Abstract
Nearly half of Nevadans live in homeowners associations (HOAs), where disputes between owners and boards too often escalate into costly litigation. In our earlier blog — Nevada Knows Fee-Shifting Is Dangerous — But Uses It In HOAs — we explained how attorney fee provisions in CC&Rs, once defended as tools for fairness, have instead been weaponized to silence owners. This in not the norm. The Nevada Supreme Court has been clear that the baseline rule is the opposite.
Most people don’t realize that fee-shifting is supposed to be the rare exception, not the rule. Under what lawyers call the “American Rule,” each side pays its own lawyer, win or lose. Courts across the country have said there is no inherent right to force your opponent to cover your attorney’s bill. As the Nevada Supreme Court put it:
“It has been a consistent rule throughout the United States that a litigant has no inherent right to have his attorney’s fees paid by his opponent. Such an item is not recoverable in the ordinary case as damages, nor as costs, and hence is not allowable in the absence of some provision for its allowance either in a statute or rule of court, or some contractual provision or stipulation.”
The few exceptions Congress or state legislatures have created are almost always one-way — designed to help weaker parties like consumers, employees, or civil-rights plaintiffs enforce their rights. Nevada’s HOA system flips that logic on its head: homeowners are not only stripped of the American Rule’s protection, but exposed to catastrophic two-way fee awards just for raising disputes with their association.
Fee clauses --and the "head stand" by lawmakers-- is part of the story, but not the whole. An even deeper structural problem exists: Nevada’s dispute resolution framework is broken. The system that was supposed to give owners a fair, affordable path to resolve conflicts has instead become another channel for risk and leverage. It in now little more than a "speed bump". Rather than insulating homeowners from litigation’s costs, it funnels them toward exactly the outcomes that prevailing-party fee clauses were designed to threaten.
The Nevada Supreme Court’s recent interpretation of NRS 38.310 makes alternate dispute resolution (ADR), once understood as “mandatory,” waivable. Combined with two-way prevailing-party clauses and statutory private rights of action, the result is an unbalanced system where deep-pocketed associations dominate and owners are left at risk. See two blogs on the Courts ruling Nevada Supreme Court Ignores the Law on HOA Disputes—Become Policy Makers In Robes and Dispute resolution (ADR) reform must be a Legislative priority.
This blog addresses proposals to close the waivable loophole, keep all CC&R/contract claims out of district court, and end private rights of action to enforce Chapter 116 violations. The framework is designed to be owner-centric: affordable, timely, and fair.
A Short History of Nevada HOA Dispute Resolution
In 1991, Nevada adopted the Uniform Common-Interest Ownership Act (UCIOA), codified in Chapter 116 of the Nevada Revised Statutes (NRS). At the outset, all disputes — contract and statutory — went directly to civil court.
In 1997, recognizing owner frustrations with the civil system as the only avenue for relief, Nevada lawmakers experimented with a new approach.[1] The Legislature created the Office of the Ombudsman, initially for education and assistance. By 2003, lawmakers expanded its authority to investigate disputes and funded it through a per-unit assessment on associations. That same year, Senate Bill 100 established the Commission for Common-Interest Communities and Condominium Hotels (CICCH Commission), intended to provide “an expeditious and inexpensive forum for resolving disputes.” The Ombudsman would investigate alleged violations of Chapter 116, while the Commission could adjudicate, impose fines, and order corrective action.
Nevada was unusual in explicitly routing statutory wrongs to a regulator for investigation, and if supported, adjudication before a dedicated administrative body. This created what is better understood as a three track system. First, statutory violations could be investigated by NRED and adjudicated by the Commission. Second, those same statutory disputes could also be pursued directly in civil court through a private right of action (PRA). Third, purely contractual disputes over the CC&Rs — interpretation and enforcement of covenants, bylaws, and rules — remained strictly within the courts. This structure blurred the lines between statutory oversight and contract enforcement, setting the stage for confusion and manipulation.
