2.4 Common-Interest Communities (NRS 116)
Key Takeaways
- Common-interest communities (HOAs, condos, PUDs) are governed by NRS Chapter 116, the Uniform Common-Interest Ownership Act; they dominate the Las Vegas market and are tested heavily on the state portion.
- When a unit in a CIC resells, the seller must furnish the buyer a resale package (NRS 116.4109) including the CC&Rs, bylaws, rules, current budget, reserve study, and a statement of unpaid/special assessments.
- The association must deliver the resale-package documents and certificate within 10 days of the unit owner's written request (NRS 116.4109); that 10-day association deadline is different from the buyer's 5-day cancellation right.
- After receiving the resale package, the buyer has 5 calendar days to cancel the purchase for any reason and recover the earnest money (NRS 116.4108-116.4109).
- CC&Rs run with the land and bind every owner; unpaid assessments become a lien on the unit, and the association's super-priority lien for up to 9 months of assessments can prime a first mortgage (NRS 116.3116).
Why CICs Dominate the Nevada Exam
A common-interest community (CIC) is any development where owners must belong to an association and pay assessments for commonly held property — HOAs, condominiums, and planned unit developments (PUDs). In Southern Nevada the majority of residential subdivisions are CICs, so NRS Chapter 116 (the Uniform Common-Interest Ownership Act) is one of the most heavily tested blocks on the state portion. The intro chapter flagged this; here is the substance behind it.
The three governing documents
| Document | What it does | Priority |
|---|---|---|
| Declaration / CC&Rs | Creates the community; recorded covenants, conditions & restrictions that run with the land | Highest — binds every owner and successor |
| Bylaws | Govern how the association operates (board, meetings, voting) | Subordinate to CC&Rs |
| Rules & regulations | Day-to-day rules (parking, pets, paint colors, short-term rentals) | Subordinate to bylaws |
A buyer who takes title in a CIC is bound by the CC&Rs whether or not they read them — that is the meaning of covenants that "run with the land." An owner cannot opt out of mandatory membership or assessments.
The Resale Package (NRS 116.4109)
When an existing unit in a CIC is resold, the seller must furnish the buyer a resale package before closing. The association prepares the documents; the seller delivers them.
What the package must contain
- A copy of the declaration (CC&Rs), bylaws, and rules and regulations
- The association's current operating budget and most recent financial statement
- A reserve study summary (funding for future major repairs)
- A statement of all unpaid and special assessments against the unit
- Information on pending litigation, unsatisfied judgments, and insurance
- A schedule of fees, fines, and transfer charges
Two deadlines candidates confuse
| Deadline | Who | Length | Source |
|---|---|---|---|
| Association must furnish the resale documents and certificate after the owner's written request | Association → owner/agent | 10 days | NRS 116.4109 |
| Buyer's right to cancel the purchase after receiving the package | Buyer | 5 calendar days | NRS 116.4108-.4109 |
High-yield trap: The 10-day figure is the association's time to produce the documents; the buyer's cancellation window is only 5 days after receiving the package. An exam stem that swaps these ("the buyer has 10 days to cancel") is wrong. During the 5-day window the buyer may cancel for any reason tied to the HOA documents and recover the earnest money.
Assessments and the Super-Priority Lien (NRS 116.3116)
Every owner owes periodic assessments (dues) that fund the association's budget, plus special assessments for unexpected major costs. Unpaid assessments are serious because they become a lien on the unit.
How the assessment lien works
| Feature | Rule |
|---|---|
| Lien attaches | Automatically when an assessment becomes due (NRS 116.3116) |
| Covers | Unpaid assessments, late fees, interest, collection costs |
| Enforcement | The association can foreclose the lien, even nonjudicially |
| Survives sale? | Unpaid amounts attach to the unit and must be cleared at closing |
The 9-month super-priority lien
Nevada's most-tested CIC twist: a portion of the association's lien — generally up to 9 months of unpaid assessments plus certain charges — is a super-priority lien that can prime (jump ahead of) a recorded first mortgage. This is why a careless lender or buyer who ignores HOA arrears can be wiped out: the association's 9-month slice is paid first. The 2014 SFR Investments litigation made Nevada famous for this rule, and the Legislature has since added lender-notice protections, but the super-priority concept itself remains testable.
Worked scenario: A condo seller owes the HOA $2,400 in back assessments and a $600 fine. At closing, escrow must collect a current resale demand from the association and pay the lien so the buyer takes clear title; leaving it unpaid lets the HOA pursue the new owner and the unit.
CIC Restrictions That Affect a Sale
| Restriction | Practical effect |
|---|---|
| Right of first refusal / approval | Some CICs require board approval or can match an offer |
| Rental caps / short-term rental bans | Limit an investor-buyer's plans — disclose them |
| Architectural controls | Owner cannot freely alter the exterior |
| Age-restricted (55+) communities | Lawful under the Housing for Older Persons Act; not a fair-housing violation |
| Transfer / capital-contribution fees | One-time fees due at closing |
The licensee must make sure the buyer understands these restrictions before the cancellation window closes. A buyer who wants to run a short-term rental but buys into a community that bans them has a classic disclosure dispute.
The Licensee's Role in a CIC Transaction
- Identify early that the property sits in a CIC.
- Help the seller order the resale package from the association (allow for the 10-day furnish window so closing is not delayed).
- Deliver the complete package to the buyer and document the delivery date — the buyer's 5-day clock starts then.
- Confirm escrow obtains a current assessment/lien demand so unpaid dues are cleared at closing.
- Disclose rental caps, pet limits, age restrictions, and pending litigation that could affect value or use.
Exam tip: Tie every CIC fact to a number — NRS 116, 10-day association furnish, 5-day buyer cancellation, 9-month super-priority lien. Those four anchors answer most CIC questions on the state portion.
After receiving the complete HOA resale package, how long does a Nevada buyer have to cancel the purchase and recover the earnest money?
Why is a Nevada HOA's assessment lien especially dangerous to a first-mortgage lender?
Which document in a Nevada common-interest community contains the recorded covenants that run with the land and bind every owner?