Homeowners associations are far more than private contracts. Yet Nevada law has not fully reckoned with that reality. It continues to rely on a legal fiction that common-interest communities are governed primarily by “private” agreements. This fiction props up a regulatory and judicial framework whose underlying assumptions no longer match how modern associations actually function.
Early common-interest communities (CICs) were structured as private agreements among neighboring property owners. Covenants, conditions, and restrictions (CC&Rs) were enforced much like ordinary contracts. Associations existed largely to maintain shared amenities and allocate common expenses. In that limited context, contract law provided a workable—if imperfect—framework.
Over time, however, that model quietly collapsed. Modern associations evolved from simple mechanisms for managing shared property into complex, corporate-style enterprises. They now run diverse operations and exercise broad discretionary authority over homes, finances, and daily conduct. These are not the hallmarks of a simple private contract; they are features of governance. Lawmakers reinforced this transformation by layering statutory governance regimes over common-interest communities. This structured board authority, mandated procedures, and authorized enforcement mechanisms go well beyond anything contemplated by ordinary contract law.
Acknowledging the Shift in Governance
Lawmakers, courts, and scholars have increasingly acknowledged this shift. As the Restatement (Third) of Property: Servitudes explains, common-interest communities now occupy a hybrid space—part property regime, part private government. Members are not merely contracting parties; they are governed constituents. Their investments are personal, financial, and often irreplaceable. Consistent with that reality, the Restatement does not treat association authority as unlimited simply because it appears in recorded documents. Incorporation is understood as a practical mechanism for organizing collective ownership, not as a determinant of the substantive standards that should govern the exercise of association power. Instead, the Restatement imposes substantive limits grounded in fairness norms appropriate to governing institutions rather than purely private contractual relationships.
This mismatch lies at the core of today’s dissatisfaction with HOA governance. Traditional contract doctrines are ill-suited to address abuse of discretion, selective enforcement, conflicts of interest, and systemic accountability failures. Treating HOAs as ordinary private actors helps explain why civil litigation has proven to be a poor substitute for meaningful oversight. The costs, risks, and structural imbalances make enforcement largely illusory for most homeowners.
This post looks at why that conceptual shift matters—from contracts to governance—what the Restatement (Third) of Property says about it, and what Nevada should learn from that framework as it confronts the persistent failures of its HOA regulatory system.
What Are the Restatements?
Most homeowners have never heard of the Restatements of Law. Yet these volumes quietly shape how judges, lawyers, and legislatures think about our rights.
The Restatements are produced by the American Law Institute (ALI), a body of respected judges, professors, and practitioners founded in 1923. They are one of the most respected and well-used sources of secondary authority, covering nearly every area of common law. Their purpose is to bring coherence to areas of law that have developed unevenly across states by distilling prevailing legal principles into authoritative formulations. Restatements are not statutes and are not binding. But they are among the most influential forms of secondary authority in American law. Courts cite them when state law is unclear, law schools teach them as black-letter summaries, and legislatures sometimes adopt their principles outright.
The Restatement (Third) of Property: Servitudes is particularly important to HOA owners. It reflects a deliberate reassessment of how servitude law should operate once associations evolve from simple property-sharing arrangements into governing institutions. Unlike earlier contract-centric approaches, the Restatement expressly recognizes that common-interest communities exercise discretionary power that can profoundly affect owners’ homes, finances, and daily lives. As a result, it reframes association authority around principles of reasonableness, proportionality, and accountability—concepts largely absent from traditional contract doctrine.
For homeowners, this matters because it directly addresses the gap they experience in practice. Rules are enforced, fines are imposed, elections are conducted, and money is spent with little meaningful scrutiny. Courts and regulators often retreat behind the notion that these are “private” contractual matters. The Restatement does not eliminate association authority, but it rejects the idea that such authority should be insulated from review simply because it arises from recorded covenants. In doing so, it offers a framework that better matches how modern HOAs actually function—and why purely contractual enforcement has failed owners so consistently.
The 2000 Turning Point: HOAs as Private Governments
In 2000, the ALI published the Restatement (Third) of Property: Servitudes. For the first time, it directly addressed common-interest communities—the HOAs, condo associations, and co-ops that govern over 30% of Americans.
Earlier Restatements treated covenants and servitudes as private contracts: one neighbor agreeing with another, enforced through traditional property and contract principles. By 2000, it was no longer plausible to maintain that framing. Common-interest communities had evolved into institutions that make rules, enforce compliance, impose sanctions, manage substantial budgets, and exercise continuing discretionary authority over residents’ homes and daily lives.
As Professor Susan French observed:
“Individual owners… have little recourse against board misconduct.”
