CIC Package Law Offers Chance to Tighten Up Timelines
By Deanne M. Rymarowicz, Esq.
GLVAR Legal Counsel
It’s been nearly five months since the "seller pays" provision went into effect in the CIC resale package statute, NRS 116.4109. In some ways, a provision that was meant to create clarity has created even more uncertainty.
NRS 116.4109(1) now clarifies that the furnishing of a CIC resale package is "at the expense of the unit’s owner." (See SB 253, Section 8.) In other words, the seller is expressly and solely responsible for paying for the resale package. Always remember that providing the CIC resale package provision is mandatory and is not waivable for residential common interest communities. Additionally, in a typical REO resale, none of the statutory exceptions apply.
One question that keeps emerging is whether the seller may write in a counteroffer that the buyer is to pay for the package up front and be reimbursed by the seller at close of escrow, similar to an appraisal. While this appears to be permissible, it is unclear why a seller would put the buyer in the driver’s seat of a crucial, statutory "out" provision. The buyer has until "midnight of the fifth day" following receipt of resale package to cancel the transaction and receive a prompt refund of "all payments made." (See NRS 116.4109(2).) In theory, a buyer could wait until just before the close of escrow to obtain the resale package and then cancel; according to case law in another jurisdiction with the five-day rule, cancellation may be for any reason, not necessarily related to the CIC documents.
Another important question is, what if the buyer never receives the package because the seller flatly refuses to furnish it and/or pay for it, and the buyer refuses to pay for it? Nevada law appears to allow the buyer up until closing to cancel the transaction for non-receipt of the resale package. GLVAR’s RPA (which requires the seller to provide the package) helps to clarify the timeline, stating that if "Buyer does not receive the resale package within fifteen (15) calendar days of Acceptance, this Agreement may be cancelled in full by Buyer without penalty." (RPA, Section 9) This gives the seller a couple of days to request the package plus the CIC’s statutory ten-day allowance to produce the package.
Buyers must be made aware that if they close a transaction without a CIC package (where a package is required) they lose the right to (1) cancel the contract pursuant to the five-day rule in NRS 116.4109(2); or (2) sue for "damages, rescission or other relief based solely on the ground that the unit’s owner or his authorized agent failed to furnish the resale package, or any portion thereof." See NRS 116.4109(2). From a risk management perspective, such advice should be in writing from the buyer’s agent or broker, preferably signed off by the buyer.
A copy of the recent changes to the law may be found at www.leg.state.nv.us/75th2009/Reports/history_request.cfm and searching for Senate Bill 253. |
