Nevada’s HOAs Need Limits
Where Are the Boundaries?
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Nevada has spent decades managing particular exercises of HOA authority. But it has done comparatively little to define the outer boundaries of that authority—what an HOA may be empowered to own, operate, regulate, or require its owners to do and finance through the declaration. NVHOAReform seeks advocacy grounded in analysis—not advocacy that hides contrary arguments. As you read this post, understand that we are not claiming to know the perfect boundary. We are asking why lawmakers and regulators have largely avoided addressing where the lines should be.
Continued silence – by owners, regulators, and lawmakers- leaves the boundary exactly where it is today: largely wherever the developer puts it.
Who decides?
A great deal of time is spent arguing about whether boards misuse their power and whether regulators effectively enforce the limits already on the books. Those debates are necessary—and need far more owners to participate constructively. But a more basic question should come first:
What limits the scope of an association’s authority and obligations in the first place?
There are two parts to that question:
The scope of authority: What may the HOA regulate or require owners to do?
The scope of obligations: What may the HOA own, operate or provide—and require owners to finance?
In Nevada, much of the answer originates with the declaration—the CC&Rs—written by the developer before future homeowners have any meaningful role in shaping them. A common-interest community is created by simply recording a declaration. The declaration requires no regulatory approval before it is recorded and imposed on future owners. NRED itself says there is “no state agency that reviews or approves” the public offering statement required for condominium and planned-development projects.
And here is the elephant in the room. NRS 116.2105(2) says: “The declaration may contain any other matters the declarant considers appropriate.”
That is about as broad a statutory invitation as one can imagine.
NRS 116.3102 then gives the association the statutory powers needed to operate the community—expressly subject to the declaration and including conferred by it. The statute does grant some authority of its own. But much of its practical effect is to give legal force to the powers, responsibilities and obligations established in the declaration.
That makes the declaration, at least in my assessment, far more than the simple private contract it is too often characterized as. It becomes a governing instrument that defines what the association may regulate, what it may own or operate, and what owners, notably absent at its creation, may ultimately be required to do and finance.
That is why what the developer puts into the declaration—effectively the governing law of the association—matters so much. The developer is not simply describing the community being sold. It is helping define the powers and obligations of an association that will continue long after the developer leaves—and that future owners will be required to obey and finance.
The same concern appears in declarant and special declarant rights. A declaration can reserve broad powers for the developer over governance, development, board composition, architectural control, property additions or withdrawals, and other community decisions. Those rights may serve legitimate development purposes, but they also raise the same boundary question: when do development rights become continuing control that works around the limits Nevada law otherwise seeks to impose?
That does not mean every developer-created power or obligation is extraordinary or improper. The problem is the absence of meaningful outer boundaries. Nevada provides remarkably few guardrails limiting what authority may be placed in the declaration, or what enterprises, services, facilities, obligations and recurring expenses may be placed inside the mandatory HOA structure in the first place.
Not Just Architectural Rules
As previously noted CC&Rs are far more than rules about homes, common areas and assessments. They define how broadly an association may expand what it does—and what owners must collectively pay for.
My own association’s CC&Rs illustrate the point. They authorize a familiar list of community services and facilities, then extend that authority to other “similar services and facilities.” That wording is typical all most all CC&RS-- and it matters. The listed items are not necessarily the limit. A board can decide that some new service or facility is sufficiently “similar” to something already authorized and bring it within the association’s operations.
The documents go further- again as is typical. They give the association powers that are not expressly written down at all if those powers are considered “implied” or “necessary” to carry out its stated purposes. Unless the documents or law specifically require an owner vote, the Board generally exercises those powers itself. In effect, the declaration does not simply describe what the association does today. Broad grants of authority leave my board substantial discretion to decide what else the association may do --without first returning to the owners for approval.
Owners are therefore not merely agreeing to the services and expenses listed when the home is purchased. They are also agreeing to a governance structure that allow boards to expand them.
The HOA Owns What?
The lists themselves are generally not the problem. The harder question is what those broader grants permit beyond that listed. My own HOA again provides a useful real-world example. The developer installed the community’s sewer connections. That is typical. What was not typical was leaving the association responsible for portions of that infrastructure rather than transferring responsibility to the local public authority.
The reasons behind that decision are suspect but go beyond this post. The important point is that I have yet to find that unusual obligation disclosed anywhere in my CC&Rs. Even the manhole covers bear the county seal, reinforcing what most owners would naturally assume—that the sewer infrastructure belongs to the public system.
Today, my HOA is responsible—and potentially liable—for those pipes. Owners receive no reduction in sewer charges for carrying that responsibility. The county has since prohibited this arrangement going forward. How this added infrastructure responsibility affects the association’s insurance cost and exposure is unclear.
The point is not simply that county government eventually stopped the practice. The question is:
Why was a developer able to place that permanent infrastructure obligation on future homeowners in the first place?
