Association homeowners may foot the bill if their HOA loses a lawsuit. Typically made up of member residents, many residential communities have homeowners’ associations to help keep the neighborhood unified and clean. The terms of the association’s covenants, conditions, and restrictions often allow the association to pass on extraordinary expenses that exceed the association’s operating and reserve funds to the homeowners. Almost 3,000 HOAs, or common-interest communities, currently exist and operate in Nevada, according to the state’s Department of Business and Industry. In exchange for access to the association-maintained common areas, membership in these organizations requires homeowners to adhere to the association’s rules and to pay assessments.
If an HOA loses a lawsuit and must pay damages as a result, the costs often disburse to several areas – from insurance policies to special assessments charged to members. Homeowners’ associations must maintain at least four types of insurance policies – commercial general liability, property, crime, and directors and officers liability insurance. A commercial general liability policy will typically cover claims involving personal and bodily injury, property damage, or other such negligence-related claims. The property policy should include coverage for no less than 80% of the community’s actual cash value for issues such as damage to HOA facilities. Crime insurance policies provide some financial protection in cases involving dishonest or criminal actions on the part of HOA board members or other employees. State law requires associations to carry coverage equal to the lesser amount of $5,000,000 or all the HOA’s reserves plus three months of assessments. A directors and officers policy, on the other hand, covers individual board members personally named in HOA lawsuits.
Special assessments refer to additional fees levied by common-interest community associations. These fees come in addition to the monthly, quarterly, or annual assessments that the association levies for the upkeep and care of landscaping, common areas, and shared amenities such as fitness centers, swimming pools, or basketball or tennis courts. HOAs must sometimes impose special assessments to cover the costs of lawsuits by members, as well as to cover shortfalls resulting from nonpayment by a number of homeowners, improper budgeting of the community’s expenses, and unexpected or unusual maintenance needs. Groups also occasionally assess these extra fees to upgrade or replace sidewalks, roofs, or community amenities, or to add shared facilities such as clubhouses or walking trails.
Unpaid assessments run the risk of increasing the costs for other community members or resulting in collections or legal action.
Depending on the terms spelled out in the covenants, conditions, and restrictions, HOAs have differing protocols for handling unpaid assessments. Some associations have formal policies for when members must pay and how the group will handle late or nonpayment. In some cases, this may include working with HOA general counsel to file a lien or to take civil action against the homeowner. Before taking such extreme measures, however, common-interest community groups must send delinquency notices, assess late charges and fines, and employ other such methods to reach a resolution with members. Sometimes, the organization will work with members who cannot afford financially to pay the assessments and the association may accept partial payments and/or create payment plans.
Various disputes between common-interest communities and association members reach the seriousness of filing lawsuits. Just as HOAs expect homeowners to follow the shared community rules, association members expect that the organization will uphold its obligations under the covenants, conditions, and restrictions. Some of the most common reasons homeowners take legal action against common-interest communities in which they reside include contract violations, remodeling disputes, repair disputes, discrimination, and the misappropriation of HOA funds.
Members may consider filing lawsuits to enforce their interests under the HOA’s covenants, conditions, and restrictions. These documents essentially exist as contracts between homeowners and common-interest community organizations. While these associations generally exist for the betterment of the community, sometimes actions they take violate the rights of members under these contracts, or they may fail to uphold their obligations to the communities. For example, despite including landscaping in the HOA fees, the group does not provide regular service. Consequently, one or more members sue the association.
Homeowners occasionally sue common-interest community organizations over remodeling disputes. In some cases, HOAs refuse members’ requests to remodel their homes, despite the covenants, conditions, and restrictions not directly addressing the matter. For instance, if an HOA’s CC&Rs do not specifically prohibit additions but the association denies a homeowner’s request to add to his or her home and extend the kitchen, a homeowner may perceive a violation of the CC&Rs. To gain authorization for the build, the member may file a civil lawsuit.
If an HOA fails to make repairs or does not make them in a timely manner, homeowners may take legal action. Members pay association dues in exchange for community benefits such as the use of shared swimming pools or outdoor grilling areas. Should something go out of order and require repairs in the areas under the purview of the HOA, then the organization bears responsibility for having it fixed. Excuses, delays, neglect, and other factors relating to handling such repairs sometimes lead homeowners to pursue their options for enforcing their rights and obtaining solutions.
