Introduction
Prevailing-party attorney fee provisions, buried in nearly every Common Interest Community (CIC) governing documents (CC&Rs), - commonly know as HOAs or COAs-create a structural flaw in the housing model that touches over half of all Nevadans — and 77 million across America. Courts enforce them as if they were fair bargains, but they are adhesion provisions imposed without negotiation. Worse, Nevada's CIC law itself, Chapter 116, compounds the danger authorizing courts to award prevailing-party fees even in statutory enforcement actions. Most homeowners don’t realize Nevada law lets private lawsuits enforce Chapter 116 — rights they assume belong with regulators. NRS 116.4117 not only creates this private right of action but adds fee liability with it. Yet NRS 116.4117 expressly creates this private right of action, and with it, prevailing-party fee liability. This pairing is highly unusual in American law: while many statutes grant a private right of action, fee-shifting is almost always one-way in favor of the weaker party — as in civil rights, consumer protection, and employment law. Nevada stands nearly alone in exposing the weaker party, the homeowner, to catastrophic two-way fee awards in statutory enforcement. [1] Homeowners come to learn — often too late — that whether framed as contract or statute, simply raising a dispute can trigger catastrophic fee liability. So they duck. What policymakers label as apathy is in fact a rational survival strategy in the face of weaponized fee clauses.
This blog consolidates our prior analysis of how prevailing-party provisions function in practice, why their misuse is especially destructive in the HOA setting, and why reform is needed. For more on the legislative history that brought us here and the structural fix the Coalition see a badly needed— ensuring disputes are resolved through ADR where fee-shifting cannot be weaponized — see our companion blog: Putting Owners First: A New Framework for HOA Dispute Resolution.
What is a Prevailing-Party Clause?
Prevailing-party clauses are provisions allowing the fee shifting of attorney fees. They are found in nearly every CIC's CC&Rs. They state that if a dispute arises “to enforce” or interpret terms of the governing documents, the party deemed to have prevailed may recover attorney’s fees and costs. On paper, this appears to promote fairness: if you win, you should not have to pay for enforcing your rights.
In contract law generally, these clauses serve a legitimate purpose: protecting parties who must enforce their agreements from being saddled with fees even when they were in the right. When two equal parties freely negotiate a contract, the idea that the winner recovers fees can deter frivolous lawsuits and encourage compliance with the bargain both sides accepted. This is "fair" — or, in legal mumbo jumbo, as reciprocity: when both parties are equals at the bargaining table, sharing the same risk of fees is part of the deal they chose.
But what about HOA contracts tied to your home? These covenants (CC&Rs) are not freely negotiated. You don’t get to choose whether to join the HOA — membership is automatic when you buy the property. The law treats you as if you ‘consented’ to all HOA rules the moment you purchased, even though no homeowner has real bargaining power or a chance to negotiate terms. Courts justify this through a legal fiction known as constructive consent. Despite their obvious character as adhesion contracts, most courts still refuse to label CC&Rs that way. [2] For a deeper dive, see our blog CC&Rs and "constructive consent".
The HOA Exception
When statutory rights are at stake, courts and legislatures recognize that public interests must be enforced even when regulators lack the resources to act. This is where private lawsuits serve a “private attorney general” role. To encourage citizens to bring these cases, fee-shifting rules are usually structured to protect plaintiffs and minimize their risk.
Public policy across many areas of law follows a consistent pattern:
Symmetric fee-shifting deters enforcement. If both sides face equal risk, ordinary citizens will hesitate to sue, while institutional defendants can absorb the gamble.
To encourage enforcement of public duties, plaintiffs are protected. Fee liability is generally imposed only when claims are abusive or frivolous.
This balances deterrence with access to justice. It screens out baseless suits while ensuring legitimate ones can still be pursued.
In the HOA world, Nevada goes even further. It not only allows prevailing-party provisions in CC&Rs, it actually embeds fee-shifting into statute. NRS 116.4117, which creates a private right of action to enforce HOA laws, authorizes courts to award attorney’s fees to the prevailing party. That means even when a homeowner sues to enforce statutory rights — rights the Legislature itself created to protect them — they risk catastrophic fee liability if they lose.
