Editor’s note: This post is part of a two-part series examining HOAs as quasi-governmental entities. Here, we look at how HOAs wield municipal-type powers without municipal-level accountability. Our discussion of “double taxation” draws in part from “Trust and Community: The Common Interest Community as Metaphor and Paradox” by Paula A. Franzese and Steven Siegel, published in the Missouri Law Review (2007). In a companion post, we focus exclusively on the double taxation inequity and what legislative reforms could address it.
Summary
The “quasi-governmental” nature of homeowner associations (HOAs) is one of the most important and controversial aspects surrounding HOAs. As legal scholar Mark Fenster Pollack has observed, the modern HOA is "functionally indistinguishable" from certain forms of municipal governance—yet it remains shielded from the constitutional constraints imposed on public entities. HOAs blur the line between contract and public law, exercising powers that resemble local government without corresponding democratic safeguards. This dualism means:
owners must comply with rules they did not negotiate, under a fiction of consent.
owners are governed by boards with regulatory power, but have fewer procedural protections than citizens under municipal government.
double taxation
remedies are mostly civil litigation, not public enforcement—shifting the burden and cost to individual owners. (Read more in the blog Prevailing party provisions in CC&Rs– a destructive element in HOA law)
A formal recognition of the nature of HOAs is needed. Courts prefer to leave policy shifts to legislatures, not legal precedent. This is why legislative action is needed.
The private HOA or "Quasi-Governmental" argument.
Over thirty years ago, Professor Gerard Frug presciently observed, "[t]he privatization of [local] government in America is the most important thing that's happening, but we're not focused on it. We haven't thought of it as government yet."- and will still haven't.
Having Government-Like Powers: HOAs can:
• Enact rules and regulations (like ordinances) through CC&Rs and bylaws.
• Levy assessments (dues) and special fees—similar to taxes.
• Enforce rules via fines, restrictions, or litigation.
• Lien and foreclose on properties for non-payment—just like a local government can for unpaid taxes.
• Local governments offload services to HOAs—roads, drainage, sewers, water lines, street lights, parks—shifting public responsibilities to private boards.
• Home buyers don’t really “choose” an HOA—you can’t opt out, and properties can’t be sold without accepting the HOA’s terms.
But They Lack Democratic Safeguards: Unlike cities or counties:
• HOAs are typically formed as non-profit corporations- which is the case n Nevada
• Homeowners choose (in theory) to buy into HOA communities, agreeing to follow covenants, conditions, and restrictions (CC&Rs) as part of a private contract.
• HOA boards are not subject to open meetings laws in many states (to include Nevada).
• They don’t follow the same due process standards as public agencies.
• There’s no requirement for transparency beyond what’s written in the governing documents and statutes.
• Elections may not be fair or inclusive, and board turnover can be slow.
• Disputes often go to private litigations not public channels.
• Residents don’t realize that HOA can affect them like a local government would.
HOAs exist in a legal limbo—not bound by the Constitution in the same way governments are, yet they regulate behavior in deeply personal ways.
Taxing Twice
As noted by Franzese and Siegel, one of the clearest signs that HOAs function as quasi-governmental entities is their tax-like power to fund services—but unlike a city, they don’t operate within a single, unified tax system. In many Nevada developments, municipalities require the creation of an HOA to take over services such as street maintenance, lighting, landscaping, and sometimes even water and sewer.
The problem? Homeowners in these communities pay twice for many of the same functions.
First, they pay their regular property taxes to the city or county, just like every other resident.
Second, they pay HOA assessments—often hundreds or thousands of dollars per year—for services the city no longer provides in their neighborhood.
The municipality keeps the full tax revenue but offloads the service burden onto the HOA. This creates a two-tier system:
Tier One: Residents in older, non-HOA neighborhoods receive public services funded by their taxes.
Tier Two: Residents in new HOAs pay the same taxes plus private assessments for equivalent services.
As Franzese and Siegel point out, because courts generally have not recognized HOA assessments as “taxes” for constitutional purposes, homeowners can’t invoke “equal taxation” protections to challenge this double burden. The inequity persists—not because it’s fair, but because the law hasn’t caught up with the reality of HOAs as quasi-governmental bodies.
This is exactly why legislative reform is essential. If HOAs are going to act as a parallel layer of local government, the law must address how they are funded, ensure that residents are not paying twice for the same services, and require transparency and accountability equal to their municipal counterparts.
What are the implications?
Courts have largely treated HOAs as private contractual associations, but as Pollack and others argue, this view ignores the reality that homeowners in many states cannot meaningfully opt out and are subject to enforceable rules, assessments, and sanctions. The "contract" model fails to account for the coercive, enduring, and involuntary nature of HOA governance—raising serious constitutional and policy concerns.
The Supreme Court has not clearly ruled on whether constitutional rights (like the First Amendment) apply to HOAs, because they’re technically private entities—even though they govern public-like spaces.
Due process may not fully apply in HOA-governed spaces, unless state laws impose such protections.
HOAs exercise powers similar to those of local governments but without the same constitutional or statutory safeguards, leaving owners with fewer protections than they would have as city or county residents.
Homeowners in many newly established HOAs face double taxation—paying full municipal taxes and separate HOA assessments for the same category of services, while neighbors in older areas receive those services from the city at no additional charge.
This two-tier tax system can increase housing costs substantially and is largely invisible to buyers until after purchase, making informed choice nearly impossible. Voter turnout for HOA elections is low, power gets concentrated in small groups, and homeowner apathy can allow abuses or mismanagement.
It can be hard for homeowners to challenge unfair rules or actions, especially without legal resources.
Courts are reluctant to start calling HOAs quasi-governmental- it opens the door to Constitutional lawsuits against all sorts of private associations (e.g., churches, country clubs, co-ops). It could create massive legal uncertainty about where public rights apply.
As Pollack notes, acknowledging the quasi-public nature of HOAs in the judiciary would carry broad constitutional implications, including potential due process, "equal taxation", and First Amendment challenges. That is why courts have been cautious, and why it is imperative for legislatures to proactively address this governance gray zone—especially in states like Nevada, where HOAs oversee essential infrastructure and enforce binding community standards.
These concerns are not new. Legal scholars such as McKenzie, Pollack, and Frug have long called attention to the undemocratic structure of HOAs and the mismatch between their powers and the protections available to homeowners. Yet courts have been hesitant to intervene—leaving it to legislatures to close this governance gap.
“Further Reading”
Evan McKenzie, Privatopia: Homeowner Associations and the Rise of Residential Private Government
Mark Fenster Pollack, “Community Associations and the Constitution”
33 Hofstra L. Rev. 1053 (2005), Are HOAs Governmental?
Gerald Frug, City Making: Building Communities without Building Walls (1999)
