Nevada CIC Law and Ombudsman

2006 March 09
Last Update:  2009 May 02.  See History for brief descriptions of changes and updates. 

    Nevada is one of the states with many Common Interest Development (CIDs) governed by Property Owners Associations (POAs).  And the number is growing.  There has been substantial legislative activity since 1991, but the POA problems continue to grow. 

    The continuation of this post briefly describes the legislative history (from internet sources), and references a Nevada television report on continuing problems within POAs and the Nevada Law, and my comments on the Office of Ombudsman established in Nevada law. 

Don Nordeen
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• History: 
  • 2009 May 02 — Added another example of ineffectiveness of Nevada's Ombudsman concept. 
    
  • 2006 Jun 21 — added reference to definition of ombudsman
    
  • 2006 Jun 12 — added references to TV report and newspaper article on backlog of complaints from homeonwers
  • 2006 Mar 31 — added comments concerning the March Meeting of the Nevada Commission for Common Interest Communities
  • 2006 Mar 15 — added information on complaint and dispute resolution and CID/POA law
    
  • 2006 Mar 12 — added information on the Nevada CIC Act and the Office of Ombudsman and amended legislation creating the Commission for Common Interest Communities
  • 2006 Mar 09 — Initial Post
    
• Links:  Nevada CIC Law and Ombudsman at <http://swagman.typepad.com/poa_governance/2006/03/nevada_cic_law_.html>
  
• Key Words:  • Common Interest Development;  • Legislation, CID & POA;  • POA Governance;  • POA Members' Rights;  • POA Problems;  • Private Government;  alternate dispute resolution;  alternative dispute resolution;  common interest community;  common interest development;  governance;  Nevada;  ombudsman;  POA governance;  POA members' rights;  POA problems

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Nevada CIC Law and Ombudsman (continued)

Legislative History in Nevada

    In 1991, Nevada adopted/adapted the Uniform Common Interest Ownership Act (UCIOA) 1982 version.  Before reviewing the following references, you may wish to first view the television report and this blogger's comments.  See UCIOA (1994) for a later version of the model act.  The Nevada legislature has amended their Act a number of times.  That history is available in CALIFORNIA LAW REVISION COMMISSION STAFF MEMORANDUM, Study H-853, March 17, 2005, Second Supplement to Memorandum 2005-10.  See clrc memo.pdf at Exhibit pages 20-22 (pdf pp 22-24).  See current act for the complete Nevada Uniform Common Interest Ownership Act today.  Most of the sections are written in general terms, but some have much detail — apparently the amendments. 

    (added 2006 Mar 12)  In 1997, the Nevada CIC Act was amended to add an Office of Ombudsman with limited authorities.  Several points are noted for the home page for the Nevada Ombudsman as it existed on 2006 Mar 12:

• The Office is in the Real Estate Division, not Consumer Protection of a section in the Attorney General's office. 
• The date of the last update is 2003 Nov 14.
• The duties of the office are to "assist", "assist", "assist", and "compile and maintain".
• There is no requirement for an annual report of activities and findings. 
• There is no requirement for an annual report to the legislature recommending issues for legislative consideration. 
• There is no authority to even recommend a remedy in response to a complaint. 
• There is no requirement to refer unresolved complaints to the attorney general for review and possible action. 
• Links to other Real Estate Division web pages are provided in the box at the upper left.  However, the link to "Common Interest Communities" does not work. 
• There are no links to other internet pages covering activities and reports issued by the Office of Ombudsman. 

Memo by this blogger:  But there is a link to site map.  Scroll down to "Common Interest Communities".  Note that "legislative history" is shown, but there is no link, not even to the Nevada Legislative history included in a California Law Revision Commission Memorandum cited in the first paragraph above.  Paragraph applies to the Real Estate Division website as it existed on 2006 Mar 12. 

    Note a number of ombudsman activities/reports:  Survey Questionnaire.pdf undated, but with a return date of 2002 Oct 1; and Survey Results.pdf dated 2003 Jan 21.  The survey results include numbers and percentages but no graphs that could aid in the understanding of the results.  There is no analysis concerning the validity of the survey results:  is the sample representative?  what is the standard error of estimate?  etc.

 (added 2006 Jun 19)  While the office was named "Office of Ombudsman", the authorities and duties may not be consistent with the meaning of ombudsman.  (See Definition from Merriam-Webster online Dictionary.)

