By: Ashley Watson, Regional Marketing Director, CM, FirstService Residential
The start of the 2017 Nevada Legislative Session will be here before you know it, and FirstService Residential is
already gearing up for its second “Day at the Capitol” event. This event, scheduled for March 28, 2017, provides an opportunity for homeowners’ association (HOA) board members to make their voices heard regarding HOA legislation.
Our first event in 2015 was a huge success, with board member participation significantly contributing to an overall positive legislative outcome for HOAs. However, a new crop of bills aimed at HOAs appears to be on the horizon, making your participation in our 2017 event more important than ever.
Although legislators still have time to submit Bill Draft Requests (BDRs), preliminary indications suggest the following items may be under consideration in the next legislative session:
Elimination of super priority status for HOA liens
As you may know, NRS 116.3116 gives HOA liens super priority status. This means that your HOA can recoup up to nine months of unpaid assessments by foreclosing on a delinquent homeowner’s property. Amendments passed during the 2015 legislative session did not change this, but they did clarify foreclosure requirements and provide some protections to banks and other secondary lienholders.
The banking industry is again urging legislators to consider eliminating the super priority status as a whole for HOA liens. This means that the association would no longer have the power to extinguish the first lien or collect the up to nine months of unpaid assessments. Additionally, the 2017 legislative session may consider changing the HOA foreclosure process from non-judicial (whereby the HOA directly auctions the property) to judicial (which involves suing the homeowner in court and having the home auctioned by a government official). This change would make the foreclosure process much more expensive and lengthy for HOAs.
Restrictions on lending options for homes in HOAs
Nevada has more than 3,000 HOAs (equating to upwards of 500,000 homes). In Southern Nevada alone, more than half of all homes are part of an HOA. These statistics make it clear that lending option restrictions, such as the requirement of an association having FHA approval, would affect a significant number of potential homebuyers and current homeowners.
Impound account requirements for HOA assessments
Mortgage lenders would be required to collect several months of future HOA assessments at the buyer’s closing to establish an impound account. The assessments would also be built into their monthly mortgage payment for homeowners with a mortgage lien. A similar bill did not pass in 2015, but it seems likely to be back on the table in 2017. This would significantly decrease the number of collections accounts for each association.
Abolishment of NRS 116
Another attempt to abolish NRS 116 is expected in 2017. NRS 116, also known as the Uniform Common-Interest Ownership Act, governs HOAs. If it were to be eliminated, governance responsibility would go back to Nevada counties.
As an HOA board member, you need to do everything you can to protect your HOA and make your voice heard. Write or call your representatives about issues that affect your community. And make sure to sign up for FirstService Residential’s “Day at the Capitol” event on March 28, 2017, for an opportunity to visit the State Capitol in Carson City, meet with legislators, attend hearings and have your voice heard.
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The start of the 2017 Nevada Legislative Session will be here before you know it, and FirstService Residential is
already gearing up for its second “Day at the Capitol” event. This event, scheduled for March 28, 2017, provides an opportunity for homeowners’ association (HOA) board members to make their voices heard regarding HOA legislation.Our first event in 2015 was a huge success, with board member participation significantly contributing to an overall positive legislative outcome for HOAs. However, a new crop of bills aimed at HOAs appears to be on the horizon, making your participation in our 2017 event more important than ever.
Although legislators still have time to submit Bill Draft Requests (BDRs), preliminary indications suggest the following items may be under consideration in the next legislative session:
Elimination of super priority status for HOA liens
As you may know, NRS 116.3116 gives HOA liens super priority status. This means that your HOA can recoup up to nine months of unpaid assessments by foreclosing on a delinquent homeowner’s property. Amendments passed during the 2015 legislative session did not change this, but they did clarify foreclosure requirements and provide some protections to banks and other secondary lienholders.
The banking industry is again urging legislators to consider eliminating the super priority status as a whole for HOA liens. This means that the association would no longer have the power to extinguish the first lien or collect the up to nine months of unpaid assessments. Additionally, the 2017 legislative session may consider changing the HOA foreclosure process from non-judicial (whereby the HOA directly auctions the property) to judicial (which involves suing the homeowner in court and having the home auctioned by a government official). This change would make the foreclosure process much more expensive and lengthy for HOAs.
Restrictions on lending options for homes in HOAs
Nevada has more than 3,000 HOAs (equating to upwards of 500,000 homes). In Southern Nevada alone, more than half of all homes are part of an HOA. These statistics make it clear that lending option restrictions, such as the requirement of an association having FHA approval, would affect a significant number of potential homebuyers and current homeowners.
Impound account requirements for HOA assessments
Mortgage lenders would be required to collect several months of future HOA assessments at the buyer’s closing to establish an impound account. The assessments would also be built into their monthly mortgage payment for homeowners with a mortgage lien. A similar bill did not pass in 2015, but it seems likely to be back on the table in 2017. This would significantly decrease the number of collections accounts for each association.
Abolishment of NRS 116
Another attempt to abolish NRS 116 is expected in 2017. NRS 116, also known as the Uniform Common-Interest Ownership Act, governs HOAs. If it were to be eliminated, governance responsibility would go back to Nevada counties.
As an HOA board member, you need to do everything you can to protect your HOA and make your voice heard. Write or call your representatives about issues that affect your community. And make sure to sign up for FirstService Residential’s “Day at the Capitol” event on March 28, 2017, for an opportunity to visit the State Capitol in Carson City, meet with legislators, attend hearings and have your voice heard.
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