the title will generally read just that: Jane Smith, a married woman as her sole and separate property. In community property states, in order for your spouse to disclaim any community property interest in the property s/he may be required to sign a Quit Claim or Interposal Deed.

Part III: Our House

If you are purchasing property with another person that is not your spouse, you really have two choices:  “joint tenants” or “tenants in common”. With joint tenancy, each owner has an undivided equal interest in the property. More importantly, joint tenancy comes with an automatic right of survivorship. This means that when one joint tenant/owner dies, his/her interest automatically transfers to the remaining owner(s). If one of the joint tenants transfers her/his ownership interest during their lifetime, this can destroy the joint tenancy and convert the ownership to tenancy in common.

More than one owner can also own property as tenants in common. In this case, each owner will own a percentage of an undivided interest in the property i.e. the ownership interest does not have to be equal. With joint tenancy there is no right of survivorship and when one joint tenant dies the interest is freely transferable to the decedent’s heirs. In Nevada, if the type of vesting is not specified, our statutes provide that the default vesting is tenancy in common.

Part IV: Love and Marriage

Married couples can also hold property as joint tenants or tenants in common.  However, both California and Nevada have the option for married couples to hold property as “community property” or “community property with right of survivorship”. The community property with right of survivorship vesting carries two very important benefits, namely the automatic right of survivorship when one spouse dies and a tax benefit known as a “step up in basis”.

What this means is, when one spouse dies, the surviving spouse gets the benefit of a readjustment of the tax basis in the property up to the current value. This is important if, say, a married couple purchased the house in 1970 for $100,000. At the time of the death of the first spouse in 2016, the house is valued at $700,000. The surviving spouse elects to sell and downsize, without the step up in basis the surviving spouse could be subject to capital gains tax on the difference between the original basis of $100,000 and the new value of $700,000. If the property was vested as community property with right of survivorship, the surviving spouse would get the tax benefit of the step up in basis.

If a married couple holds title simply as community property (without the right of survivorship), they can take advantage of the step up in basis, but the transfer of title to the surviving spouse will not be automatic and may require probate.

As noted above, there are many ways for individuals to hold title to real property.  This post only discuses a few of the most common. Because there are tax and legal consequences to how title is held, it is important that you consult with an attorney to help you sort out the best approach for your needs. And do keep in mind that you can always change the vesting after close of escrow!

Mortgage Debt Relief Act Extended Through 2016….Finally

  • January 11, 2016

Buried deep in the Tax Extenders provisions of the 2016 Appropriations Bill (H.R. 2029) quietly passed by Congress and signed by the President on December 18, 2015, was a very unpublicized extension of the Mortgage Forgiveness and Debt Relief Act of 2007.  In fact, the reference to this extension of this very relevant Act was so deeply buried, that I am indebted to a very generous Regional Rep of Senator Dean Heller for providing me with a map to find the needle in the haystack (see pages 824-825 of 887!).Mortgage Forgiveness Debt Relief Act Extended

This extension is of great importance for homeowners who are still suffering under the weight of underwater homes.  As I have discussed in numerous articles and blog postings, the Mortgage Forgiveness and Debt Relief Act of 2007 provides a tax exemption for homeowners for “income” resulting from debt forgiveness related to foreclosures, short sales and principal forgiveness of loans.

When a Lender “forgives” debt, e.g. it waives pursuing a deficiency in a short sale or elects not to sue for deficiency after a foreclosure sale, the debt that is forgiven is, in most circumstances considered by the IRS to be ordinary income and taxable as such.  Under the Mortgage Forgiveness Debt Relief Act of 2007 taxpayers can generally exclude income resulting from the discharge of debt on their principal residence.  For more information click here (please note that the IRS has not yet updated its website to reflect the extension of the Act through January 1, 2017).

This latest extension will continue this tax protection for homeowners through the 2016 tax year.  This means that if you relinquished your home in a foreclosure, short sale or deed in lieu, or had a loan modification resulting in debt forgiveness in 2015, or if one of these unfortunate events happens to you in 2016, you may be able to take advantage of this latest extension of the Act.

Please note that before making the decision to relinquish your home and incur taxable debt forgiveness, it is highly advisable that you speak with a tax professional.  As with most IRS rules, there are exceptions and restrictions that could be a “gotcha” for an unsuspecting homeowner.  But if you do in fact qualify, this is fantastic news for underwater homeowners!

If you have questions about an underwater mortgage, loan modification, foreclosures or short sales, Incline Law Group LLP can provide you with options and information to help you make informed decisions.