    (added 2006 Mar 12)  Apparently because of the lack of effectiveness of the Office of Ombudsman, the legislature created a Commission for Common Interest Communities in 2003 to give homeowners an expeditious and inexpensive forum for resolving disputes with CICs.  Again, the Commission was made part of the Real Estate Division, not Consumer Protection or Attorney General.  The Commission is identified under "Commissions" immediately above the "Common Interest Communities" web page identified in the Memo above.  The home page, which was last updated on 2005 Dec 1, contains no links to its other activities.  The commission has promulgated ADOPTED REGULATION OF THE COMMISSION FOR COMMON-INTEREST COMMUNITIES.pdf.  A picture of the commissioners is available.

Memo by this blogger:  If the quality of website for the Common Interest Communities in the Real Estate Division of the State of Nevada is any indication of the quality of the management and oversight of common interest communities/developments and homeowners associations, it is no wonder that problems persist in Nevada CICs.  Care and interest for serving the homeowner begins with communication, communication and more communication.  It appears that the Real Estate Division doesn't care about the homeowners.  Or maybe the Division doesn't consider homeowners to be their customers.  Would the staff in the Consumer Protection Department have more interest in homeowners?  If I hadn't checked the Site Map, I would not have found much of the information described above.   

(added 2006 Jun 25)  Another perspective of internal bureaucratic problems caused by the role of ombudsman being different from the role of the Department is discussed by Florida State Representative Julio Robaina.  These internal problems may also exist with the Nevada Office of Ombudsman.   

     (added 2006 Mar 31)  Please review video at NV Commission for Common-Interest Communities March 2006 Meeting.  After reviewing the video, I posted the following comment at the HOA News Network Website. 

    "What a mess! According to the charter for the Commission, it is to provide a means to expedite dispute resolution in lieu of costly and slow civil litigation. As such, the Commission should be composed as a jury of peers. Instead, the Commission is composed of members of interest groups. Specifically, the Commission members introduced themselves as representative of homeowners, attorney counsel from the Attorney General’s office, CPA member, developer representative, and management representative. Further, the chairman introduced himself as the attorney representative. The division staff included another dozen people, none of whom were peers of individual homeowners.
    The legislation is wrong. Each of these interest groups is entitled to lobby the legislature for legislation favorable to their interests. But the legislation enacted for dispute resolution through the Commission appears to be contrary to due process provisions in a democracy of a trial/hearing and decision by peers.
    Obviously, the result is another huge bureaucracy with a stated backlog of 177 cases by a commenter above.
    These actions by Nevada may be beneficial to other states, as an example of what not to do in setting up an Office of Ombudsman and other alternate means of dispute resolution. A much more effective process has been set up by Montgomery County, Maryland. See information at Montgomery County Commission on Common Ownership Communities.

    (added 2009 May 02)  Here is another example, Home group's board battles: Association panel member accused of legal violations, which provides more about the deficiencies in Nevada's Office of Ombudsman concept.  Nevada's concept is fundamentally flawed because it is located in the Real Estate Division which is dominated by real estate interests and CAI. 

    (added 2006 Mar 15)  Additional Information on Complaint and Dispute Resolution and CID/POA Law 

• Dispute Resolution for CIDs/POAs in Maryland — This process has been in effect in Montgomery County, Maryland, and appears to be effective. 

• Florida Ombudsman for Condominiums

• See Uniform Law Commissioners for more information on the amendments to UCIOA currently under development.  See Legislation, CID & POA Model & Content for a broader discussion of the legislative issues.   

Story by Las Vegas Channel 8 KLAS TV 

    The video dated 2006 Feb 7 can be viewed at HOA Hell Demo #1 published by HOA News Network.  Immediately below the video as a comment is the text of the television report, which has been appended to this post to preserve the text.  Following that text is my comment concerning the underlying legislative problems which are likely the root of the obvious problems described in the video report.

Other Stories

    (added 2006 Jun 12)  A 2006 Jun 2 television report, Valley's HOA Disputes Are Backlogged (click on the TV picture to watch), by KLAS-TV in Las Vegas describes some of the problems in property owners associations in Nevada and the slow response by the Office of Ombudsman for Common Interest Communities to address the problems.  The administrator's office is now recommending that an administrative law judge be appointed to handle the complaints.  The Ombudsman's office is now vacant.  An administrative law judge requires action of the legislature.   

    (added 2006 Jun 12)   A 2006 Jun 7 newspaper story by Las Vegas Sun, Complaints about homeowners groups reaching Nevada Legislature, provides additional information on the backlog of homeowner complaints.  A comprehensive archive is maintained by the Las Vegas Sun at this site.  Use the search capability to understand the history of problems in Nevada.  See this Blogger's Comments below. 

