Opponents of HOA reform often claim:
“Buyers consent when they purchase. If they don’t like the rules, they can buy somewhere else. The state shouldn’t interfere in private agreements.”
On paper, this sounds like classic free-market logic. In reality, it rests on a flawed assumption — that buying a home in a common interest community (CIC), commonly referred to as Homeowners Association (HOA) or Condominium Association (COA), is an arms-length, informed transaction where government has no role beyond enforcing the bargain.
The Context the Free-Market Argument Ignores
In most areas of contract law, when a transaction involves adhesion contracts — standard-form agreements offered on a “take it or leave it” basis — courts and legislatures recognize the risk of overreach by the stronger party.
That’s why consumer finance, insurance, landlord-tenant, and even cellphone contracts are subject to:
Mandatory disclosures
Prohibited clauses
Cooling-off or rescission rights
Substantive fairness review
These protections exist because adhesion contracts tilt the playing field — the weaker party doesn’t draft the terms, can’t negotiate them, and often doesn’t even read them before committing.
The Myth of Voluntary CIC Consent
The “hands-off” approach assumes:
Buyers and sellers are independent, equally informed actors.
Buyers can freely choose among multiple options, including non-CIC housing.
The consequences of agreeing are clear and manageable.
In reality:
In many Nevada and high-growth markets, CIC housing is the only realistic new-home option — making “choice” illusory.
Buyers often don’t receive homeowners association rules and CC&Rs until late in the sale process, leaving no meaningful time to digest them.
Post-purchase, CIC boards or developer-controlled regimes can adopt new restrictions without direct owner consent.
Amendment barriers make internal reform nearly impossible.
“Walk and Talk” Like Adhesion Contracts — But Without the Protections
CIC home buying involves:
Standard-form CC&Rs drafted entirely by the developer, presented on a take-it-or-leave-it basis.
The largest single investment most households ever make.
Long-term, quasi-governmental obligations binding all future owners.
In almost every other adhesion-contract context — insurance, consumer credit, residential leasing — the state imposes extensive regulatory involvement, including:
Robust, early, plain-language disclosure requirements.
Cooling-off periods for review and rescission.
Substantive fairness standards to remove oppressive terms.
Ongoing enforcement oversight by dedicated agencies.
Yet homeowners association laws in most all states allow CIC purchases to escape such oversight.
Why the Free-Market Defense Collapses
Free-market theory itself recognizes that markets require:
Transparency
Real alternatives
Some parity in bargaining power
And as Professor Paula Franzese emphasizes, the very predominance of CICs is not the natural or inevitable by-product of unfettered market forces. Instead, it results from a confluence of non-market factors:
Municipal CIC privatization policy that shifts services from public agencies to HOAs.
Lack of consumer understanding of the complexities of the servitudes package.
Absence of meaningful, affordable non-CIC alternatives in many markets.
Disparities in bargaining power between housing producers and consumers.
Divergence of interests between CIC developers and homebuyers.
Developer lock-in of governance systems and rule sets long after turnover.
These are powerful impediments to true consumer choice and prevent market forces from reflecting actual housing preferences.
Why Nevada Can’t Afford the Hands-Off Approach
With Nevada’s property-tax cap limiting municipal revenue growth, local governments increasingly rely on HOAs to provide services once handled publicly. This makes CIC governance a structural component of local government, not just a private choice.
Without state-level reform:
Buyers remain locked into developer-friendly governance they cannot meaningfully change.
HOAs continue to exercise public-type powers without public-type safeguards.
Municipal cost-shifting continues to produce double taxation for HOA residents.
Policy Steps to Break the Myth of Consent
Early, plain-language disclosure of CC&Rs and HOA powers before contract signing.
Mandatory cooling-off periods after full document delivery.
Limits on unilateral rule-making by boards post-purchase.
Limits on municipal policies that make CIC living the only realistic option.