Real Estate Form Contracts vs. Custom Contracts

  • September 29, 2015

Almost every association of realtors, whether commercial or residential, has a set of form contracts for the purchase and sale, lease or lease option of real property. For many transactions, these forms will cover all the legal bases. However, there are circumstances when a custom drafted contract is warranted for a real estate transaction. This is more common with commercial real estate, but there are circumstances in which a custom contract is also advisable for a residential transaction.

contract_of_sale_of_real_estate-legalities_00011876When should you seek out an attorney’s help in drafting a custom contract for the purchase and sale of a home, investment or commercial property? Below is a short list of circumstances when a custom contract or terms may be advisable:

  • Are you changing the use or developing the property in a way that is different from its existing use? In that case you may need custom language that provides specific contingencies and due diligence review to protect your ability to cancel the contract if the property turns out not to be feasible for your intended use.
  • Are you purchasing something more than just a house or building? If you are also purchasing development rights or plans, water rights, grazing or agricultural rights or an ongoing business operation on the property, you may want customized contract terms or multiple contracts.
  • Are you purchasing or leasing multiple parcels or multiple parcels with different use? Are you purchasing multiple parcels from different sellers? Incline Law Group recently assisted with the acquisition of 6 parcels with four different types of use – multifamily, single family, commercial and mixed use (office/residential). With the complexity of the various leases, rent rolls, ongoing business operations and more, a form commercial purchase and sale contract just could not address all of the issues and we used a custom contract.
  • Is the property currently leased? The more tenants you have, the more complex the transaction can become. That does not necessarily mean you need a custom contract, but you do want to be sure you are properly assigning leases, accounting for security deposits and addressing open tenant issues.
  • Are there a lot of moving parts? In general, the more complex a real estate transaction is, whether that is because of the nature of the property, the type of use, the complexity of due diligence issues or the sophistication level of the parties, the more advisable it is for you to seek the assistance of an attorney and consider the use of a custom contract.

There may be plenty of other circumstances in which a custom contract, or at least custom drafted contract provisions, are advisable.  Not every real estate transaction needs a custom contract or terms, but when in doubt, you should seek the advice of legal counsel.

Practical Difficulties Enforcing HOA Rules – A Quiz

  • September 29, 2015

Test your knowledge and skill applying NRS 116 to a typical homeowner complaint about unreasonable fines.

This is a participatory quiz:

There has long been a debate whether HOAs have too much power because they have the ability to use funds from all owners to enforce “alleged violations” of governing documents against a single owner who has far less economic power because the owner must pay all his own costs needed to defend against an enforcement action. And the owner also pays part of the funds (HOA dues) used to prosecute his claimed violations.

In the factual situation described below, consider yourself first a member of the governing board tasked with uniformly enforcing the governing documents, but owing a duty to be fair to all owners in the HOA and to be governed by Nevada statutes. Next consider yourself the owner in question. Next, consider and apply the Nevada statutes, and governing document provisions, and evaluate and give your answerHOA Rule Book by ruling in favor of the HOA or the Owner.

Facts: Owner has owned a free-standing cabin for many years in an HOA of similar cabins. Owner has had a “rustic” deck for years. The deck is not “falling down” or a risk to others, its wood is just old and not freshly stained. Owner also has a metal chimney that has flaked paint because it has not been repainted in a number of years. The HOA has issued violation orders: “Chimney and braces need painting above roof” and “please stain and maintain the deck…”

Owner acknowledges that while an owner has an obligation to maintain and repair his unit, the HOA does not have the authority to direct or require it to do specific things such as “stain and maintain the deck” or to “paint the chimney” unless there is specific authority granted to it in the rules and unless there are standards established that clearly describe what an HOA can enforce and what an owner must or must not do. Here, owner argues there is no specific authority given the Board and no standards establishing why maintenance is needed for the deck.

The HOA claims it has “discretion” under HOA Rule 3, below, to direct these repairs and it has levied thousands of dollars in fines against the owner for non-compliance with its “alleged violations.”

An HOA is obligated first to comply with and abide by the provisions of NRS 116, which has the highest authority, which then governs the CC&Rs, and the CC&Rs control what is permitted in HOA rules. For a rule to be enforceable, it must comply with the CCRs and NRS 116.

Here are excerpts from relevant Nevada statutes, the CC&Rs and the HOA rules:

116.31031  1. Provides that the HOA can levy a fine only if there is a violation of the governing documents, such as a claimed violation of HOA Rule 3, below.

116.31065:  “The rules adopted by the association:  … 2. Must be sufficiently explicit in their prohibition, direction or limitation to inform a person of any action or omission required for compliance…” [This provision is repeated, almost verbatim, in CC&R Section 4.8, below.]

116.3107:  “1. … each unit’s owner has the duty to provide maintenance, repair and replacement of his or her unit…”

CC&R 4.8:  Rules and Regulations “… must meet the following criteria:… (b) The rules must be sufficiently explicit in their prohibition, direction or limitation to inform a Townhouse’s Owner … of any action or omission required for compliance…”

HOA Rule 3: “Appearance of Unit/Lot. … The exterior of the unit must be kept in good repair, subject to the discretion of the Board, including but not limited to paint, roof, decks, windows, and screens.”

The Question: Does Rule 3 provide sufficiently explicit prohibitions, directions or limitations so an owner will know what he can or cannot do? Does Rule 3 satisfy NRS 116.31065 (2) and CC&R 4.8 so as to allow imposition of fines against owner?

Stated another way, does the “discretion” mentioned in Rule 3 satisfy the specificity required or is it in fact contrary to the specificity required by NRS 116.31065 and CC&R 4.8?

DECISION:  Ruling in favor of HOA: [____]                             Ruling in favor of Owner:  [____]


We invite you to share your decision and rationale in the comments section below.