This Blogger's Comments

    There are a number of problems in this case — all with the basic CIC legislation in Nevada. 

• First, the legislation does not specify democratic principles for the HOA:  rule of law, defined rights of members, protection of the rights of all members, separation of powers, limited powers for HOAs, specific and limited authorities for boards of directors, separate legislative body, checks and balances, due process, fairness, justice, independent judiciary, open meetings, members' access to records (equivalent of FOIA), effective and low-cost means for members to force boards to adhere to the governing documents, and reservation of members authority to be involved in HOA decisions that affect their rights, benefits, privileges, dues, assessments and obligations. 

• Second, the Office of Ombudsman was not treated as a "consumer protection" function.  It was placed in the Real Estate Division (fox guarding the hen house), rather than in a Consumer Department or the Attorney General's Office, which have functions to protect consumers and be advocates for them.   

• Third, the Office of Ombudsman was not given any authority for recommending remedies for complaints which should include the following:  (1) authority to investigate complaints including examination of HOA records; (2) authority to develop and propose remedies for consideration by both the complainant and the HOA; (3) authority to require replies from both parties on acceptance of proposed remedy, and if not accepted, why not; and (6) authority to refer the file to the attorney general's office for necessary legal action if not accepted by both parties.  Further, (5) the Office should be required to issue period public reports on the complaints handled including summarizing systemic problems.  Lastly, (6) the Office should be required to submit an annual report to the legislature describing issues for consideration by the legislature. 

• Fourth, instead of fixing what is obviously wrong with the Nevada CIC legislation as stated above, the legislature created yet another layer of bureaucracy — the Commission for Common Interest Communities, which again is placed in the Real Estate Division (fix guarding the hen house).  Would the legislature place a Truth in Lending Commission in the Banking Department and then staff the Commission with attorneys from the lending businesses?  Of course not, it would be in the Consumer Department and staffed with attorneys advocating consumer and constitutional rights for HOA members. 

    It is time for HOAs to be considered what they really are — private governments for real live people who need well-functioning organizations that respect the rights of their members and define their obligations.  For this, we should be looking at organizational law (new legal entity: private government), municipal law (adapt provisions for private government) and constitutional law (establish and protect the rights of HOA members).  The improvements HOA members must have are not to be found in property law and the lobbying interests of the CIC Industry, which have been the dominant influences in CIC/HOA legislation.

    (added 2006 Jun 12)  The 2006 Jun 2 television report, Valley's HOA Disputes Are Backlogged, and the 2006 Jun 7 Las Vegas Sun story, Complaints about homeowners groups reaching Nevada Legislature, described above illustrate a number of fundamental flaws in the concept of common interest developments (CIDs) and property owners associations (POAs).  Ultimately, the flaws show up as unresolved problems as attested in these stories and many other places.  The Nevada legislation enacted so far has not been effective.  Nevada law was originally based on the model Uniform Common Interest Ownership Act (UCIOA).  UCIOA contains the fundamental flaws concerning capability to quickly and effectively resolve disputes between individual property owners (members of the POA).  In spite of almost continuous change in the Nevada law, the flaws remain.  The Nevada law and its amendments illustrate what is insufficient to address just one of the fundamental flaws in the CID/POA concept.  Note that yet another change in the legislation to appoint an administrative law judge is now being proposed.  That could be helpful if individual property owners would be able to argue their cases and avoid expensive legal bills.  Simplifying the property law by replacing the complex common law with a few simple and easy-to-understand laws for CC&Rs might be a much better answer.  Then the work of the ombudsman would be much simpler, and owners of property in CIDs might be better able to understand the CC&RS.     <Return to KLAS-TV60602>

 

Text of the Television Report

Colleen McCarty, Investigative Reporter
HOA S.O.S.
Feb 7, 2006, 01:36 PM

HOA S.O.S. Chances are you watch the nightly news from inside a home governed by a homeowner’s association. More than 60-percent of us pay for the privilege. But some valley homeowners find they don’t exactly get what they bargained for.

The I-Team receives a lot of phone calls from people who want our help. And lately, too many of them have involved homeowner’s associations. We started to wonder why people were calling the I-Team instead using the system created to help valley homeowners. Until we took a look at that system.

