Mt. Charleston Nevada 12.16.2012

This is a follow up to the CIC liens in Nevada.  On December 12, 2012 the State Of Nevada Department Of Business and Industry Real Estate Division (NRED) issued an Advisory Opinion on the Super Priority Liens filed by home owners associations formally known as Common Interest Communities or CICS:  It can be read in detail here.  But here is a portion of it with the key holding that “costs of collecting” are not be included in the lien.

QUESTION #1:

Pursuant to NRS 116.3116, may the portion of the association’s lien which is superior to a unit’s first security interest (referred to as the “super priority lien”) contain “costs of collecting” defined by NRS 116.310313?

SHORT ANSWER TO #1:

No. The association’s lien does not include “costs of collecting” defined by NRS 116.310313, so the super priority portion of the lien may not include such costs. NRS 116.310313 does not say such charges are a lien on the unit, and NRS 116.3116 does not make such charges part of the association’s lien.

QUESTION #2:

Pursuant to NRS 116.3116, may the sum total of the super priority lien ever exceed 9 times the monthly assessment amount for common expenses based on the periodic budget adopted by the association pursuant to NRS 116.3115, plus charges incurred by the association on a unit pursuant to NRS 116.310312?

SHORT ANSWER TO #2:

No. The language in NRS 116.3116(2) defines the super priority lien. The super priority lien consists of unpaid assessments based on the association’s budget and NRS 116.310312 charges, nothing more. The super priority lien is limited to: (1) 9 months of assessments; and (2) charges allowed by NRS 116.310312. The super priority lien based on assessments may not exceed 9 months of assessments as reflected in the association’s budget, and it may not include penalties, fees, late charges, fines, or interest. References in NRS 116.3116(2) to assessments and charges pursuant to NRS 116.310312 define the super priority lien, and are not merely to determine a dollar amount for the super priority lien.

QUESTION #3:

Pursuant to NRS 116.3116, must the association institute a “civil action” as defined by Nevada Rules of Civil Procedure 2 and 3 in order for the super priority lien to exist?

SHORT ANSWER TO #3:

No. The association must take action to enforce its super priority lien, but it need not institute a civil action by the filing of a complaint. The association may begin the process for foreclosure in NRS 116.31162 or exercise any other remedy it has to enforce the lien.

Well now, that ought to cause a number of wonderful conversations just days before a close of escrow. I have listed my other writings on this below. This subject is changing often and the Legislature in Nevada is in session in just a few months, so by the summer of 2013, we might have even more changes.

Questions? darren@dwelshlaw.com

Please see my other blogs on CIC:

Nevada CIC Resale Package Costs I

Nevada CIC Resale Package Costs II

Nevada Condominium Hotel Disclosure

CIC Unpaid Delinquent Dues And How They Affect REO Listings

Changes to the Nevada CIC Resale Package

Non-Receipt of the Resale Package

Rental Restrictions within an Association

Nevada CIC Charges for Resale Packages

Nevada CIC Addendums

 

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