HOA Records: A Threat to Health, Safety, and Welfare?

Mike Kosor

18 hours ago

10 min read

When an HOA owner requests records that leads to threats of HSW fines, Nevada must reconsider the limits of association authority. But will it?

Access to association records that come with disputed conditions and threats of serious penalties discourage owners from exercising valued rights Nevada law was intended to protect. The concern is not just HOA imposed restrictions surviving a legal challenge. It is whether homeowners will ever challenge them.

Congress recognized a similar problem when it enacted the Consumer Review Fairness Act of 2016, prohibiting businesses from using certain contractual restrictions and threats of penalties to silence consumer criticism. While that law does not necessarily apply to HOA records requests, the underlying consumer-protection concern is much the same: The mere assertion of restrictions and threatened penalties can discourage homeowners from exercising their rights, even when those restrictions lack legal authority or would not survive a challenge.

The HOA Application

A Sun City Summerlin homeowner recently requested association financial records. Before providing them, the association presented the owner with a two-page Use and Confidentiality of Association Records Affidavit, reportedly at the direction of association counsel. The affidavit provided (found here) does more than address the purpose of requesting records. It restricts publication and distribution of information, demands contractual commitments, and warns of criminal penalties, litigation, fines, attorney's fees, and even foreclosure. Most remarkably, it declares that violating the affidavit will “likely constitute a health, safety, and welfare violation” under NRS 116.31031.

Yes, we are talking about an owner's request to examine records of its association becoming a likely HSW violation.

A record request can result in a HSW fine?

This example raises several concerns examined in this post. Among them: Can an association impose restrictions on statutory records-access rights that the Legislature did not impose? And how does violating those restrictions become grounds for threatening some of Nevada's most severe HOA enforcement penalties? Could imposing unauthorized restrictions backed by such threats also constitute prohibited retaliation against homeowners for requesting records? And will Nevada's regulatory system provide meaningful answers to the questions?

Nevada gives owners broad access to association records

Start with what NRS 116.31175 actually says. The executive board “shall, upon the written request of a unit's owner, make available the books, records and other papers of the association” for review. The statute then identifies specific records, such as financial statements, budgets, reserve studies, contracts, and court records. Notably, it introduces those examples with the words “including, without limitation.”

That language is important. The Legislature did not restrict owners to the listed records. It established a broad right of access, subject to specific statutory exceptions. The Nevada Real Estate Division (NRED) has addressed this interpretation in Advisory Opinion 12-03-116, stating:

Generally speaking, all records are available to review unless one of the limited exceptions applies.

That is the Division's own interpretation of the statute. NRS 116.31175 also does not require an owner to explain why records are wanted, execute a confidentiality agreement, or agree not to publish or distribute information lawfully obtained.

The HOA Puts Conditions on Your Right to See Its Records

An HOA may argue that because NRS 116.31175 does not expressly prohibit requiring an affidavit, its governing documents can authorize one. Sun City Summerlin appears to have taken that approach. But consider Nevada law establishes homeowners' rights to inspect association records, including financial records, subject to specified exceptions. As we explained in our earlier post, Nevada HOA Records Requests: The List Is Not the Limit. the Legislature did not expressly authorize associations to create additional conditions on those rights.

There is another important statutory provision. NRS 116.1104 provides that, except as expressly permitted by Chapter 116, its provisions cannot be varied by agreement and rights conferred by the chapter cannot be waived. NRS 116.31175 establishes the right to inspect records. NRS 116.1104 protects rights conferred by Chapter 116 against waiver. The Legislature need not use the word "right" to establish one; imposing a mandatory obligation on an association to provide records establishes a corresponding entitlement for homeowners.

This raises two related questions: Can an HOA require a homeowner to accept additional contractual restrictions as a condition of exercising a statutory right that Chapter 116 says cannot be waived? And does statutory silence become an invitation for HOAs to claim powers the Legislature never expressly granted?

We believe the answer to both is no, at least where those claimed powers interfere with rights the Legislature has expressly protected. We examine the broader problem of claimed HOA authority in our post, Nevada’s HOAs Need Limits.

Sun City Summerlin's affidavit cites NRS 82.186, Nevada's general nonprofit corporation records-inspection statute. That law permits certain affidavits concerning the purpose of a records request. But does that authority extend to homeowners exercising their separate rights under NRS 116.31175?

And what about the association's claimed confidentiality rights?

