Abstract- Homeowners’ associations (HOAs) have increasingly assumed quasi-governmental functions, yet the legal framework governing them remains anchored in private law doctrines that obscure core problems of consent, fairness, and accountability. Nevada courts, like others across the U.S., treat covenants, conditions, and restrictions (CC&Rs) as binding contractual obligations—even though homeowners lack real bargaining power and did not negotiate the terms. Courts justify enforcement through legal fictions such as constructive notice, the treatment of CC&Rs as real property servitudes, and an asserted promotion of collective welfare. However, these rationales mask the developer-driven origins of CC&Rs and the structural coercion faced by homeowners. This post critiques the legal justifications—emphasizing how judicial efficiency, not justice, often prevails—and explores reform frameworks that recognize HOAs as de facto local governments. Proposed reforms include expanding administrative oversight, applying public policy and unconscionability doctrines more aggressively, and mandating transparency and plain-language disclosures. As HOAs govern a growing portion of American housing, the law must evolve to reflect the power imbalance embedded in these so-called “contracts” and ensure democratic protections for affected homeowners.
Introduction
Nevada courts have recognized HOAs are not purely private actors, but function as de facto local governments[i]—and should be constrained accordingly. The U.S. legal system treats CC&Rs as binding contracts, even though homeowners have no real bargaining power or ability to negotiate them. The justification for this is rooted more in property law theory and claims of "public policy" than in traditional contract doctrine. Below is a discussion of how courts justify this, and the criticism it attracts.
The Core Problem: Lack of Real Consent
Homeowners “agree” to CC&Rs by purchasing property in a development where they already exist. But:
They did not draft or negotiate the terms.
The terms are usually created solely by the developer, often with legal and financial incentives that favor the declarant and industry stakeholders.
Most buyers are unaware of the full legal implications of CC&Rs at the time of purchase.
Critique: Despite this, courts enforce CC&Rs as if they were freely negotiated, binding contracts[ii]. Why?
Justifications Used by Courts and Legislatures
Constructive Notice (Implied Consent)
Legal fiction: By purchasing property with recorded CC&Rs, the buyer is deemed to have constructively consented to the terms.[iii]
The CC&Rs are typically recorded in county land records, making them “public.”
Courts treat this as sufficient notice and basis for enforceability — even if the buyer never saw or understood the terms. (Nevada requires owners be given all governing documents before purchase. Read more here)
This assumes an unrealistic level of sophistication by consumers and treats notice as consent — a deeply flawed premise in any meaningful theory of contract.
"Whether or not referenced"
Below is the Constructive Notice and Acceptance provision in my CC&Rs. The wording is common to most CC&Rs. Note the underlined words:
Every Person who owns, occupies or acquires any right, title, estate or interest in or to any Unit or other portion of the Properties does hereby consent and agree, and shall be conclusively deemed to have consented and agreed, to every limitation, restriction, easement, reservation, condition and covenant contained herein, whether or not any reference to these restrictions is contained in the instrument by which such person acquired an interest in the Properties, or any portion thereof.
This clause appears (my not being a lawyer) to say that any person who owns, lives in, or has any legal interest in a property governed by the CC&Rs is automatically bound by all the rules and restrictions in the CC&Rs—even if:
They never read them,
They weren’t told about them, or
The document transferring ownership (e.g., the deed) doesn’t mention the CC&Rs.
By purchasing or acquiring any interest in the property, the person is “conclusively deemed” (a legal term meaning “assumed without the possibility of rebuttal”) to have agreed to the entire CC&R document.
The Theory- Servitudes as Property Interests, Not Contracts
CC&Rs are enforced as real covenants or equitable servitudes, which “run with the land.”[iv]
This provision reflects the property servitude model rather than traditional contract law.
In contract law, mutual assent (both parties knowingly agreeing) is key.
Courts often bypass traditional contract defenses (like lack of mutual assent or unconscionability) because these are property obligations, not just personal agreements.
Under this view, the burden and benefit pass automatically to all future owners.
Critique: This obscures the power imbalance. Just because a rule "runs with the land" doesn’t mean it's fair, especially when it regulates daily life and imposes financial penalties.
Promotion of Collective Welfare
Courts and legislatures argue that CC&Rs promote community stability, aesthetic uniformity, and shared services.
Enforcing CC&Rs is seen as protecting expectations of other owners who rely on uniform enforcement.