Also in 2003, lawmakers amended NRS 38.310 to require all civil actions involving CC&Rs or NRS 116 to first be submitted to mediation or arbitration — alternative dispute resolution (ADR).[2] Courts treated ADR as jurisdictional: no mediation, no lawsuit. But in Kosor v. Southern Highlands Community Association (2025), the Nevada Supreme Court weakened this safeguard, holding that ADR under NRS 38.310 is not jurisdictional but merely a waivable claim-processing rule. This ruling undermined ADR’s role, allowing sophisticated parties — most often HOAs with dedicated counsel — to bypass ADR entirely if no timely objection is raised.
Why Reform Is Needed: Board Litigation Authority
The executive board of an HOA may commence a civil action (See NRS 116.4117). In theory, Nevada law requires written notice to owners 21 days in advance, a meeting, and approval by at least a majority of all unit owners. This is an intentionally high hurdle — designed to check the board’s power and ensure litigation, with all its costs and risks, has genuine owner benefit and backing.
But lawmakers carved out broad exceptions. Actions to enforce assessments, enforce governing documents, enforce vendor contracts, bring counterclaims, or act in the name of “health, safety, and welfare” are all exempt. In practice, this means boards can initiate most lawsuits without consulting the people who must pay for them. No notice, no meeting, no vote.
The counterclaim exception is especially dangerous. If an owner sues the association — even for declaratory relief — the board can retaliate with a counterclaim, all without owner approval. A protection meant to guard homeowners thus becomes a weapon, discouraging legitimate claims under the threat of a crushing, dues-funded counterattack.
The “health, safety, and welfare” exemption is equally troubling. Its vague language gives boards and their counsel enormous discretion to reframe disputes within its scope, making it a catch-all tool for litigation.
These exemptions allow abuse: shielding board members from accountability, retaliating against owners, and entrenching developer interests. The damage is not only collective (higher dues, depleted reserves, rising insurance costs) but also individual. An owner can be forced to spend tens or hundreds of thousands defending themselves against their own HOA.[3] Even if they prevail, the toll is ruinous. If the board wins a fee award or dismissal, prevailing-party clauses can convert a homeowner’s defense into financial catastrophe. Faced with the risk of losing their home or savings, most owners will never challenge misconduct, no matter how blatant.
Lastly, Nevada courts have not clearly resolved whether “other appropriate relief” in NRS 116.4117(1) permits a stand-alone cause of action absent damages. The ambiguity has fueled costly litigation over governance issues that cause no measurable harm but expose owners to prevailing-party fee liability. [4] Even if addressed, homeowners still face risk. When an HOA frames its enforcement claims under NRS 116.4117, the result can be costly and chilling for the owner—even if the claim is ultimately dismissed. Litigation expenses, fee-shifting threats, and prolonged uncertainty all serve to deter legitimate challenges.
Better Route
Lawmakers have long recognized that homeowners deserve “an expeditious and inexpensive forum for resolving disputes.” (see supra note 1) The first step in resolving most HOA disputes is opening a dialogue. In Nevada, as elsewhere, that means ADR as a general process for addressing disputes among parties. This did not emerge in a vacuum. HOA disputes rarely involve meaningful money damages. Most conflicts concern governance, elections, or compliance with statutory duties — matters where what owners seek is accountability, not compensation. So why allow a non-regulatory avenue at all?
Civil litigation is built for the recovery of damages. Forcing HOA cases into court is inequitable where the real danger lies not in what owners might recover, but in what they stand to lose. Prevailing-party clauses transform every lawsuit into a high-stakes gamble, exposing homeowners to catastrophic fee awards simply for asserting their rights. So was it lawmaker intent to restrict HOA related civil enforcement to cases with proven actual damages? [5] If so that needs to be clear but begs the question nonetheless, is it still appropriate in the HOA setting?
Reform is needed to realign practice with legislative intent: governance and statutory disputes should remain outside of civil court unless material damages are at issue. The Legislature created ADR to be the primary venue for these conflicts — fair, timely, and affordable — and that purpose must be restored.
