What HOA Boards Have to Know about Special Assessments in Nevada

Nothing HOAs handle seems as divisive and contentious as a HOA special assessment.

Homeowners see them as unwelcome bills. Boards often find them to be the only way to close funding gaps. From either perspective, special assessments require delicate and skilled handling. 

The difference between dues, reserve funds, and special assessments

• Regular dues or monthly HOA fees cover the budgeted, day-to-day operating costs for HOA communities.

• Reserve funds are portions of the regular dues that are set aside for savings to be used later for major repairs and replacements.

• HOA Special assessments are separate, usually one-time charges levied upon homeowners to cover the costs of things not included in the budget or projected as an expense. These charges are usually due to emergency repairs, shortfalls, or unforeseen projects.

When can a board levy an HOA special assessment?

Boards typically turn to special assessments in response to emergencies, such as failed roofs or burst water mains. In some situations, they occur because planned projects outstrip reserves or the community has sustained years of underfunding.

When it comes to reserve assessments, the Board need not obtain a vote of the membership, but the assessment amount must be based upon the Association’s current reserve study.  Nevada Revised Statutes 116 governs this and most special assessment situations. This law and each individual community’s governing documents set the rules for when and how special assessments can be made.

NRS 116 is gigantic in sheer volume of pages and has almost 800 regulatory statutes. If you have ever wondered why it takes so long for lawyers to earn degrees, click NRS 116 and see why.

Nevada law regarding community properties and HOAs is very lengthy and extremely complex.

Here is what your board should keep in mind:

1. There are requirements for notice and homeowner votes

This is where boards get into trouble. Depending on the amount and purpose, Nevada law and the CC&Rs may require specific notice to owners and, in some cases, a homeowner vote to approve an assessment. Omit these and challenges result.

2. When a homeowner can’t or won’t pay

Unpaid assessments can lead to liens and, ultimately, collection action against the property. Boards should follow the process precisely so owners do not simply ignore a valid assessment.

3. When homeowners challenge an assessment

Homeowners may push back on an assessment they believe was improperly levied on grounds of process, authority, or applicable laws, rules, and regulations. Your board should expect that kind of challenge to surface from time to time and should be prepared for it rather than caught off guard by it. Have your CC&Rs reviewed before acting, and before responding to a challenge, so your board’s position is grounded in the governing documents rather than improvised in the moment.

Boards who do special assessments right

• Properly document the need.

• Exactly follow the notice-and-vote rules.

• Communicate with homeowners and each other early and clearly.

• Get legal review for any considered or contested assessments.

• Run a well-oiled process that prevents most disputes.

Involve HOA counsel

When you’re stuck in an emergency situation or debt-ridden near the brink, talk to Troy Isaacson Law BEFORE making decisions.

A clinical review of your rules and regulations within the perspective of your dire needs and predicaments will lead to an overview of the variables you might consider, as well as legal precedence, options, underlying risks and exposure, and probable outcomes.

Take all the guesswork out of special assessments. Contact the Nevada HOA attorney   Troy Isaacson Law to lead you in the best direction.