Who Regulates HOAs in Nevada?

HOA stands for homeowners’ association. It is a private organization that consists of members of a community. HOAs make and enforce rules for a group of properties and residents that choose to be governed by them. Their purpose is to make and enforce these rules to protect property values in an area. Because of the powers that HOAs have over residents, there must be a way to regulate them, to ensure fair governance. In Nevada, federal and state laws provide specific regulations regarding HOAs, but ultimately it is the Ombudsman for Common-Interest Communities of the Nevada Real Estate Department who regulates HOAs in Nevada.

The last several decades have seen a proliferation of the number of HOAs in the United States. In 1970, 2.1 million residents lived in housing units that formed part of 10,000 communities governed by some form of community associations. By 2020, 74.1 million people were living in 355,000 community associations. In Nevada, there were approximately 3,460 associations governing 518,000 residents. If you are living in a community governed by an HOA, it is important that you understand your rights and responsibilities regarding your property, so that you can avoid problems, and address any issues appropriately if they do arise.

What Is an HOA?

A homeowners’ association is an entity that governs and enforces rules and restrictive covenants for residents and properties within a common-interest community, subdivision, or condominium building. People who purchase homes within the jurisdiction of a homeowners’ association are usually automatically members of the HOA. Members are required to pay dues to the association, and they must comply with HOA rules. Members who are non-compliant can be fined by the HOA. 

The purpose of a homeowners’ association is to allow residents to pool their resources, so that they can enjoy amenities within the community that they otherwise could not do, such as maintaining common areas of the community. HOAs also assist in maintaining the property value in the community by enforcing rules aimed at ensuring residents maintain their properties, buildings, and lawns, within the standard set by the homeowners’ association.

Some key features of a homeowners’ association are:

• HOAs make and enforce rules in a community, subdivision, or condominium building.
• Members of the HOA are residents of that community, subdivision, or condominium building.
• Often, membership is mandatory for people who purchase property within that community.
• HOAs are run by a board of directors made up of some residents from the community.
• HOAs typically require monthly or annual fees from residents to pay for the maintenance of common areas and upkeep of facilities.
• Homeowners’ associations can impose fines on homeowners who do not comply with the rules and regulations set by them.

HOAs are created and governed through a set of governing documents. There are typically four different types of documents. These are the Articles of Incorporation, Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, and Rules and Regulations.

The Articles of Incorporation is generally a short document that sets the name of the HOA, its location, and its purpose.

The CC&Rs set out the rights and obligations of homeowners, as well as the association itself. These can vary significantly for each HOA. CC&Rs describe the maintenance responsibilities of homeowners, as well as the maintenance responsibilities of the HOA for common areas within the community. It also contains fees that homeowners are responsible to pay for the operating cost of the HOA and how these are to be collected. CC&Rs also set out the HOA’s enforcement powers, procedures for dispute resolution, and restrictions on how owners can use their properties. These restrictions can apply to pets, altering properties, and the use of common areas.

Bylaws are what control the procedures for management and decision-making of the HOA. It sets out the mechanics of these processes, such as how officer and director positions are filled, how voting and notification are undertaken for decisions made by owners and board members, and how record keeping is to be done.

Rules and regulations are internal rules that are passed using the process outlined in the CC&Rs. They can be changed regularly using procedures outlined in the bylaws. They are typically aimed at things such as waste disposal, use of signage, and parking and recreational facilities. CC&Rs take precedence over rules and regulations if there is a clash between them.

What Powers Do Nevada HOAs Have?

HOAs are permitted to regulate many things in a community, provided they comply with state laws and their own governing documents. An HOA may govern many choices a homeowner can make. Things HOAs may regulate include the number of pets, exterior paint color, siding, types of fences, types of children’s play structures, and landscaping choices such as types of shrubbery hedges and flowers. It also may govern running at-home businesses, regulations on noise, construction, and appearance of sheds, and maintenance standards that are enforced on homeowners.

HOAs have methods of enforcing rules, from letters of warning to dispensing fines. In Nevada, if a homeowner violates regulations, the HOA can impose a fine of up to $100 for each infraction, up to a total of $1,000 in fines. It may impose higher fines for violations that pose a safety hazard or cause considerable damage.

HOAs also collect fees and assessments from members of the community. Fees due to the HOA are an amount paid by each member to cover current operations. Assessments are usually an amount imposed by the board to cover instances where monthly operating expenses are higher than expected, some homeowners are not paying fees to HOAs, or there has been an unexpected natural disaster causing an unforeseen cost.

If a homeowner falls behind in paying fees and assessments, the HOA can:

• Charge the delinquent homeowner for the overdue fees and assessment owed, penalties, fines, late charges, and interest.
• Send delinquency notices for not paying fees and assessments.
• Get a lien on the member’s home. A lien is a legal claim against a property. It is used as collateral for debts and attaches to real property such as a house. If there is a lien on a member’s property, the property owner must clear it before the sale or refinance of the property is permitted.
• Foreclose on the home but only under certain circumstances. Foreclosure is a legal process allowing a lender to sell a home or property to satisfy the debt of a borrower who has stopped paying. If a member is unable to pay HOA fees and assessments, and the HOA has a lien on the home, it may be able to foreclose on the house to recover the fees and assessments.

Who Regulates HOAs in Nevada?

Federal and state laws regulate HOAs in Nevada, but it is the Nevada Real Estate Department that is ultimately responsible for maintaining the proper functioning of HOAs and their communities.

Many of the rights that people have over their properties are surrendered to HOAs. This can lead to conflict between boards and homeowners. Experienced attorneys who act as general counsel to HOAs can often provide education to both sides, minimizing conflict and acting as a buffer to help homeowner associations avoid litigation.

Nevada law requires that where there is a conflict, members of a community governed by an HOA must go to the office of the Ombudsman of the Nevada Real Estate Department to resolve the conflict. 

There are three ways for the Ombudsman to handle an issue.

The first deals with issues relating to the interpretation, application, or enforcement of governing documents such as CC&Rs. In such a case, the matter will be referred for alternative dispute resolution (ADR). In ADR, a referee is assigned, who makes a decision based on the evidence provided. This decision is non-binding until confirmed in court within one year.

Second is where there is an alleged violation of the Nevada Revised Statutes code. In this situation, the matter will go to the compliance department for an investigation to determine if the law has been broken.

Third is where the Office of the Ombudsman speaks to both parties and feels that they can resolve the concern through mediation. Mediators will meet with the parties and attempt to resolve an acceptable conclusion to the conflict. If an acceptable conclusion is not reached, they can file to go to an investigation.

If these processes do not resolve the problem, then parties can resolve the dispute in court.

In Nevada, 350–400 cases go to the Office of the Ombudsman every year. Approximately 40% of these are resolved and 15% go to litigation.