Some lawsuits by members against common-interest communities allege discrimination. HOAs have the ability through their covenants, conditions, and restrictions to establish wide-ranging rules – from restricting members from renting their properties to specifying the height of their mailboxes and the colors they can paint the exteriors of their homes. These rules cannot, however, have protected characteristics, such as race, number of children, or marital status, as their basis. Therefore, homeowners may take legal action when HOAs violate the state’s housing discrimination laws.
If HOAs do not appropriately spend the money paid by members as monthly dues, some homeowners take legal action. Homeowners’ association boards have an obligation to allocate the funds paid as dues in the manner they say they will and for the betterment of the shared community. Members, then, may file misappropriation of funds lawsuits to stop board members from using the monies in unacceptable ways, such as for excessive attorney fees or board lunches.
Members in disputes with common-interest community boards may file civil, equity, or federal lawsuits to resolve their issues. Often following the same sequence, such actions typically involve homeowners filing complaints with the appropriate courts, responses from the HOAs, fact-finding, and eventually, a ruling on the matter by the judge or jury. The court jurisdiction for such cases depends on factors, such as the type of complaint. For instance, a federal court may hear a discrimination claim while an equity court hears a conjunction case, and a small claims court rules on a personal injury claim.
Before filing lawsuits, homeowners should review the HOA covenants, conditions, and restrictions to ensure they have the right to sue the association. Sometimes, such contracts limit members’ rights to file lawsuits and instead require them to submit to binding arbitration or another dispute resolution process. Through arbitration, a third party will listen to arguments from both sides and draft a written opinion specifying the winner of the claim and the resulting award, if any. In binding arbitration, the sides must adhere to the process findings and generally cannot pursue the matter any further. In Nevada, disputes between members and the association related to the HOA’s governing documents must also first undergo alternative dispute resolution under the Nevada Real Estate Division before a lawsuit may be commenced.
The dynamics between HOAs and homeowners sometimes bring challenges – providing community benefits while imposing rules and costs on members. When faced with a homeowner’s association dispute, people may find it helpful to understand their rights and responsibilities, as well as the options available to them for remedying violations of their interests.
The homeowners’ association’s (HOA) attorney represents the HOA as an entity. The HOA is separate and distinct from the individual directors, homeowners, and community managers. Typically, the HOA attorney is charged with looking out for the best interests of the HOA, such as by reviewing the HOA’s rules, regulations, and governing documents to make sure that they are up-to-date and do not violate existing laws. If there is a dispute between the HOA and an unhappy homeowner, for example, the HOA attorney advises the Board on the best interest of the entity and the entity’s obligations to its members. Should formal mediation or litigation be necessary, the HOA attorney may represent the HOA during the proceedings.
The homeowners’ association is a separate entity, much like Walmart is a separate entity from that of its shareholders, board of directors, and corporate officers. The board for the homeowners’ association – like the board of directors for Walmart – acts on behalf of the association by, for instance, creating regulations and rules that protect and further the interests of the homeowners’ association and its community. The HOA can own property, have a bank account, enter into contracts to buy goods or services, and to sue or be sued.
The HOA attorney represents the homeowner’s association as an entity, rather than the individual board members or directors.
An HOA attorney is the legal counselor for the HOA. The HOA board members are charged with ethically acting on behalf of the HOA, such as by voting for regulations and rules, and subject to the Business Judgment Rules. The HOA general counsel (another name for an HOA attorney) legally advises the HOA board on the governing laws that may impact the association. An HOA attorney will also assist the HOA board in amending governing documents for the HOA. The HOA attorney is additionally responsible for reviewing the homeowner’s association’s governing documents to make sure that the HOA complies with its own rules and regulations.
General counsel for the HOA may also evaluate decisions that are made or contemplated by the board to ensure that the decision is in the best interest of the HOA as an entity, rather than the board members as individuals. For example, if the board is voting on whether to raise the HOA fees and the compensation for the board members, the board members have an inherent interest in raising the fees and the compensation for the members. The board members can still vote on these matters; however, an HOA attorney can act as a neutral third party to make sure that the proposed terms of the resolution for the increase in the HOA fees and board member compensation is fair and in the best interest of the HOA, not any or all individual board members.
