HOA Whack-a-Mole
Where are the usual consumer protections?
In our post Nevada’s HOAs Need Limits, we asked a core question: Who should decide how much authority an HOA is given in the first place? A related post, Political Signs in an HOA?, showed what can happen when even the simplest issues are left to developer-drafted declarations that enter the marketplace without meaningful substantive regulatory review.
This post addresses the result: a continuing game of HOA Whack-a-Mole in which owners and lawmakers are left chasing restrictions one at a time—deciding after the fact what should never have been left to private drafting in the first place.
Lack of Traditional Consumer Protection
In most mass consumer markets, government does more than require disclosure and prohibit a few specifically identified abuses. Credit, banking, securities, mortgage lending and insurance all operate within substantive regulatory frameworks that limit what providers may do and, in some areas, require review or approval before products or terms reach consumers.
That is one reason regulators exist in the first place. Disclosure and private choice are not always enough—particularly where bargaining power is unequal, the seller is the repeat player, or important consequences may not become apparent until after the transaction.
HOA declarations largely reverse that model—or, at minimum, stop one step too soon.
The Uniform Common-Interest Ownership Act (UCIOA), adopted by Nevada in 1991 and forming the basis of Nevada HOA law today, reflects an understandable objective: give developers considerable flexibility in creating common-interest communities. But that flexibility raises an obvious second question: what are the outer boundaries? The Uniform Law Commission has since recognized the need for stronger homeowner protections. Its answer has included a Common Interest Owners Bill of Rights. Other consumer markets rely more heavily on traditional regulatory systems to establish substantive protections before or as products enter the marketplace. Those are different approaches, but each can serve an important function: setting meaningful boundaries.
Nevada has done neither comprehensively. It has not adopted a broad owner Bill of Rights establishing clear substantive limits. Nor has it created a regulatory review of restrictions developers place into declarations before those restrictions become binding on purchasers.
Nevada law followed the UCIOA model—and inherited its shortfall. NRS 116.2105 provides:
“The declaration may contain any other matters the declarant considers appropriate.”
And NRS 116.3102(1) begins by making association powers “subject to the provisions of the declaration.” Subsection (1)(r) then provides that the association:
“[m]ay exercise any other powers conferred by the declaration or bylaws.”
There are good reasons for flexibility. Someone has to create the community before buyers arrive. The developer must establish common property, assessments, maintenance duties, easements, voting rights and the other provisions necessary to make the community function. The governing terms also need to apply uniformly rather than be renegotiated with every purchaser. And the declaration remains subject to existing state and federal law.
We agree with all three. But they do not justify giving a developer an open-ended ability to write the community’s “laws” unless the Legislature has expressly prohibited a particular restriction. The developer writes the governing terms, records them against the property, and future owners receive them when they purchase. Nevada provides the enabling law and has, over time, placed a relatively small number of substantive limits on what a declaration and association may do.
But as noted earlier, no Nevada regulator reviews the declaration before recording to determine whether its provisions comply with those limits—or whether additional restrictions and grants of authority should be permitted at all. Government enters later, after a particular restriction or exercise of authority generates enough controversy to produce a statutory response.
That is the gap.
Then Comes Whack-a-Mole
Nevada HOA law contains numerous examples of lawmakers returning later to place limits on particular exercises of association authority. Political signs. Solar energy systems. Flags. Religious and cultural displays. Each protection may be sensible on its own.
Together, however, they reveal the weakness in the underlying structure. The declaration is written first. The restriction exists first. The owner challenge comes later. And only then does the Legislature decide whether that particular exercise of HOA authority should be limited. That is legislative Whack-a-Mole.
Instead of establishing the boundary before the governing document reaches the homeowner, lawmakers repeatedly return after the fact to say: Not this. Then: Not that either.
And then wait for the next issue to surface.
Our Political Signs in an HOA? post showed the problem clearly. NRS 116.325 protects an owner’s or occupant’s right to display political signs, subject to statutory conditions. Yet even after lawmakers stepped in, questions remain over what an association may still regulate when the statute is silent. That is what happens when homeowner protections are built one subject at a time. The specific right may be protected, but the underlying grant of authority remains largely untouched.
Government Becomes the Exception-Maker
If the developer can establish the governing terms first, and the association can exercise powers conferred by the declaration unless the law says otherwise, the private actor gets the first move. Government responds later.
Government becomes the exception-maker rather than the boundary-setter. That is the heart of the Whack-a-Mole problem. The statutes protecting signs, solar energy, flags, landscaping and other owner interests are not evidence that the system already has an adequate front-end boundary. They show that lawmakers have repeatedly had to create one boundary at a time.
Reform the Front End
The answer is not to deny developers the flexibility needed to create common-interest communities. They need that flexibility. Nor is the answer to let every purchaser negotiate a different declaration. A common-interest community requires a common governing structure. The industry also correctly points out that a declaration remains subject to existing state and federal law. But Nevada does not even require a regulator to review the declaration before recording to determine whether it complies with those existing limits. And ordinary consumer protection often goes further.
Mass-market consumer regulation uses substantive standards, regulatory oversight and, where appropriate, review or approval before standardized obligations are imposed on consumers. HOA declarations should receive the same basic protection. Before a declaration is recorded and attached to future homes, its substantive restrictions and grants of association authority should receive independent regulatory review. That would not reject the flexibility UCIOA sought to give developers. It would add the safeguard that is missing.
Critics would reasonably ask whether front-end regulatory review would add cost, delay development, or undermine the flexibility UCIOA intentionally gave developers. Those concerns deserve consideration. But they do not answer the threshold question: what should establish the substantive boundaries before owners are forced to challenge them one dispute at a time?
One answer could be independent regulatory review of declarations before they bind purchasers. Another could be a comprehensive Nevada HOA Bill of Rights establishing clear statutory limits on what governing documents and associations may do.
The important point is not that only one model can work. It is that Nevada has not adopted either approach comprehensively. Instead, the first meaningful test of a questionable restriction often comes only after a homeowner has purchased the property and is willing and able to challenge it.
It would also undercut the familiar defense: You bought the home. You received the documents. You agreed. Disclosure would remain important. But owner consent would no longer substitute for determining whether the provision should have been permitted in the declaration in the first place.
That is a familiar principle of consumer protection. HOA law should use it too. Until then, lawmakers will continue repairing the consequences one restriction at a time.
That is Whack-a-Mole.