This is not only unusual — HOAs appear virtually alone in being subject to such two-way fee-shifting. [3] In every other context, lawmakers have been cautious about allowing fee awards to silence dissent. Yet in Nevada, HOAs and their attorneys are given exactly that tool, even though associations already wield extraordinary power over owners.
In the CIC Context, Three Realities Undermine Fairness
First, homeowners never negotiate these contracts — the developer writes the CC&Rs and buyers must accept them as a condition of purchase. It is take-it-ot-leave-it.
Second, Nevada already has a regulator and a Commission with power to enforce the law, so turning statutory violations into fee battles in civil court makes little sense. These disputes should remain within the regulatory framework, not be repackaged into civil fee battles.
Third, most CIC disputes aren’t about money damages at all — they’re about process, elections, or access to records. Unlike tort claims, which rest on fault and harm, CIC disputes are often about interpretation — whether a rule was followed, a notice properly given, or a procedure complied with. And because CICs are not ordinary contracting parties but quasi-governments with rulemaking, enforcement, and taxation-like powers, imposing two-way fee-shifting in these contexts magnifies the imbalance: boards can litigate with community-funded counsel, while individual owners risk personal financial ruin.
Statutory Fee-Shifting Compounds the Problem
And Nevada goes even further, at least as the statutes are often read, making its CIC system unusually severe. Where homeowners have the least bargaining power, Nevada not only allows fee provisions in CIC contracts, it actually wrote them into the law itself. NRS 116.4117(6) provides that in any civil action to enforce rights and obligations under Chapter 116, “the court may award reasonable attorney’s fees to the prevailing party.” Similar provisions appear elsewhere in Chapter 116.
Yet even here, the legislative intent may not have been to expose owners to fee liability in cases with no demonstrable harm. The statute’s plain language links the right of action to “any person suffering actual damages.” Read that way, the ability to recover fees presupposes an actual-damages claim. Only later interpretations have treated “other appropriate relief” as a standalone basis for suit, expanding the reach of fee-shifting far beyond what most consumer-protection frameworks would allow.
But even assuming courts were to limit the statute properly to damages cases, the danger remains. Because fee-shifting in Chapter 116 is two-way, homeowners who bring legitimate damages claims still face catastrophic liability if they do not prevail. That risk alone deters owners from ever testing their rights, knowing that an HOA with deeper pockets can pursue every argument and then turn the fee provision against them if they lose.
This stands in stark contrast to most areas of consumer and employment law, where fee-shifting is deliberately one-way. There, the weaker party — the consumer, tenant, or employee — can recover fees if they win, but does not risk paying the other side’s fees if they lose, unless their case was frivolous. Nevada’s CIC structure reverses that logic: it exposes homeowners to full fee liability even when they are simply trying to enforce the very protections the Legislature wrote into law.
The effect is chilling. Because Chapter 116 creates a private right of action, homeowners who try to enforce statutory rights in civil court face the same two-way fee risk as in CC&R enforcement. Even when the Legislature created these rights to protect owners, it simultaneously undercut them by allowing associations to demand fees if the owner does not prevail.
This statutory fee-shifting compounds the problems created by CC&R clauses, creating double exposure. An HOA can frame a dispute both as a contractual enforcement and as a statutory violation — and seek fees under both theories. No other state couples statutory enforcement of HOA law with such sweeping two-way fee-shifting. Nevada stands nearly alone in this punitive design.
Reform must address this statutory flaw directly. Chapter 116 should be amended so that statutory fee-shifting protects homeowners, not punishes them. At a minimum, prevailing-party provisions in NRS 116.4117 and related sections should be eliminated or made one-way, ensuring that owners are not deterred from enforcing the very rights the Legislature intended them to have.
Why This Matters
The result is neither tort nor contract law as we know them. In tort, fee-shifting is rare and tied to fault — negligence, recklessness, or intentional misconduct. In contract, especially adhesion contracts, courts are supposed to construe fee clauses narrowly against the drafter. Nevada’s current application of prevailing-party clauses honors neither principle.