Further, as the Nevada state legislators pass new state laws in Nevada and society changes, it may become necessary for the HOA board to update its rules and regulations. For example, some common regulations for HOA’s include prohibitions against homeowners running businesses out of their home and restrictions on noise. If the legislators pass a new law prohibiting homeowners’ associations or landlords from restricting a homeowner’s ability to run a remote consulting business out of his or her home, for example, an HOA attorney might help the board understand the new law and amend the HOA’s documents accordingly.
Additionally, one of Nevada’s new laws makes it so that from May 1st through September 30th of each year, the State and City laws about the hours during which construction may commence takes precedence over an HOA’s rule about construction hours. If the HOA’s regulations and rules prohibit construction after 3 pm, for instance, but the State or City law says that construction should stop at 8 pm, then the State or City law may apply, not the HOA’s regulation.
Having an HOA attorney review the HOA’s governing documents, rules, and regulations, in part, serves the goal of protecting the best interest of the HOA as an entity by making sure that it remains compliant with new laws. Without an HOA attorney, an HOA might be subjected to a lawsuit by a homeowner because the HOA’s restrictions are contrary to the law. An HOA’s attorney might help limit the HOA’s liability, thus protecting the interests and purpose of the HOA.
The HOA attorney does not represent directors individually; however, the HOA attorney can – and should – advise the HOA board and have conversations with the individual HOA directors about the legal rights and responsibilities of the HOA board and the HOA.
The board of directors for the HOA have obligations to act in the best interests of the HOA by, for example, making sure that the individual members are making business decisions or voting for or against something because it would help the HOA, rather than the board member’s personal interests. As discussed above, an HOA attorney represents the HOA as an entity, but, as part of that representation, may review contemplated resolutions or proposed changes to ensure that the action would not unduly harm the HOA’s interests (such as by excessively increasing the compensation of the board members when the HOA is in financial distress).
Does an HOA Attorney Represent Individual Homeowners?
As discussed earlier, the HOA attorney represents the HOA as an entity; however, the attorney may act as a buffer between the HOA board and an unhappy homeowner. Furthermore, the HOA attorney may attend meetings where homeowners are present and are expressing their concerns about the HOA. Following these meetings, the HOA attorney may recommend that the HOA board take steps or actions based on the homeowner feedback or concerns.
As of 2013, it is the law in Nevada that, in disputes involving a homeowner’s association, the “disputing parties must complete the Alternate Dispute Resolution (ADR) process” before commencing a lawsuit. If the HOA’s governing documents have a process of resolving disputes in-house, that process must be fully followed before participation in ADR. At all times, the HOA attorney will typically represent the HOA, rather than an individual board member or homeowner. HOA boards are encouraged to communicate with an HOA attorney openly and clearly about what the HOA attorney can provide to the HOA and any limitations on the terms of representations.
No, the HOA’s attorney does not represent the community manager or management company. The HOA attorney can, for example, field questions that the community manager or management company has, with the permission and knowledge of the HOA board.
During the COVID-19 pandemic, for example, the HOA attorney may be directed to explain to the community managers the social distancing, masks, and sanitation rules for indoor and outdoor common areas, such as what notices must and can be posted. In some cases, the HOA may be subject to fines or other penalties for not complying with these rules, so the HOA might be responsible for advising the board on these obligations as well.
A homeowner’s association’s board is generally responsible for maintaining and repairing common areas in its community. The board should be aware of its responsibilities and the consequences of failing to meet them.
An HOA’s responsibilities differ for each community. However, most communities require the Association through its Board of Directors to maintain, repair, and replace common areas. The board’s duty to maintain common areas typically includes the upkeep of common pools and parks, or the repair of a community clubhouse, among other things.
The board’s annual budget should include the anticipated costs to maintain common areas. They should also keep a reserve fund for repairs and replacements depending on the useful life of each common element. The HOA typically creates its budget based on the periodic dues paid by homeowners. If unexpected repairs require additional funds, the Board may consider a special assessment, requiring homeowners to pay a one-time fee to cover the cost of repairs.
