NRED Intervention Affidavit Update

The Nevada Real Estate Division (NRED) has completed its investigation on an “Intervention Affidavit” filed on May 30, 2018. This Affidavit alleged that the SOA Board violated Nevada Law (i.e., NRS 116.31088) in not obtaining a majority vote of Somersett Owners to pursue the ongoing lawsuit against the Somersett Development Company et. al. pertaining to the SOA Common Area Rockery Wall failures. Detailed information on this Affidavit is contained in a previous SU post dated June 30, 2018, which may be accessed via the following link:

Rockery Wall Lawsuit NRED Intervention

As a result of its investigation, the NRED concluded (in a November 5, 2008 memo, Re: Case No. 2018-784, to the Intervention Affidavit author) “that no good cause to pursue a complaint before the Commission for Common-Interest Communities and Condominium Hotels exists at this time”. The NRED investigator is of the opinion that the SOA Board appears to have made a good faith effort to commence and ratify the civil action, and that the NRS statute “does not mandate that a civil action is summarily dismissed if the association fails to garner the majority approval of its Units’ Owners”. The NRED memo ends with: “Please be advised that this case is now closed. The Division reserves the right to reopen its investigation should such action be warranted”.

What can one conclude from the NRED decision?

  1. There will be no incumbrance from the NRED for the SOA Board to move forward with the lawsuit.
  2. The SOA Board will not have to conduct another homeowner vote to obtain a majority.
  3. The SOA Board will not have to dismiss the civil action for not receiving a majority vote.
  4. The SOA Board is free to spend the $500K in budgeted legal fees for 2018 and 2019.

Editorial Comment:

It is hard to agree with the NRED premise that the SOA Board made a good faith effort in commencing the lawsuit for the reasons described in the June 30 post referenced above, and that the majority vote provision of the Nevada 116.31088 could be overlooked. Also, why it took the NRED 4 months to perform their investigation.  However, perhaps this is all moot, as if the Board had made a timelier effort to notify owners of its intent to commence the lawsuit, and allowed additional time to achieve the required majority vote, ratification for the lawsuit would most likely still have been achieved. This based on the results (77% in favor of ratification) from the limited number of ballots that were received.