Terry Pennisi believes in old-fashioned value — things like working hard, playing fair and being a good neighbor. Pennisi believes so strongly in her values that she’s always shocked when confronted by those who don’t. “I honestly felt that even though I was in violation not paying on time, what happened was not fair and I know it happens to too many people.”

Pennisi almost lost her house late last year when her homeowner’s association threatened to foreclose. At issue was $1,009.07 in fees accumulated when she fell behind on her dues. “It didn’t even occur to me that something like this could happen,” Pennisi said.

In desperation, Pennisi contacted the state ombudsman for common-interest community who’s job it is to help homeowners with problems just like hers. “I sounded like a desperate little kid afraid of the dark, that’s how scared I was and no one even bothered to call me back. And no one answered my calls, so I don’t know what they’re getting paid for.”

The ombudsman’s office, established in 1997, is supposed to be the first line of defense for homeowner’s or associations embroiled in disputes. Frustrated with the office’s inability to settle complaints, the legislature created the Common Interest Communities Commission in 2003. Senator Mike Schneider sponsored the bill.

Mike Schneider (D) Clark County said, “A lot of associations have operated kind of like dictatorial third world countries. We needed to have something in place where someone could have a big hammer and drop it on associations.”

Commission Chairman Michael Buckley wields that hammer in the form of a gavel. The body has the authority to make legal determinations. But like the wheels of justice this process moves slowly. The commission has heard only six cases since its creation.

Michael Buckley, Common Interest Communities Commission chairman, said, “What the legislature wanted was quick solutions, quick results. But certainly if you’ve got to go through the process at the real estate division, that’s not quick.”

That process begins back at the ombudsman’s office in the state real estate division. From complaint to commission, it now takes an average of two years. Due process says division administrator Gail Anderson, “I don’t believe there’s a break down. I think there’s just a new program that’s starting that will begin to gain momentum and should be at that point that now we are moving. We hadn’t been.”

Anderson points to a learning curve, staffing shortages and the bureaucracy as reasons for the backlog. The division currently has 138 cases awaiting resolution, including Terry Pennisi’s.

Colleen McCarty: “So, there’s a state agency that we all pay to support that’s supposed to be there to help us.”

Pennisi: “Right.”

McCarty: “And what you’re telling me is it’s not working.”

Pennisi: “I was as naive as you just sounded because it did not work.”

True to her values Terry paid the lien.

Optimistic fair play will win out when and if the commission hears her case. We don’t know when that will be, but we’re told speeding up the process is a priority at the real estate division. Another change is the current ombudsman retires in April. Some see that as an opportunity. Others tell us they worry the hiring process will only contribute to the current backlog.

The I-Team asked the division if it could have stopped Pennisi’s foreclosure until the dispute was settled. The division does not believe it has the authority to do that. However, legislators who created the laws disagree and say the agency could issue a cease and desist order. We may see some additional legislation in this area next session.

Email investigative reporter Colleen McCarty at ccmcarty@klastv.com

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Copyright 2009 © Donald L. Nordeen.  All Rights Reserved.  See Copying Posts on This Weblog.
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Comments

[kathy]

2007 Oct 17

if you have cc&r's and an arc but no hoa and no common areas are you considered a cic. the ombudsmans office says yes because your common interest is the cc&r's. the attorney generals office in nv says we are covered by nrs 116 even tho we lack a hoa or common element. anybody know where i can find this in writing.

====Reply====

2007 Oct 18

If there is no HOA, then who sponsors the ARC (architectural review committee)? The Nevada law is available on the internet, and it should have a definition for a CIC and also its applicability. You should compare those definitions in the Nevada law to your development and CC&Rs.

Don Nordeen

[Dino]

2008 Dec 01

Re Time for Board Meetings

The directors of my HOA keep setting the quarterly HOA meeting on weekdays at 9:30 am. when the majority of the residents are at work. I been battling them to change to a more reasonable time in the afternoon, but they persist in having meeting continue. Two of the three directors are builders and they set the time to their convenience therefore depriving home owners to participate what I want to know is "is there a guideline, law that dictate a reasonable time to have meetings".
Thank you for your response.

Dino O

====Reply====
2009 May 03

I doubt that there is any law defining the meeting time for board meetings. That is a matter for the organization to decide.

I suggest a petition of owners asking for the meetings to be at a time when members are normally available such as evenings or Saturday morning. If the board does not respond, get the necessary signatures for calling a special members' meeting (requirements should be in your bylaws) to vote on an amendment to the bylaws (or other governing document) to specify the time for board meetings.

Don Nordeen