This is similar to zoning law rationales — collective interests justify individual burdens.
Critique: The collective interest rationale continues to underlie much of land use regulation—both public (zoning) and private (CC&Rs). However, the collective interest narrative often masks elite or developer interests, especially in HOAs where the declarant drafts rules before any “collective” exists. “The supposed collective interest often reflects only the interests of those with the power to shape the rules.”[v] The rationale assumes HOAs function democratically and transparently, which is often not the case. It also ignores how developer-drafted CC&Rs are written to favor commercial goals, not homeowners' long-term interests. Lastly, while zoning is publicly accountable through municipal procedures, CC&Rs are privately created, resistant to change, often requiring supermajority votes to amend, and not subject to judicial review unless grossly unreasonable.[vi]
Judicial Efficiency
Courts prefer bright-line rules that are easy to administer.
Enforcing recorded CC&Rs as contracts avoids complex factual inquiries about what the buyer actually knew or agreed to.
This approach reduces litigation over enforceability and avoids opening the floodgates to challenges.
Critique: Judicial efficiency is achieved at the expense of individual fairness and informed consent, particularly for vulnerable or first-time buyers.[vii]
Why These Justifications Are Increasingly Contested
Power Imbalance
Declarants write CC&Rs unilaterally, often including:
Developer control rights
Non-negotiable fee obligations
Broad enforcement powers
Attorney fee-shifting clauses
Buyers have no power to modify these terms and are given “take-it-or-leave-it” conditions, often hidden in dense boilerplate.
Lack of Transparency
Buyers may receive incomplete or misleading disclosures.
Even if CC&Rs are recorded, they may be hundreds of pages long and written in legalese that most people cannot understand.
Nevada law (like other UCIOA-based jurisdictions) follows the principle that statutes governing common-interest communities can override or supplement the terms of the CC&Rs (see NRS 116.1206). Even if the new law is not explicitly incorporated or reflected in the governing documents, it is still enforceable. Owners are presumed to know the law, and the association has a duty to comply with it.
Associations can enforce statutory provisions even if they have never amended the CC&Rs to include the change—undermining the appearance of mutual agreement or contractual certainty.
“Reforms to CIC statutes often take effect years after communities are established, creating tension between new legal mandates and ‘frozen’ governing documents. Owners are expected to comply, even though they may never be notified.” [viii]
Inconsistent with Modern Contract Principles
Modern contract law values mutual assent, freedom to bargain, and remedies for unfairness.[ix]
Enforcing CC&Rs against homeowners under the guise of contract undermines those principles.
Recorded CC&Rs are not products of negotiation, and suggests that the servitude doctrine may sidestep the fairness protections available under contract law.[x]
“Courts treat CC&Rs as enforceable because they are said to be private contracts—but that interpretation fails to recognize the structural coercion and lack of actual bargaining. The notion of consent is fictional and primarily serves the goal of judicial efficiency and predictability, not justice.”[xi]
Alternative Theories and Reforms
Reframing CC&Rs as “Adhesion Contracts”
Argue courts should apply heightened scrutiny to CC&Rs as they are:
Unilaterally drafted.
Non-negotiable.
Often contain harsh penalty provisions.
Push to apply unconscionability and reasonable expectations doctrines more aggressively (as courts do with consumer contracts).
Adopt a Regulatory Approach (Not Just Contract Law)
Recognize that HOAs function as quasi-governments, and require:
Administrative oversight limiting, or at a minimum identifying to potential buyers’, governing document terms, bylaws and association rules that raise concerns of reasonableness or a departure from norms.
Administrative due process protections for disputes over governing documents. Administrative bodies (like Nevada’s CIC Commission) to review and certify CC&Rs and amendments for fairness and legality.
If adopted, this would subject HOAs to constitutional scrutiny (e.g., due process, equal protection), weakening enforcement of CC&Rs that conflict with public rights.
Prohibit developer (declarant) rights or special declarant rights that limit owner ability to change CC&Rs and bylaws at the termination of declarant control.
Homeowner Bill of Rights
Codify rights to:
Due process before fines or enforcement.
Equal application of rules.
Judicial challenge of illegal or overbroad provisions.
Limit Declarant and Industry Drafting Power
Standardized CC&R Templates [xii]
Require or incentivize use of state-approved templates to ensure uniformity, fairness, and public interest alignment.
