AB396 would encourage accessory dwelling units, add HOA disclosures and raise enforcement fines; sponsor removes two contested sections

Assemblymember Shay Backus presented Assembly Bill 396 to the Senate Government Affairs Committee, describing a multipronged bill the sponsor said aims to increase housing supply through expanded allowance for accessory dwelling units (ADUs), reduce last‑minute surprises in real‑estate closings by requiring homeowner associations to disclose insurance information in resale packages, and strengthen remedies for homeowners subjected to excessive fines by HOAs.

Backus described four components (she later reduced the bill’s scope and said sections 7.1 and 7.2 would be removed from the draft in committee): (1) model state policy encouraging local governments to adopt ordinances that permit ADUs and limit unreasonable local restrictions (for example, preventing ordinances that ban full kitchens or impose setbacks stricter than those for primary residences); (2) conforming changes to other statutes to reflect an ADU policy; (3) amendments to chapter 116 (common‑interest communities) to clarify who can amend declarations, when an association can prohibit leasing, and to require associations to include insurance documentation in resale disclosure packages so lenders and buyers can confirm coverage before closing; and (4) an increase in the maximum administrative fine the commission can impose (from $1,000 to $5,000) for certain abuses — a change Backus said was modest but aimed at deterrence.

Local governments and planning advocates said they had worked with the sponsor and were largely neutral on the revised draft. Washoe and Clark counties said they support ADU expansion in concept and have already implemented streamlined ADU permitting in some places. Housing advocates (Strong Towns Las Vegas, Americans for Prosperity) testified in favor of ADU provisions; the Nevada Justice Association said it opposed two specific subsections that had been added in amendment (7.1 and 7.2) that it said would limit insurance and change standing for certain enforcement claims — the sponsor told the committee those subsections would be removed from the bill before work session.

Attorney Michael Buckley and others testified in support of the chapter 116 provisions (amendments align some sections with modern uniform law changes and would require associations to provide proof of insurance to buyers). Committee members asked detailed questions about notice, neighbor rights on zoning and ordinance processes, HOA covenants that run with the land and the interaction between local zoning, association rules and lenders’ underwriting standards. Several legislators said they remained cautious about state intervention in private covenant rules but praised the sponsor’s outreach and willingness to trim contested language.

The hearing closed with stakeholders asking for further technical work; the transcript shows no committee vote on AB396 during the hearing.