Corporations may have legitimate reasons to protect confidential information. But an HOA is not an ordinary corporation. Homeowners are required to fund its operations, and Nevada law expressly gives them access to records needed to examine how their money is managed. Incorporation provides a means of organizing and operating the association; it should not, by itself, determine the extent of an HOA's authority over homeowners. We examine this distinction more fully in HOAs Are More Than Contracts: Legal Fiction and Institutional Interests Work To Stifle Reform.

NRS 116.31175 identifies specific exceptions to homeowners' records-access rights. It does not establish a general confidentiality right allowing an association to control what homeowners communicate about its financial and operational affairs.

In our Sun City example, Section 4 of its affidavit goes considerably further than asking an owner to affirm a proper purpose. It restricts use of records for commercial or competitive purposes, while also identifying publication, dissemination, and distribution of association records—or information derived from them—through newsletters, websites, social media, and other publications. Read together with Section 3, the wording raises a troubling question: Is the association attempting to prohibit improper commercial uses, claiming broader authority to restrict what homeowners communicate about association affairs, or both?

Consider the implications. An owner examines financial records and discovers questionable expenditures, unexplained management costs, or transactions deserving greater scrutiny. The owner then shares that information with fellow homeowners, journalists, or lawmakers. Nothing in NRS 116.31175 establishes a blanket prohibition against doing so. But executing the affidavit could be used to claim that the owner agreed to precisely such a restriction.

The Legislature identified specific exceptions to homeowners' statutory records-access rights. But where does an HOA obtain the authority to impose additional restrictions on those rights—or to control what homeowners communicate about records they lawfully obtain? Can or even should, an HOA be able to condition access to records guaranteed by statute on an owner's agreement to restrictions that the statute itself does not impose?

The issue has been raised with NRED in a recent petition for a formal advisory opinion.

The Fine Print and What Nevada Law Does Not Say

This brings us to two revealing notes at the end of Sun City Summerlin's document. After the seven numbered provisions, the owner's signature, and the notarization section, the affidavit adds two statements under the heading Please Note.

The first declares: Refusal to fully execute and return this affidavit relieves the Association of any obligation to provide records in response to a records request. That is a sweeping assertion. NRS 82.186 permits refusal of certain corporate records inspections when a requester declines the particular purpose affidavit contemplated by that statute. It does not declare that refusing to execute an entire agreement—including publication restrictions, HSW acknowledgments, and threatened penalties—extinguishes an owner's records-access rights under Chapter 116.

The second note identifies records that do not require the affidavit: financial statements, budgets, reserve studies, and specified meeting minutes. That list creates another misleading impression. By identifying a few records exempt from the affidavit, the document implies that all other association records require one.

But NRS 116.31175 does not establish two classes of records—those available without an affidavit and all others available only after executing one. Its starting point is broad access, followed by specified exceptions. At end, the two notes turn that structure on its head. They present the affidavit as the general requirement and unrestricted access as the exception. Where does Nevada law authorize that reversal?

Notice also the document's construction. These statements appear after the signature and notarization provisions, rather than among the numbered contractual commitments. Are they intended as binding terms, or merely information about the law? Either way, placing such consequential assertions after the signature does nothing to clarify their legal effect.

There is another revealing fact. The Sun City Summerlin homeowners that reached out to the Coalition reported refusing to execute the affidavit but was nevertheless provided the requested records. Why, then, was the affidavit presented as a condition of access in the first place? And what does that say about the document's assertion that refusing to sign relieves the association of its obligation to provide records?

And then comes the HSW threat

Section 6 maybe the most disturbing provision. It seeks the owner acknowledge that violating the affidavit constitutes a violation of the association's governing documents and will likely constitute a health, safety, and welfare violation under NRS 116.31031. The provision then identifies possible remedies including fines, damages, injunctive relief, attorney's fees, and foreclosure of violation fines.

Notice the wording. The affidavit states that a breach “shall constitute” a violation of the governing documents but “shall likely constitute” an HSW violation. Does it- and why likely?

The qualification avoids an unequivocal legal conclusion while retaining the threat of extraordinary consequences. The homeowner is confronted with the possibility of foreclosure even though the affidavit identifies no conduct that would satisfy Nevada's statutory imminent-threat requirement. Even assuming an association has authority to restrict publication or distribution of its records—a question now before NRED—violating such a restriction does not, by itself, establish an HSW violation. We are hard-pressed to identify how sharing lawfully obtained association records would satisfy that standard.