If the HOA and its board fail to maintain and repair common areas, they face several possible consequences. If the board is failing to meet its obligations, homeowners may pursue remedies such as:
If the board is aware of needed repairs or maintenance, it can head off homeowner complaints by providing a plan of action and timelines for the repairs. If it becomes clear that the community requires extensive repairs, the board members should make a proactive plan to address any problems as quickly as possible. An HOA lawyer can help the board navigate its obligations to the community.
Before installing a security camera in a homeowners’ association community, homeowners and associations should consider federal, state, and local laws, as well as the community’s governing documents. In the last decade, security cameras have become smaller, less expensive, and easier to use increasing their popularity with homeowners and businesses but their installation should not be done without consideration.
Homeowners who live in an HOA community may want to install a security camera to monitor their property. However, homeowners should be aware that their HOA’s governing documents may limit their ability to install cameras. Almost every HOA has a section in its governing documents that require owners to obtain approval before making improvements or changes to the exterior of their property, which may include the installation of a security camera.
Further, any homeowner planning to install a security camera should be aware of their neighbors’ reasonable expectation of privacy. A reasonable expectation of privacy means that homeowners may not position their cameras so that they record the backyards or interiors of their neighbors’ homes. Homeowners should consult with their association to ensure that they adhere to all relevant rules and guidelines before installing a camera.
Associations are usually not required to install security cameras in common areas. However, if the association decides to install security cameras or the homeowners request cameras, an HOA lawyer can help the association review aspects of security camera usage that can protect both the association and the homeowners.
Before installing security cameras, an association should:
The association’s security camera policy should be put in writing and homeowners should be made aware of the policy. The association can share the policy with homeowners by posting a physical notice or posting it on an online community forum. Homeowners need to be aware of the policy so no one is under the impression that the camera feed is constantly monitored. Further, the association should ensure that the footage is stored professionally and that no one can access the footage privately or from their personal computer. A policy regarding storage and access can help protect homeowners’ privacy. Consulting the association’s lawyer will help associations navigate any issues associated with installing security cameras.
HOAs often have security walls around their perimeters, and the Nevada Legislature passed a law in 2009 that requires the HOA to repair these walls when necessary. However, the law raises questions for the HOA when they need to make these repairs. An HOA lawyer can review their covenants to ensure that it is clear who is responsible and that Nevada law is followed.
The Nevada law mandated that the HOA has legal responsibility for any security wall located inside the community that borders on a common area. This is not the same thing as a wall that encloses a gated community. Instead, the wall must be inside the community. These walls are often owned by the individual property owner, and the responsibility for their maintenance can be confusing.
For the HOA, it means that they will need to increase their financial reserves in case they need to make these costly repairs. However, the homeowners are often the owners of these security walls through their deeds. Under Nevada law, it is possible that an HOA does not have to foot the bill for these repairs if the governing document states that the homeowners must pay for it themselves. The HOA also has the ability to petition the county to take over the responsibility for these walls.
There are numerous legal issues involved with the potential fixes. First, an HOA may need to enter onto private property to make these repairs and may need specific permission from the owner. The HOA must maintain the walls when they do not own them or the property on which they are located.
Second, the HOA may need to increase its financial reserves and its operating budget. If there are extensive necessary repairs, it could mean that the HOA must pass the expense along to all homeowners in the form of a dues increase or special assessment. This will be very controversial because the walls are not commonly owned.
Finally, the HOA must repair the damage to the walls, no matter who caused it. This could include vandals. There are also instances in which the homeowner themselves could have done the damage, and the HOA must pay for the repairs because of this law.
In the latest legislative session, Nevada lawmakers passed several laws that impact Homeowner Associations. The laws range from what cars can be towed to clarifications on the imposition of fines for continuing violations. The full implications of these laws for HOAs can be difficult to determine at first glance.
Although the legislature passed several new laws impacting HOAs, the most urgent ones relate to:
State and City construction hours now supersede HOA restrictions. Even if the HOA would like to limit construction hours in their communities, contractors may work longer hours if allowed by State and City ordinances. However, this law only applies from May 1st through September 30th each year.