Homeowners who might otherwise exercise their ordinary rights — to speak, to object, to participate in governance — often choose not to. They are not looking for a battle; they are simply trying to exercise basic rights of participation. But the risk of catastrophic fee awards makes silence the only rational choice.
As Professor Paula Franzese has observed, few checks exist to restrain boards from autocratic or petty enforcement. With litigation financed directly from owners’ dues, boards can “launch a missile to kill a mouse” — pursuing even trivial violations with disproportionate legal firepower, and then making the mouse pay for the missile.[4]
Courts have only reinforced this imbalance. Legal scholars are beginning to recognize that the real danger is not just quirky “pink flamingo” restrictions, but the way judges have institutionalized deference to HOA boards. In a 2023 article aptly titled Forget the Pink Flamingos, Professor Nadav Shoked explains that courts apply a forgiving “business judgment” standard to HOA decisions, shielding nearly any enforcement action from meaningful review. By treating association rules as untouchable expressions of private contract, judges validate even trivial or heavy-handed sanctions. The effect is to transform HOAs into instruments of discipline and punishment rather than resolution.
That insight resonates with what Nevada homeowners experience on the ground. When courts wave through enforcement actions with minimal scrutiny, boards grow confident they can pursue disputes aggressively — emboldened to “launch a missile to kill a mouse,” knowing the judicial system will back them. The result is a governance system where rules are not guardrails but weapons, and where homeowners enjoy fewer protections than they would under public law. As Shoked emphasizes, HOA restrictions function like local ordinances but escape the constitutional and proportionality checks that restrain city governments.
This dynamic underscores what I have described elsewhere as the danger of private regulatory enforcement — boards exercising quasi-governmental power without meaningful accountability (see “Danger: Private Regulatory Enforcement”). And it confirms the culture that allows directors to believe they have a right to be wrong so long as they invoke the mantle of “business judgment.” But as I have argued in another post, that right does not extend to abuse (see “HOA Boards & The Right to Be Wrong”).
In theory, fiduciary duties and statutory obligations provide checks on board authority. In practice, those obligations are watered down by vague standards, regulatory capture, and a dispute system that routes owners toward costly, high-risk litigation rather than timely resolution. Franzese and others have pointed to the role of the Community Associations Institute (CAI), a national trade group representing attorneys, managers, and vendors who profit from a litigious enforcement culture. That culture reinforces incentives to fight rather than resolve. [5]
This produces what looks like apathy in HOA communities. Some of it is genuine disengagement, but much of it is imposed silence. Like citizens deterred from assembling by the threat of riot police, homeowners are chilled by the prospect of catastrophic fee awards. The result is not healthy indifference but conditioned withdrawal — apathy that could be mitigated if fee-shifting were reined in.
The industry itself is not blind to this dynamic. Attorneys, managers, and even some boards recognize that the looming threat of catastrophic fee awards suppresses challenges and keeps owners compliant. But because that suppression benefits those in power, there is little incentive to address it. What policymakers mistake for community apathy is, in large part, a system of engineered silence.[6] [7] [8]
Toward Reform
NVHOAReform proposes a structural fix: restrict HOA disputes to ADR. See our blog: Putting Owners First: A New Framework for HOA Dispute Resolution. A complete list of recommended reforms by the Coalition can be found here.
Conclusion
Prevailing-party clauses look fair on paper but are destructive in practice. They have been stretched into contexts where they do not belong, transformed from narrow contractual remedies into weapons that silence owners and entrench power. Reform is needed to keep HOA disputes out of the courts.
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Footnotes
[1] Fee-shifting provisions are not unknown in American law, but they almost always operate in one-directional, protective ways. For example, civil rights statutes (42 U.S.C. § 1988) award attorney’s fees to prevailing plaintiffs, but to defendants only when the suit is frivolous. Consumer protection laws (state UDAP statutes) and employment laws (Title VII, FLSA, state wage/hour provisions) follow the same model: one-way recovery favoring consumers or employees. Landlord/tenant statutes often tilt toward tenants or cap recovery to prevent abuse. Even in HOA law, California’s Davis–Stirling Act limits prevailing-party fees to actions enforcing governing documents (contract claims), not statutory violations. And UCIOA jurisdictions such as Colorado and Minnesota permit a private right of action but generally do not embed two-way prevailing-party fee provisions in statute. Nevada’s approach is therefore highly unusual: by coupling a statutory PRA with two-way fee liability under NRS 116.4117, it exposes homeowners — the weaker party — to risks almost never seen elsewhere in American law.