Finally, post-Kosor, ADR is no longer treated as a jurisdictional prerequisite. It has been reduced to a waivable procedural step, allowing HOA disputes to move straight into court if no party raises the objection. That was never the Legislature’s intent. This loophole undermines the very framework lawmakers designed and must be corrected if ADR is to function as the meaningful safeguard it was meant to be. Read more on the recent NSC ruling here- Nevada Supreme Court Ignores the Law on HOA Disputes—Become Policy Makers In Robes.
Key Elements in Practice
NVHOAReform's proposed amendment to NRS 38 creates a Division-administered system that keeps HOA disputes out of district court litigation. Rather than inventing something new, it builds on existing Nevada procedures and gives parties a menu of options for resolution. Under Division oversight, disputes could be heard in:
a short jury trial (NRS 38.250),
small claims court (NRS Ch. 73), or
justice court (NRS Ch. 4).
Most disputes involving “actual damages” are modest — fines, late fees, or minor out-of-pocket losses — and these forums are well-suited to resolving them quickly and fairly. These lower-cost pathways ensure faster outcomes without the crushing burden of prevailing-party attorney fees. And here is the safeguard: if the parties cannot agree on a venue, or if the alleged damages exceed the jurisdictional limits of these programs, the case will be directed into binding arbitration administered by the Division.[6]
It is fair to note that binding arbitration is not without controversy. Some critics argue it can limit discovery, constrain appellate rights, or tilt procedure in favor of repeat players [7]. Those concerns are real in the commercial and employment context, where arbitration clauses are imposed unilaterally. But here, arbitration is administered by the Division itself, under public rules and oversight, as part of a statutory enforcement scheme. That makes it different in kind from private, corporate arbitration: the goal is not to strip owners of rights, but to provide a quicker, less costly forum that still carries the force of law.
Critics fairly point out that private arbitration can limit discovery, reduce appeal rights, and favor “repeat players.” [8] Our proposal is different: arbitration would be run by the Division, under public rules and neutral panels, with basic due-process safeguards—the goal is faster, cheaper resolution without the worst features of corporate-designed arbitration. Importantly, this reform does not bar prevailing-party clauses in CC&Rs. Those provisions will remain, but because HOA disputes are kept out of civil court and resolved within ADR forums where attorney’s fees cannot be awarded, their practical effect is neutralized. The clauses lose their teeth, and with them the threat of catastrophic fee escalation that now deters homeowners from exercising their rights.
Arizona provides a real-world proof of concept. Under A.R.S. § 32-2199.01, HOA disputes are filed with the Department of Real Estate and referred to the Office of Administrative Hearings. The process is fast, affordable, and shields owners from the crushing fee exposure of civil litigation. Nevada’s proposal would adapt this principle—state-managed ADR tailored to HOA disputes—ensuring enforcement remains possible while restoring fairness and balance for homeowners.[9]
Opposition & Responses
Opposition: ADR adds delay and burden
Industry voices may argue that forcing all disputes through ADR slows down enforcement and burdens both sides.
Response: The reform sets expedited timelines and multiple pathways—small claims, short jury trial, arbitration—ensuring speed. What it eliminates is the escalation of fees that makes litigation intolerable for homeowners.
Opposition: Without fee-shifting, frivolous claims will multiply
CAI and association counsel will insist that prevailing-party fees are necessary to deter baseless lawsuits.
Response: Nevada already has Rule 11 sanctions and existing statutory remedies against frivolous filings. Fee-shifting is not about deterring frivolous claims; it is about deterring all claims, including meritorious ones. Stripping fees from ADR restores balance without removing safeguards.
Opposition: Boards need strong enforcement tools
They will argue that associations cannot function without the power to recover their legal costs.
Response: Boards still retain enforcement authority and compliance tools. Importantly, this reform does not bar prevailing-party clauses in CC&Rs; it neutralizes them. By removing HOA disputes from civil court and placing them in ADR forums where attorney’s fees cannot be awarded, the clauses become inoperative. What boards lose is not legal authority but the ability to wield catastrophic fee awards as a weapon against dissent. Governance should not depend on financially destroying those who disagree.
