Assembly hearing on AB396 opens debate on ADU expansion and HOA rules; counties urge local control

Assemblymember Shay Backus, D-37, presented Assembly Bill 396 to the Assembly Committee on Commerce and Labor, proposing three linked changes to Nevada housing law: (1) expand the ability of homeowners to add accessory dwelling units, (2) require new disclosures and underwriting considerations for common-interest communities, and (3) tighten limits on abusive HOA fines.

Why it matters: The bill seeks to increase housing supply through ADUs while addressing financing hurdles and consumer protections in common-interest communities. Local governments and HOA stakeholders warned that some provisions are more restrictive than existing county ordinances and could undermine locally developed ADU programs.

Key provisions described by the sponsor

- ADU expansion: Section 1 would require governing bodies meeting the population threshold to adopt ordinances authorizing owners to apply for ADUs that meet affordability criteria. The draft caps an ADU’s size at 75% of the primary residence’s gross floor area or 1,000 square feet, whichever is smaller; the sponsor acknowledged that some counties (for example Washoe County) allow larger ADUs and said she is open to amendment.

- Process requirements: The bill would require local ordinances to provide an expedited approval process, prohibit conditions that effectively ban typical ADU features (for example separate kitchens or parking bans), permit ADUs to be used as long-term rentals, and bar restrictions on who may occupy an ADU.

- Timing and preemption: The bill includes implementation timing provisions (sponsor referenced 01/01/2026 as a target for permitting ADUs under section 1) and a clause making any local ordinance conflicting with section 1 void.

- HOA/common-interest changes: Sections 5–10 amend Chapter 116 (NRS 116) to clarify who may amend declarations in ways that alter unit boundaries, to allow associations to restrict leasing where necessary to meet underwriting or insurance requirements of mortgage lenders or insurers, to require resale packages to include proof of association insurance, and to raise a fine cap contemplated for enforcement from $1,000 to $5,000 in limited circumstances involving relief through the ombudsman or the commission.

Support and testimony

Supporters emphasized the insurance disclosure change and protections for buyers and sellers in condominiums where lenders may deny funding if association insurance is absent or inadequate. Mackenzie Warren (Real Property Section, State Bar of Nevada) and Michael Buckley (chair, Real Property Section) testified in favor citing the importance of making insurance information available in resale packages to prevent closings from failing late in escrow.

Opposition and cautions

Local governments and municipal groups urged preserving local control. Representatives from the cities and counties that have already adopted ADU-friendly codes — including Clark County, Washoe County and the city of Henderson — said parts of AB396 could roll back local ordinances or impose more restrictive statewide minima. Washoe County and Clark County asked the sponsor to exempt the Lake Tahoe Basin and to preserve existing local allowances where they are more permissive. The Nevada League of Cities also testified in opposition.

Committee discussion and next steps

Backus said she will continue to work with stakeholders and pursue amendments to address county concerns, and she explicitly noted she will seek to exclude the Tahoe Area Master Plan from the bill’s applicability. The committee limited public testimony to specified time blocks and heard a range of support and opposition; no formal committee vote on AB396 was recorded in this hearing.

Provenance: The bill presentation and subsequent testimony and questions appear in the committee transcript beginning with Assemblymember Backus’s opening remarks and continuing through jurisdictions’ testimony and sponsor responses.