Why this is the sharper of the two rental changes

AB 396 moved rental restrictions on two fronts. It let boards impose them by rule under a rewritten NRS 116.335, and it let associations impose them by amendment under this new NRS 116.2117(9). The two are often described together, but they do different work and an owner needs to know which one is being used against them.

• The rule route (NRS 116.335) requires the declaration to already authorise restriction or contain a cap. It is fast — a board agenda item — but it is unavailable to an association whose declaration is silent.
• The amendment route (NRS 116.2117(9)) works regardless of what the declaration currently says, because the amendment changes what it says. It is slower, because amending a declaration requires the vote the declaration and the statute specify. But its reach is greater: subsection 6 no longer shields anyone from it.

The grandfather clause was the reason a Nevada investor could buy into a community with no rental cap and be confident the cap could not later be applied to them. That confidence is now conditional on the amendment failing the subsection 9 test.

What “reasonably designed” has to be designed against

The phrase is doing all the limiting work in the sentence, and it points outward at two identified industries:

• Institutional lenders that regularly make or purchase first-mortgage loans on units in common-interest communities. In practice this means the secondary-market project-eligibility standards — the owner-occupancy and investor-concentration thresholds that determine whether units in a project are financeable at all.
• Insurance companies that issue policies to associations or to units. Carriers have their own occupancy and tenancy conditions, and in a hardening market those conditions have been moving.

An amendment is not immunised merely by reciting one of these. “Reasonably designed to meet” a requirement implies a requirement that exists and a restriction proportionate to it. An association amending its declaration under subsection 9 should expect the question, and an owner contesting one should ask it: which underwriting requirement, in what document, and how does this restriction meet it?

The declarant provisions in the same section

AB 396 made two further changes to NRS 116.2117 that point in the opposite direction — away from declarant control. The consent requirement for an amendment changing unit boundaries or allocated interests now runs to a majority of remaining owners “including a majority of the votes allocated to units not owned by the declarant.” And the indexing exception the section previously carried for certain amendments was struck.

The pattern across the whole bill is consistent on this point: wherever AB 396 touched a voting threshold, it added a floor measured in non-declarant votes. The termination statute at NRS 116.2118 received the same treatment, and more dramatically.

What to do about it

If you own a Nevada rental unit: the question is no longer only “what does my declaration say?” but “what could it be amended to say, and would that amendment reach me?” Watch for proposed amendments circulated with underwriting justification attached — that attachment is the association preparing its subsection 9 record. Amendments must be recorded to be effective, so the county recorder is where the answer ultimately lives.

If you are buying: a resale package tells you the rules as they are today. It does not tell you that a lease restriction adopted next year can now be enforced against you. Ask whether an amendment is under consideration.

If you sit on a board: the amendment route is the durable one. A rule adopted under NRS 116.335 depends on declaration language you did not write and cannot control; an amendment under subsection 9 puts the restriction in the declaration itself. It is also the route that most needs a documented underwriting basis, because it is the one that overrides a protection the Legislature deliberately left standing everywhere else in the section.