— Making Common Interest Communities Work: The Next Step, 37 Urban Lawyer 359, 365 (2005)
This recognition did not emerge in a vacuum. By the late 1990s, courts across the country were already struggling to apply traditional contract doctrine to associations exercising broad discretionary authority over residents’ homes, finances, and daily conduct. Judicial opinions increasingly blended deferential language with implicit reasonableness review—an uneasy hybrid reflecting the limits of treating governance institutions as mere private bargains.
The Restatement did not invent this tension; it organized and responded to it. Rather than importing wholesale the insulation doctrines developed for business corporations, the Restatement grounded association authority in standards appropriate to entities that function as private governments.
This was a major intellectual shift. The 2000 Restatement acknowledged what millions of homeowners already understood from lived experience: common-interest communities do not merely enforce contracts. They govern. Governance demands standards of fairness, reasonableness, and accountability that extend beyond the fine print of recorded documents.
Why This Matters in Nevada
Nevada’s HOA statutes—codified in NRS Chapter 116—were enacted with substantial input from developers and professional managers. Not surprisingly, Nevada courts have continued to treat CC&Rs as if they were freely negotiated private contracts. They apply corporate-style deference to HOA boards under analogies that fit poorly with the realities of community governance. The result is a system that grants boards expansive authority while offering homeowners limited procedural protection.
At the same time, Nevada has already taken meaningful steps that implicitly acknowledge a different reality: homeowners associations are not merely private contracting parties. Anti-SLAPP protections once reserved almost entirely for government actors now extend to HOA owners. The Nevada Supreme Court has confirmed that HOAs fall within those protections. These are not minor adjustments. They reflect an official recognition that HOA boards wield public-like power and that homeowners require safeguards against retaliatory or suppressive enforcement.
But Nevada has left the job unfinished. Despite recognizing the quasi-governmental nature of HOA authority in some contexts, courts continue to analyze CC&Rs through a contract lens. They defer to boards under corporate standards that assume disinterested decision-making and voluntary exit. The law thus acknowledges the government-like powers of associations while, in practice, denying homeowners the government-like protections that should accompany those powers. Instead, disputes are pushed into costly civil litigation—an arena ill-suited to routine governance conflicts and structurally tilted against individual owners.
This disconnect—recognition without accountability—defines Nevada’s current HOA regime.
What the Restatement Says
The Restatement does not treat HOA authority as unlimited simply because it appears in recorded documents. Instead, it imposes substantive limits grounded in fairness norms appropriate to governance bodies rather than purely contractual relationships. Taken together, its core provisions reject the idea that “a contract is a contract” is sufficient justification for unchecked board power.
At the most basic level, the Restatement subjects covenants and rules to a standard of reasonableness. Restrictions are unenforceable if they are arbitrary, irrational, or contrary to public policy (Restatement § 6.10). This principle reflects a recognition that governance power must be exercised for legitimate community purposes, not as a tool of convenience, retaliation, or control.
The Restatement also squarely frames HOA leadership as fiduciaries. Board members and officers must act with ordinary care and prudence and treat members fairly. They are not merely to follow the literal text of governing documents (Restatement § 6.13). Fiduciary duty under the Restatement is not satisfied by procedural box-checking; it requires attention to substance, conflicts of interest, and the real-world impact of board decisions on owners.
Even where governing documents grant boards broad discretion, the Restatement insists that such discretion be exercised in good faith and for proper purposes (Restatement § 6.14). Authority may not be used to advance self-interest, entrench control, or suppress dissent. Discretion is thus constrained not only by what documents allow but by how power is exercised.
Finally, the Restatement recognizes that owners purchase into communities with reasonable, investment-backed expectations. Significant changes to rules or enforcement practices must respect the character of the community and the expectations created at the time of purchase (Restatement § 6.5). Associations are not free to fundamentally rewrite the deal after the fact simply because they possess formal amendment authority.
Under this framework, an association that selectively enforces rules, conceals material information, retaliates against dissenting owners, or penalizes participation in community governance would not be insulated merely because its documents authorize enforcement. Governance power carries substantive obligations, and the Restatement treats those obligations as enforceable limits rather than aspirational ideals.
An Unfinished Path—and the Role of the CIC Task Force
Nevada has begun, cautiously, to acknowledge that HOAs function as governments rather than mere contractual arrangements. But it has not completed that transition. The reconstituted CIC Task Force now has an opportunity to confront this unfinished work.
NVHOAReform has been closely following the Task Force’s proceedings. While lawmakers intended the Task Force to examine structural failures in HOA governance and propose meaningful reforms, its early meetings raise concerns. Despite its reconstruction, the Task Force appears inclined toward familiar or narrow issues rather than the deeper accountability gaps the Restatement identified more than two decades ago.
Suggested Actions for Reform
Acknowledge HOAs as governments. Statutes should stop treating HOAs as mere contracts and recognize their quasi-governmental nature.
