Existing law requires the executive board of the unit-owners' association of a common-interest community to cause the annual review or audit of the financial statements of the association. (NRS 116.31144) Section 2 of this bill requires the Real Estate Division of the Department of Business and Industry to investigate and audit all financial accounts related to an association if the Division has reasonable cause to believe that the accounts or records of the association have not been maintained and that the investigation and audit is reasonably necessary to administer or enforce certain laws under the jurisdiction of the Division. Existing law establishes procedures related to the election or appointment of a member of the executive board. (NRS 116.31034) Section 3 of this bill requires candidates for membership on the executive board to undergo a background investigation conducted by the Division. Section 6 of this bill requires the candidate to submit a copy of the background investigation to the association for distribution to the units' owners during the election process or in a subsequent mailing under certain circumstances. Section 4 of this bill requires the Division to establish a training program for members of executive boards and requires members to take the training within 6 months after their election or appointment. Existing law requires the association to establish adequate reserves for the repair, replacement and restoration of the major components of the common elements and any other portion of the common-interest community that the association is obligated to maintain, repair, replace or restore. (NRS 116.3115) Existing law requires the executive board to: (1) cause a study of the reserves to be conducted every 5 years; (2) annually review the results of the study; and (3) make adjustments to the funding plan of the association. (NRS 116.31152) Section 7 of this bill requires the study to be conducted every year and establishes the standards for determining the sufficiency of funds in the reserves of the association. Existing law provides that before commencing a civil action relating to the interpretation, application or enforcement of any covenants, conditions or restrictions applicable to residential property or any bylaws, rules or regulations adopted by an association or the procedures used for increasing, decreasing or imposing additional assessments upon residential property, a dispute must first be submitted to mediation or, if the parties agree, referred to a program established by the Division for resolution of the dispute. (NRS 38.310) Section 9 of this bill exempts actions brought for damages from a failure or refusal to comply with certain provisions of law related to common-interest communities or the declarations or bylaws of an association from such mandatory mediation or such a program for resolution. Instead, sections 8 and 10 of this bill require such actions to be commenced in justice court and adjudicated as small claims. Section 5 of this bill makes a conforming change related to the applicability of certain provisions to sections 2-4.

Statutes affected:
As Introduced: 116.1203, 116.31034, 116.31152, 116.4117, 38.310, 73.010
BDR: 116.1203, 116.31034, 116.31152, 116.4117, 38.310, 73.010