Would reduce developer and HOA attorney power to insert owner-hostile provisions.
Enact heightened Standards of Drafting (Good Faith & Fair Dealing)
Currently, CC&Rs are treated under contract and servitude law but are not drafted under heightened duties like those in trust or fiduciary relationships.
Mandatory Disclosure Reforms [xiii]
Require clear, conspicuous disclosure of CC&Rs before purchase (not just at closing), including:
Summaries in plain language.
Highlighting key obligations (e.g., fines, foreclosure risk).
Tie enforceability of certain provisions to affirmative acknowledgment (opt-in).
Mandate Plain Language [xiv]
Require readable disclosures, similar to consumer credit or landlord-tenant laws.
Abolition or Substantial Curtailment (Radical Reform) [xv]
A minority but growing group of legal scholars and reform advocates argue for:
Abolishing HOAs as a legal model in residential communities.
Shifting infrastructure and governance back to public control (e.g., through local government absorption).
Proposals in this vein emphasize the anti-democratic nature of CC&Rs and their privatization of public functions
Conclusion
The justification for enforcing CC&Rs against homeowners who had no opportunity to negotiate them is rooted in legal fictions — constructive notice, servitude theory, and collective governance rationales — that mask the absence of true consent. These justifications persist because they promote judicial efficiency, serve real estate development interests, and governmental cost-shifting, but they come at the cost of fairness, transparency, and democratic accountability. As HOAs govern a growing share of American housing, the legal framework must evolve to reflect the quasi-public nature of these communities and the contractual imbalance at their core.
Mike Kosor
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i Kosor V Olympia
ii Nahrstedt v. Lakeside Vill. Condo Ass’n, 8 Cal. 4th 361, 878 P.2d 1275 (1994).
iii This concept of constructive notice is foundational to HOA law. In Nahrstedt v. Lakeside Village Condo Association, the California Supreme Court stated that owners "purchase their units knowing that restrictions may be imposed," and are thus deemed to have accepted them. See Susan F. French, 53 Wash. & Lee L. Rev. 925 (1996); Saxer, 32 Ga. L. Rev. 1 (1997); Restatement (Third) of Property: Servitudes § 3.1 cmt. b; and NCCUSL UCIOA Prefatory Note (2008).
iv The Restatement (Third) of Property: Servitudes articulates this principle, noting that a servitude is created when property is subjected to a use restriction for the benefit of others in the community.
v Franzese, Paula A., Privatization and Its Discontents, 37 Urban Lawyer 335, 348 (2005):
vi Restatement (Third) of Property: Servitudes § 3.1 cmt. h (2000): Acknowledges the potential for abuse and calls for a reasonableness standard, but notes courts rarely apply this rigorously.
vii Susan French, The Constitution of a Private Residential Government, 6 U. Chi. L. Sch. Roundtable 237, 250–51 (1999):
viii Nevada Law Journal, Vol. 12, “Statutory Overlays in Common Interest Communities”
x Mutual assent-Restatement § 17; May v. Anderson (Nev.); Carlill case, freedom to bargain- UCC § 2-204; Restatement § 18; Farnsworth; Nevada Power case, unfairness remedy- Restatement § 208; UCC § 2-302; Walker-Thomas; Nevada unconscionability
xi Restatement (Third) of Property: Servitudes § 3.1, Comment h (2000): “Although enforcement of servitudes based on notice rather than actual consent is justified to preserve the stability of land title records, this practice raises significant concerns about fairness and the legitimacy of rulemaking without democratic input.”
xii Evan McKenzie, Privatopia: Homeowner Associations and the Rise of Residential Private Government (Yale Univ. Press 1994), esp. Ch. 4.
[xiii] Susan French, “Servitudes Reform and the Restatement,” Real Prop. Prob. & Tr. J. 31:301 (1996).
[xiv] Hyatt, Community Association Law (2007), recommends standardized drafting to promote fairness and clarity.
[xv] Uniform Law Commission, UCIOA § 4-109 (Disclosure Statement); Paula Franzese, “Privatization and Its Discontents,” Urban Lawyer 37(3):335 (2005) – advocating for disclosure reform in CICs. Susan F. French, The Enforcement of Covenants in Common Interest Communities, 31 Real Prop. Prob. & Tr. J. 301 (1996), Wayne S. Hyatt, Community Association Law (Carolina Academic Press, 2007), pp. 79–83