[2] Villa Milano HOA v. Il Davorge, 84 Cal. App. 4th 819 (2000) (recognizing CC&Rs as adhesion contracts in arbitration context); cf. Pinnacle Museum Tower Ass’n v. Pinnacle Market Dev. (US), LLC, 55 Cal. 4th 223 (2012) (enforcing CC&Rs despite adhesive nature). Courts overall have yet to squarely recognize CC&Rs as adhesion contracts in the prevailing-party context.
[3] California’s Davis–Stirling Act limits prevailing-party fees to actions enforcing governing documents — contract claims — not statutory violations. UCIOA jurisdictions like Nevada, such as Colorado and Minnesota, permit a private right of action but do not embed automatic two-way prevailing-party provisions in statute. Nevada’s approach is therefore highly unusual: by coupling a statutory PRA with two-way fee liability under NRS 116.4117, it exposes homeowners — the weaker party — to risks almost never seen elsewhere in American law.
[4] Paula A. Franzese & Steven Siegel, Trust and Community: The Common Interest Community as Metaphor and Paradox, 72 Mo. L. Rev. 1111, 1138 (2007) (describing boards’ ability to “launch a missile to kill a mouse” by pursuing trivial violations with disproportionate legal firepower); see also Paula A. Franzese, Privatization and Its Discontents: Common Interest Communities and the Rise of Government for ‘The Nice’, 37 Urb. Law. 335, 340–43 (2005).
[5] Paula A. Franzese, Privatization and Its Discontents: Common Interest Communities and the Rise of Government for “The Nice”, 37 Urban Lawyer 335, 340–43 (2005) (describing industry incentives that encourage enforcement over resolution); Susan F. French, The “Contract” Myth in Common Interest Communities, 33 Hofstra L. Rev. 403, 413–15 (2004) (analyzing the framing of HOAs as private contracts and its effect on enforcement); Nadav Shoked, Forget the Pink Flamingos, 74 Ala. L. Rev. 821, 825–33 (2023) (arguing that judicial deference to HOA decision-making entrenches a disciplinary, rather than problem-solving, culture).
[6] Community Associations Institute (CAI) publicly promotes alternative dispute resolution (ADR) as the preferred path for HOA conflict resolution but simultaneously supports prevailing-party fee recovery where litigation proceeds. See CAI, Public Policy: Alternative Dispute Resolution (updated 2022), https://www.caionline.org/Advocacy/PublicPolicies/Pages/default.aspx (endorsing ADR to reduce costs and preserve community relationships); cf. CAI, Public Policy: Construction Defects (endorsing prevailing-party recovery of attorney’s fees in litigation). CAI has not advanced policy proposals limiting fee-shifting clauses in CC&Rs.
[7] CAI state-level advocacy also reproduces or endorses statutes that embed prevailing-party fee recovery in HOA enforcement. See, e.g., CAI Alabama Chapter, Summary of Alabama Condominium Act (2022) (noting prevailing-party fee provisions); CAI Delaware Valley, Homeowner’s Association Statutes (2021) (describing statutory attorney-fee recovery provisions); CAI Connecticut Chapter, Common Interest Ownership Act Summary (2020) (same). Collectively, these materials reflect CAI’s acceptance of prevailing-party clauses as a standard feature of HOA law, with no call for narrowing their scope.
[8] Observation: A review of publicly available policies and articles from the two largest national HOA management companies, FirstService Residential and Associa, revealed no commentary or advocacy for reforming attorney-fee shifting mechanisms in CC&Rs. Their silence underscores the industry’s lack of incentive to address the chilling effect of prevailing-party clauses.
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