HOAs of apartment buildings and townhome communities with common parking areas may no longer tow vehicles based on an expired registration. However, associations will no longer be held liable for excess unregistered vehicles in their community.
As of January 1, 2022, laws regulating fees for account set-up will change. Associations may charge a reasonable fee, up to $350, for the opening or closing of any file for a unit. The fee must be based on the actual costs incurred by the association. The association may automatically increase the fee each year based on the Consumer Price Index. However, the increase may not exceed 3%. If an association fails to respond to a complaint about fees within 30 days, it may be fined $250.
According to Nevada legislation, as of January 1, 2022, some associations, depending on size, will need to establish electronic access to paperwork for clients. Further, as of January 1, 2023, some associations will need to establish an electronic payment system. Although many associations may already have such digital systems in place, those that do not may incur a significant cost establishing such a system.
New legislation has established that no one involved in the foreclosure of a property may purchase the foreclosed property. Based on this law, HOAs are prohibited from purchasing homes in foreclosure in their communities.
Continuing violations are no longer capped. The fines charged by the association for a violation may accrue for as long as the violation continues. However, the association must allow the homeowner a reasonable time to cure the violation after receiving written notice before imposing fines.
Every HOA should be aware of how its governing documents treat transfers of ownership due to inheritance. The new owner has an obligation to follow HOA laws just the same as the previous one did. The requirement to follow HOA rules passes along with the property. HOA membership is not optional when one inherits a home within a common-interest community.
HOA owners are required to pay the monthly or quarterly fees when they are due. If the previous owner did not pay HOA dues before they passed, the new owner will be liable for the shortfall because the bill goes along with the property instead of the person. Those who do not pay HOA fees could even face foreclosure. HOA fees apply to ownership of the property no matter whether it is occupied.
Depending on the governing documents, the HOA could try to charge a fee for the transfer of ownership because an inheritance does mean a new owner. This may be allowed. Anything that the HOA does must be supported by its own governing documents and state law. Accordingly, the HOA should take some time to review its rules before it assesses any fees.
The new owner may want to renovate or make other changes to the property to either move in themselves or ready it for sale. The HOA will have the right to decide whether certain changes to the property are allowed. The rules could be very detailed, and they must be followed. HOAs have the power to fine people who do not follow the rules, and they could file lawsuits for violating covenants. That is not to say that everyone who inherits property will have issues with the HOA. For an owner, the best way to deal with an HOA is to communicate with them to know the rules and how the HOA may react to certain changes.
At the same time, the HOA’s power is not unlimited. They could face legal issues if they overstep their rules. Many associations contact an HOA lawyer if they are having a dispute with an owner to ensure that whatever they are doing is allowed by the governing documents. In the end, the best situation is avoiding any legal issues before they could even arise.
Before embarking on the process of amending covenants, conditions, and restrictions (CC&Rs) and Rules/Regulations that govern homeowners’ associations (HOAs), HOA boards must have clear reasons for amending the governing documents. They should also keep in mind that amending HOA governing documents can be time-consuming and expensive. Once they have performed their due diligence and carefully deliberated on the matter, they can then start the amendment process.
HOA CC&Rs and rules and regulations lose their relevance with time. Some changes in the community and society at large might necessitate the amendment of HOA governing documents. New state laws may also force associations’ boards to amend their covenant and bylaws to stay compliant.
Massive demand from homeowners might also push HOA boards to change the bylaws and CC&Rs. If most members want to change the minimum number of people required for a meeting to happen, for instance, then the board should carefully consider that demand. The decision to amend the governing documents should, however, be based on good judgment and logical thinking.
Although there is no standard timeline for amending HOA CC&Rs and changing HOA Rules and regulations, it’s best practice to inspect the governing documents after every three to five years. An HOA lawyer can help the board identify outdated provisions or stipulations that no longer adhere to the law. The lawyer can also guide the HOA on the best ways to ensure CC&Rs are equally and non-prejudicially enforced within the community.
The amendment process starts with a proposal describing the modifications to the governing documents.
The board holds a board meeting to review the proposed amendment. Homeowners are allowed to offer their views regarding the proposed amendment.
After the review, the whole membership votes to either pass or reject the proposed amendment. The voting period may be prolonged in case an association experiences low voter turnout. The current governing documents dictate what percentage of members need to vote to approve an amendment.