Incorporate Restatement standards. Nevada law should codify reasonableness, fiduciary duty, and good faith obligations and reconsider its codified Business Judgment Rule.
Expand homeowner protections. Owners should have access to due process mechanisms that mirror those available in public governance, not just corporate elections.
Fence HOAs out of the civil litigation system. The civil courts are not the right forum for resolving HOA governance disputes. Reform of Nevada's Alternate Dispute Resolution (ADR) program should be a top priority. The civil system is costly, adversarial, and ill-suited for questions of fairness, fiduciary duty, or governance standards. HOA disputes should be handled by independent regulators or tribunals, not by forcing homeowners and boards into expensive litigation.
The Restatement offers a ready-made blueprint for reform. But whether Nevada will follow it—or continue to rely on legal fictions and litigation as substitutes for governance—remains an open question.
Conclusion: Finish What Nevada Started
The Restatement (Third) of Property: Servitudes marked a turning point in how the law understands homeowners associations. It recognizes that they function as systems of governance rather than as collections of private bargains. Nevada has already taken partial steps in that direction. Through statute, lawmakers have structured HOA powers, mandated dispute processes, authorized enforcement mechanisms, and extended protections—such as anti-SLAPP safeguards—once reserved for public actors. These choices reflect legislative recognition that HOA governance is no longer a purely private matter.
At the same time, part of the resulting accountability gap is legislative rather than judicial. Beginning in the early 1990s, Nevada statutes governing common-interest communities incorporated a form of the corporate Business Judgment Rule. This embedded deference to board decision-making directly into law. That design choice matters. By treating corporate form as determinative of the standard of review, rather than as a practical mechanism for organizing collective ownership, the statutory framework elevated corporate insulation doctrines into governing law.
Once deference is codified by statute, courts are no longer weighing governance conduct against evolving standards of fairness alone. They are applying a legislatively prescribed limit on review. The result is a system that grants associations broad, government-like authority while insulating that authority using doctrines developed for voluntary, profit-oriented enterprises. This approach sits uneasily alongside the Restatement’s later recognition of HOAs as governance institutions rather than mere contractual arrangements.
The consequence is a misaligned system. Nevada law acknowledges the public-facing power of HOA governance in some contexts while continuing to rely on contractual and corporate analogies. This denies homeowners the procedural protections one would expect when governance authority is delegated by statute. Courts were the default forum for HOA disputes from the outset, but only because early law treated common-interest communities as fundamentally contract-centric arrangements. That premise—never more than partially accurate—has become increasingly untenable as associations evolved into governing institutions exercising broad discretionary power.
What has changed over time is not the role of courts, but the recognition that contract-based judicial review is ill-equipped to provide meaningful oversight of modern HOA governance.
Finishing what Nevada has already started requires acknowledging a simple premise: when lawmakers design and empower private governments, they must also ensure that fairness, fiduciary responsibility, and meaningful oversight are built into the system itself. Without that alignment, the gap between authority and accountability will persist—regardless of how carefully the documents are drafted or how deferential the doctrines remain.
Read more: What Nevada Missed in HOA Dispute Reform—Time to Finish the Job
Read more: Cost-Shifting HOA Justice: Time to Draw the Line
Read more: Dispute Resolution Must Be a Legislature’s Priority
Read more: CIC Task Force-Lawmakers Seek Answers But The Establishment Prevails
________________________
[1] See Evan McKenzie, Privatopia: Homeowner Associations and the Rise of Residential Private Government 12–19 (Yale Univ. Press 1994) (documenting the transformation of homeowner associations from private contractual arrangements into systems of residential governance increasingly structured and empowered by state legislation); Uriel Reichman, Residential Private Governments: An Introductory Survey, 43 U. Chi. L. Rev. 253, 256–63 (1976) (explaining that modern common-interest communities operate through extensive statutory delegation of powers that displace traditional private-law servitude principles); Restatement (Third) of Property: Servitudes ch. 6, intro. note (Am. L. Inst. 2000) (recognizing that association authority is now largely defined by comprehensive statutory frameworks governing rulemaking, enforcement, assessments, and dispute resolution, rather than by bilateral covenants alone).
[2] See Restatement (Third) of Property: Servitudes ch. 6, intro. note (Am. L. Inst. 2000) (rejecting pure contract and corporate models for common-interest community governance and grounding association authority in standards of reasonableness, good faith, and fiduciary obligation); Hidden Harbour Estates, Inc. v. Norman, 309 So. 2d 180, 182 (Fla. Dist. Ct. App. 1975) (association rules valid only if reasonable); Papalexiou v. Tower West Condo., 401 A.2d 280, 285–86 (N.J. Super. Ct. Ch. Div. 1979) (declining to enforce condominium restrictions where board action was arbitrary or unfair).