Why the HSW classification matters

Under NRS 116.31031, ordinary HOA violations are subject to statutory fine limits. Violations posing an imminent threat of causing a substantial adverse effect on residents' health, safety, or welfare can receive substantially more severe treatment. The HSW designation is not just another category of governing-document violation. Under NRS 116.31162, HSW violations can also fall within an exception to Nevada's general prohibition against foreclosure based on violation fines.

Nevada's existing HSW regulation recognizes this danger. It excludes violations consisting solely of voicing opposition to or support for matters affecting the community, as well as conduct otherwise permitted by applicable law.

Protecting Homeowners' Rights

Perhaps the most troubling aspect of this affidavit—or others that may exist—is not simply whether its legal claims would survive a challenge. It is whether homeowners will ever challenge them.

How many homeowners understand the distinction between Nevada's HOA records-access statute and its general nonprofit corporation law? How many would even question whether their association has the legal authority to demand such an affidavit? Most homeowners reasonably assume that when an association's attorney presents a formal legal document, its requirements are supported by law.

An owner does not have to be fined or face an actual foreclosure proceeding to be deterred from exercising a statutory right. The threat itself may be enough.

Most homeowners reasonably assume that when an association's attorney presents a formal legal document, its requirements are supported by law.

In her dissent in Dezzani v. Kern & Associates (2018), Nevada Supreme Court Justice Kristina Pickering cited Senator Mike Schneider's warning about the “immensely chilling effect” of retaliation. That concern has broader relevance here. Restrictions and threats of serious consequences, when presented in a formal document prepared by association counsel authorized by an association's governing documents or not, discourages homeowners from exercising rights the Legislature intended to protect—even if the association has legal authority to impose those restrictions.

Who is protecting the homeowner before that happens? NRED is responsible for administering Chapter 116, including investigating alleged violations of its provisions. NRED cannot reasonably be expected to prevent every questionable restriction before an HOA adopts it. But the Legislature provided a mechanism for addressing uncertainty about the law without requiring homeowners to initiate litigation. Under NRS 116.623, NRED may issue advisory opinions interpreting Chapter 116.

This brings us back to the fundamental weakness in Nevada's HOA laws identified in HOA Whack-a-Mole: Developers establish broad association powers through governing documents, requiring lawmakers to return repeatedly to restrict them. Should NRED determine that Sun City Summerlin possesses the authority to impose these additional restrictions on homeowners' statutory records-access rights, it would illustrate precisely that problem.

A Sun City Summerlin homeowner has requested an advisory opinion addressing the association's authority to impose the conditions contained in its records affidavit, including restrictions on publication and threatened HSW penalties. We await NRED's response.

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One More Thing: What If the Records Arrive Marked “Confidential”?

Sun City Summerlin used the following boilerplate disclaimer in its email correspondence:

CONFIDENTIALITY AND DISCLAIMER NOTICE

This email and any files transmitted with it are confidential and legally privileged. This email is intended solely for the use of the individual or entity to whom it is addressed. If received in error please notify the sender by return email. Then delete this email from your system and destroy any hard copy print-outs. Access by any other person to this email is not authorized. Any unauthorized use or disclosure of this email or of the information contained therein or any copying, distribution, dissemination of it is prohibited and illegal. Email into and out of our organization is scanned for viruses however, email transmission cannot be guaranteed to be secured, error free or virus free

Now suppose you request financial records from Sun City Summerlin—or another HOA using a similar disclaimer—and the records arrive with this notice at the bottom of the email. Does that make it illegal to share the records with anyone?

In my assessment, no. An HOA cannot make information confidential, legally privileged, or illegal to distribute simply by declaring it so. A boilerplate email disclaimer does not create a law, a contract with the recipient, or an enforceable restriction on its own. The association must have an independent legal basis for prohibiting disclosure.

It is entirely possible, perhaps even likely, that Sun City Summerlin would agree. The disclaimer may be nothing more than routine boilerplate, never intended to restrict the homeowner from sharing association record provided by the email. But intent does not eliminate the chilling effect. When an HOA tells homeowners that distributing information is "prohibited and illegal," how many will know that the declaration may have no legal force?

We have asked the Division's Ombudsman whether action is warranted related to associations indiscriminately using blanket confidentiality or legal-privilege disclaimers, including assertions that unauthorized distribution is illegal, in general communications and specially when providing homeowners with association records to which they are statutorily entitled.