Vote counting may happen during an open meeting so that homeowners can keep an eye on the vote-counting process.
Depending on the governing documents, HOAs generally require votes from either a simple majority or two-thirds of the membership to approve the amendment.
Upon approval, the county recorder’s office must be notified of the changes for recording purposes. Bylaws don’t require recording. Members must, however, be notified of changes before bylaws become effective.
Homeowners should always confirm HOA rules prior to commencing construction or alteration on their home. Whether installing a patio or building an addition, most HOAs have strict guidelines about what can be built, where it can be built, and how it must look. Most HOAs also require HOA approval prior to building and/or altering landscape or home. Homeowners who fail to follow the established approval process may be required to remove the structure at their own expense.
The first thing every homeowner should do is review HOA governing documents. Most will require submission of the plans to the HOA for the board to review and approve. This process varies from HOA to HOA, so it is wise to confirm the process and factor this into the building schedule.
Once the plans are approved and the required permits are secured, homeowners must work closely with builders and contractors to ensure that the work is performed in accordance with HOA rules. This includes scheduling work during approved periods and ensuring that waste and construction debris are properly removed from the property. It also requires confirming where construction trailers, portable toilets, etc. can be positioned during the construction process. During construction, the homeowner is responsible for ensuring that the contractor and their teams remain compliant with HOA policies.
Whether it is an easement within a subdivision or a common area in a condo community, these create special circumstances that every homeowner should know before initiating improvements. Most interior work is not prohibited as long as they do not change the structure or outward appearance of the community. However, any structural changes such as knocking down walls, rerouting electrical, plumbing, or heating systems are likely prohibited without prior approval.
In communities where homeowners can modify common areas, such as by placing landscaping within common areas, it is imperative to comply with the required approval procedures and selection of landscaping materials. HOA’s are required to enforce CC&R’s equally and homeowners who do not comply can find themselves in a situation where the condo manager removes the improvements, restores the landscaping within a common area, and then sends the homeowner the bill for the work.
HOA’s can issue fines and significant penalties against homeowners who fail to comply. If a structure is built that does not comply with HOA regulations and guidelines, these penalties can result in a lien being placed upon the property for any prohibited improvements similar to liens placed for unpaid assessments.
Nevada HOAs are allowed to regulate many things in their neighborhoods as long as they comply with their own governing documents as well as state and federal laws. People who plan to purchase homes located in neighborhoods controlled by HOAs should make sure that they know the rules before buying. HOA rules can help to preserve the value of homes in their neighborhoods, but they can also affect the quality of life and finances of the people who live within them. Here are 10 common examples of HOA regulations in Nevada.
An association shall not and the governing documents of that association must not prohibit a unit’s owner from keeping at least one pet within such physical portion of the common-interest community as that owner has a right to occupy and use exclusively but an HOA may be able to restrict the number of pets and/or enforce rules about picking up after pets.
Some homeowners might be dismayed when they learn that they cannot paint their homes in the desired color or add siding or shingles that fail to comply with the HOA’s regulations. Homeowners should make sure that they understand these restrictions before buying homes in the neighborhood.
HOAs often regulate the types of fences that can be installed by homeowners. This might include restrictions on fence heights and materials used in their construction.
Parents whose homes are regulated by HOAs need to check before erecting play structures. Some HOAs restrict swing sets, slides, jungle gyms, and basketball hoops.
Many HOAs have rules regarding homeowners’ landscaping choices. These might include things like the types of shrubbery, hedges, and flowers that are allowed to be planted.
HOAs place restrictions on the mailboxes that their residents install. This normally includes requirements that all of the mailboxes in the neighborhood are uniform in appearance and style.
Some HOAs restrict individual homeowners from running home-based businesses. This can be a problem when an entrepreneur decides to start a new business and wants to run it from home.
Noise restrictions are common in HOAs. These often include prohibitions on loud music, parties, and engine revving, and limits on the hours during which people can make noise.
While sheds are handy for storing garden tools, some HOAs restrict their construction and appearance.
Most HOAs have maintenance standards. Homeowners must maintain their properties in a good condition to preserve the value of the homes in the area.