A Boundary—But Only Part of One
Recently, Nevada’s Supreme Court recognized a related problem and placed an important limit on implied HOA authority. In Moretto, the Court held that restrictions on the use or design of individually owned property must be expressly authorized.[2] It saw a danger in treating broad HOA powers as enough to justify new restrictions on individually owned property. And even expressly authorized restrictions remain subject to reasonableness.
That was an important boundary. But the protection was limited. It addresses what an association may impose on your individually owned property. It does not establish the same clear boundary around what the association itself may undertake through common property, services, facilities, contracts and other activities that owners collectively must finance.
That leaves the other half of the problem largely unanswered:
How far may an HOA or its creator expand what it does—and require every owner to underwrite—before the law says that is simply outside the proper scope of a homeowners association?
Moretto settled one question: an HOA cannot rely on merely implied authority to impose use or design restrictions on individually owned property. But it did not settle the broader policy question raised here: should Nevada allow some powers to be granted at all? Why must homeowners first inherit the obligation, discover the problem, fight about it, and then wait for government or the courts to draw the line afterward?
So What?
Consider where the absence of broader boundaries can lead. Moretto says an HOA cannot simply infer authority to impose use or design restrictions on individually owned property. But if the declaration itself states the restriction, or expressly grants the board authority to impose it, the question changes:
How much authority should the declaration itself be allowed to give?
Should a board be able to prohibit a white house simply by changing an approved color palette? What limits restrictions simply labeled “architectural design”? Controls what owners place inside their garages? Decides which owners are “qualified” to serve on the board—or to run against those already there?[3]
Should a declaration be able to give a board authority over what an owner places in a backyard that cannot be seen from the street or neighboring homes? A bird feeder? The decorative ends of patio-cover rafters? Should a board be able to prohibit a white house simply by changing an approved color palette? What limits restrictions simply labeled “architectural design”? Controls what owners place inside their garages? Decides which owners are “qualified” to serve on the board—or to run against those already there?[3]
And the reach can extend well beyond individually owned property or governance procedures. Declarations already allow HOAs to own and operate golf-course complexes, restaurants and other substantial amenities. So where is the boundary? Why not an assisted-living facility, daycare center, medical or rehabilitation facility, community shuttle, driverless transportation service, or some other amenity a developer believes will help market the community—and then leave owners to underwrite it long after the developer departs?
The problem is not that any one of those ideas is inherently improper. Some might be popular and even help sell homes initially. But they also carry business and financial risks that homeowners may ultimately be required to absorb. It is that once placed into the declaration, a marketing feature, “expanded amenity”, or required service can become a permanent legal and financial obligation attached to every home.
That is where the familiar “free-market” answer and appeal to “consumer choice” start to become uncomfortable.
Disclosure Is Not a Boundary
The usual response is that buyers choose. The declaration disclosed. If buyers do not like the obligations, they can purchase somewhere else. If enough consumers reject the concept, developers presumably will stop offering it.
But disclosure is not the same thing as a substantive limit or consumer understanding. Consider how differently we approach other major consumer obligations. Imagine if credit-card regulation worked this way: anything could be put in the contract is allowed so long as the company disclosed it before you signed. We would not call that consumer protection. We would call it disclosure—and, likely, an unfair practice..
Real consumer protection also places limits on what terms may be imposed in the first place. Some terms are restricted. Some practices are prohibited. Some rights cannot simply be signed away. Regulators do more than hand consumers a disclosure form and walk away.
That is why “it is a private contract” fails as a complete justification for leaving declaration content largely unchecked. Disclosure tells a buyer what the document says. It does not answer whether Nevada should permit the document to say it.
Being told about a power is not the same thing as deciding that power should exist.
Nevada Knows How to Draw Lines. So Why Not Here?
To be fair, Nevada lawmakers have created some HOA boundaries. They override governing documents on specific subjects such as political signs, flags, landscaping and other owner protections. Chapter 116 also – not surprising- provides generally that governing-document provisions conflicting with the statute yield to the law. That shows the State knows how to say: an HOA may not do this, regardless of what the declaration says.
But those protections have developed largely one subject at a time—and usually after the problem became apparent. What Nevada has not established is a broader boundary around what kinds of businesses, services, financial obligations or private regulatory powers may be built into a declaration in the first place.
With HOA-operated childcare already contemplated by one Nevada city’s ordinance, what follows next?[4] An assisted-living facility? A medical or wellness center? Some other substantial service or enterprise effectively underwritten by homeowners simply because the declaration says so?
To be clear, I am unaware of an HOA-owned childcare facility in Nevada. But nothing I have found in Chapter 116 establishes a general boundary categorically preventing one. At end, lawmakers are responding to yesterday’s controversy while the next community concept may already be creating tomorrow’s obligations.
The Mortgage Market Already Looks for Some of These Risks
There is another revealing comparison. The financing side of homeownership is heavily regulated and risk-screened. Mortgage underwriting does not simply ask whether the borrower can make the monthly payment and validate the home’s value. It also examines characteristics of some common-interest communities that may create unacceptable project risk.