Conclusion
Nevada once led the way in designing a unique dispute resolution system for HOAs. But statutory loopholes, fee-shifting clauses, and court rulings have gutted its promise. Homeowners now face a system where boards can litigate without consent, where ADR is optional, and where prevailing-party fee provisions silence dissent.
Reform is not optional. It is essential. By restoring ADR to its rightful place, limiting civil actions, and closing loopholes, lawmakers can realign Nevada’s HOA dispute system with its original promise: an expeditious, inexpensive, and fair forum that puts owners first.
For readers who wish to examine the full statutory amendment language, see the proposal in PDF here.
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[1] Senator Mike Schneider, Presentation before the California Assembly Committee on Housing & Community Developed March 9, 2005.
[2] Alternative Dispute Resolution (ADR) refers broadly to mediation and arbitration processes used to resolve disputes outside of traditional court litigation. It grew out of a late-20th-century movement to relieve overburdened courts and to give parties quicker, cheaper ways to resolve conflicts. Family law, consumer disputes, and landlord-tenant conflicts were early candidates. Common-interest community disputes were a natural fit given most disputes involved contract and statute language compliance. It is intended to provide faster, lower-cost outcomes and to reduce the burdens of full civil trials.
[3] Author’s Note: I know this risk firsthand. For more than eight years I have been forced to fight my own HOA over its refusal to turn over control as promised, a fight that has cost me more than $400,000 in legal fees without a single ruling on the merits. You can read more about my personal experience at www.mike.kosor.com
[4] See Divina Piazza v. Spring Mountain Ranch Master Ass’n, No. 88493-COA (Nev. Ct. App. July 31, 2025) (unpublished disposition) (holding that the “actual damages” requirement of NRS 116.4117(1) applies equally to actions for declaratory relief). Judge Bulla concurred in part and dissented in part, noting that declaratory relief under NRS 30.030 does not require a showing of damages, consistent with Aronoff v. Katleman, 75 Nev. 424, 432, 345 P.2d 221, 225 (1959).
[5] “Actual damages” is usually treated as synonymous with compensatory damages. These are intended to make the plaintiff whole by restoring them to the position they would have been in but for the defendant’s conduct. In Nevada, courts often say “actual” and “compensatory” interchangeably — the amount that represents real, measurable loss. If an HOA unlawfully fines an owner $500, the actual damages are $500. It does not include symbolic awards (like $1 “nominal” damages) or punishment damages meant to deter future conduct (punitive damages). Law recognizes other categories of damages — such as nominal, statutory, or punitive — but “actual damages” refers specifically to the plaintiff’s real financial loss.
[6] As of 2025, Nevada law provides several lower-cost forums for modest disputes: small claims courts can hear cases up to $10,000 (NRS 73.010); justice courts can hear civil actions up to $15,000 (NRS 4.370); and the short trial program applies to cases under $50,000 (NRS 38.250), offering an expedited jury trial with strict time limits and simplified procedures. Together, these venues cover the vast majority of HOA conflicts, which usually involve fines, fees, or modest out-of-pocket losses.
[7] See Jean R. Sternlight, Panacea or Corporate Tool?: Debunking the Supreme Court’s Preference for Binding Arbitration, 74 Wash. U. L.Q. 637, 684–90 (1996) (criticizing arbitration for limiting discovery, constraining appellate review, and favoring repeat players); David S. Schwartz, Enforcing Small Print to Protect Big Business: Employee and Consumer Rights Claims in an Age of Compelled Arbitration, 1997 Wis. L. Rev. 33, 58–64 (same). See also Paula A. Franzese, Privatization and Its Discontents: Common Interest Communities and the Rise of Government for “the Nice”, 37 Urb. Law. 335, 343–46 (2005) (noting how privatized dispute resolution can disadvantage individual homeowners).
[8] The CFPB’s 2015 Arbitration Study and scholarship by Sternlight and Colvin.
[9] See A.R.S. § 32-2199.01; Arizona Department of Real Estate program allowing homeowners to file petitions heard by the Office of Administrative Hearings (demonstrating a state-managed model for resolving HOA disputes outside of traditional courts).