The mortgage market already draws substantive lines around some common-interest community business models. Fannie Mae, for example, treats certain continuing-care arrangements as project-eligibility concerns. Its rules also identify certain HOA-operated business activities—including restaurants, spas and health clubs—as potential project-eligibility issues.[5]
Think about that. The mortgage system asks whether certain association-operated businesses create unacceptable risk before it puts mortgage money at risk. Yet Nevada HOA law does not ask this question for its homeowners:
Should a developer be able to make that kind of enterprise a mandatory association obligation in the first place—even if the first generation of consumers is willing to buy it?
We have developed extensive protections and risk screening around the money used to finance a home. We have developed far fewer guardrails around the private obligations that can be permanently attached to the home itself.
Where Are the Boundaries?
The free-market answer still matters. Developers should have flexibility to build different kinds of communities, and buyers should have choices. But flexibility without meaningful boundaries can become a blank check.
The question is not whether Nevada should decide every amenity a community may offer. It is whether there should be some outer policy boundary around what a developer may permanently attach to residential property through a declaration backed by mandatory assessments. Can an HOA be made responsible for virtually any service or enterprise a developer thinks will help sell homes? Can almost any future operating expense become a permanent assessment obligation simply because the declaration says so? How much authority over individually owned property may be handed to future boards? And should not we these questions before, rather than after, hundreds or thousands of homes become bound by the answer?
And remember who is currently making that decision: the developer—not the future owners who will be required to live with and finance it.
Its Time to Speak Up
America has spent decades deciding that private choice does not require leaving every contractual term untouched. We place substantive limits on mortgages, consumer credit, leases, deed restrictions and countless other private arrangements. Why should HOA declarations—documents capable of imposing permanent obligations on a home and its future owners—be treated differently?
Once again to be clear, this post is not claiming to know where the boundaries should be. It is asking why lawmakers and regulators have largely avoided this policy question of where lines should be drawn. Why are Nevada lawmakers not asking what permanent private obligations may be attached to a home through an HOA declaration?
I have found little evidence of a broader debate over where the outer boundaries of developer-created HOA authority and obligations should lie. Nevada has been drawing individual lines after controversies arise, rather than debating the architecture of the boundary itself.
NVHOAReform seeks advocacy grounded in analysis—not advocacy that hides contrary arguments. There are legitimate arguments on the other side, and a short summary of the strongest is included below.[6]
We believe owners see the risk. This post hopes to bring them into focus. But unless they collectively and sufficiently demand an answer, lawmakers never have to publicly explain where they believe the boundary should be
Silence leaves the boundary exactly where it is today: largely wherever the declaration puts it.
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[1] Academic literature has examined HOAs as a form of private government and questioned whether ordinary corporate-law deference fits a system in which homeowners lack many of the practical exit and accountability mechanisms available to corporate shareholders. Michael Pollack’s Judicial Deference and Institutional Character: Homeowners Associations and the Puzzle of Private Governance addresses that issue directly.
[2] Moretto v. Elk Point Country Club Homeowners Ass’n, 138 Nev. 195, 507 P.3d 199 (2022). The Nevada Supreme Court adopted Restatement (Third) of Property: Servitudes section 6.7 and 6.9, distinguishing general association authority from the power to impose use or design restrictions on individually owned property and requiring express authorization for the latter.
[3] I am currently involved in litigation with my association concerning, among other issues, whether the board had authority to determine my eligibility to serve as a director. I have written about that dispute separately.
[4] North Las Vegas zoning regulations expressly contemplate a daycare center “managed and operated by the Homeowners’ Association or the management company,” subject to conditions including service limited to residents and employees of the development rather than the general public.
[5] Fannie Mae’s Selling Guide treats a condominium or cooperative project operated wholly or partly as a continuing-care community or facility as ineligible. A project that merely makes continuing-care services available may remain eligible only under specified conditions, including limitations involving HOA ownership or operation and mandatory owner participation. Fannie Mae also identifies certain non-incidental HOA business operations—including restaurants, spas and health clubs—as project-eligibility concerns.
[5] Fannie Mae’s Selling Guide treats a condominium or cooperative project operated wholly or partly as a continuing-care community or facility as ineligible. A project that merely makes continuing-care services available may remain eligible only under specified conditions, including limitations involving HOA ownership or operation and mandatory owner participation. Fannie Mae also identifies certain non-incidental HOA business operations—including restaurants, spas and health clubs—as project-eligibility concerns.
[6] Developers need flexibility to create different kinds of communities, purchasers retain some freedom to choose among them, Chapter 116 already imposes subject-specific limits, and owners may in some circumstances later amend their governing documents. Any broader boundary also raises difficult line-drawing questions: which services, amenities or obligations should remain permissible, which should require heightened owner approval, and which—if any—should be prohibited altogether? Those are serious considerations. They are also reasons to have the policy debate, not reasons to avoid it.
