By Mike Kosor, Founder of NVHOAReform
Whenever the idea of stronger HOA transparency rules comes up, one objection always surfaces:
“But HOAs are private. You can’t treat them like public governments or public companies.”
While not all agree with this framing, it sounds persuasive — until you look at how the law treats other “private” organizations that still sell to or affect the public.
And once you do, the argument collapses.
The “Private” Argument Misses the Point
Yes, HOAs are chartered as private nonprofit corporations under Nevada law.
But they are openly marketed to the general public.
Anyone with a qualifying mortgage can buy into them. There’s no screening, no license, no minimum wealth requirement, no proof of sophistication.
Contrast that with truly private companies: Securities laws prohibit ordinary consumers from buying ownership stakes in private companies unless they qualify as “accredited investors” — meaning they must show substantial assets or professional knowledge to understand the risk. The Securities and Exchange Commission (SEC) views accredited investors as sophisticated and able to fend for themselves in making securities investments without the need for the main disclosure protections. And even this long held view is being challenged as deeply flawed by creditable law journals,[1]
HOA buyers get no such protection or discussion.
They can — and often do — commit their life savings to property governed by an HOA without receiving even basic information about how that HOA is run.
Industry advocates such as Community Associations Institute (CAI) maintain that resale disclosure packages adequately protect buyers entering homeowners associations.[2]
Yet in private capital markets, regulators have long recognized that disclosure alone is insufficient—hence the use of accredited investor criteria to limit access to offerings.
The absence of any comparable gatekeeping leaves ordinary homebuyers exposed to complex private regimes wielding public-style powers without public-style safeguards.[3]
The Fiction of Private Contracting
HOAs are often defended as “just contracts between private parties.” But the contract isn’t negotiated.
Buyers don’t get to bargain over the terms. The declaration of covenants, conditions, and restrictions (CC&Rs) is drafted entirely by the developer and recorded before the buyer even appears.
Accepting the deed is treated as “constructive consent” under the law — even if the buyer didn’t read or understand it. It functions like a legal sleight of hand: instead of actual agreement, the law presumes consent from the mere act of purchase — even though that “consent” is neither informed nor voluntary in the way contract theory assumes. (For a deeper diver: CC&Rs and "constructive consent")
This isn’t a true private negotiation. It’s a take-it-or-leave-it adhesion contract that binds people to an ongoing government-like system they didn’t choose and can’t realistically escape.
Quasi-Governments Without Oversight
Despite their “private” label, HOAs exercise governmental powers:
They levy mandatory assessments (tax-like)
They adopt and enforce rules (like ordinances)
They impose fines and penalties
They can even foreclose on property
Yet unlike actual governments, HOAs are not subject to public records laws, procurement rules, competitive elections oversight, ethics oversight, or rarely press scrutiny.
They wield public-style power with none of the public-style accountability.
Why This Matters
This “private” label has become an excuse for opacity — a way to justify the near-total lack of governance information available to prospective buyers.
But buyers are the public.
And if they’re being asked to invest in these corporations, they deserve the same baseline transparency we require elsewhere.
Public companies must file reports with the SEC and even allow non-shareholders to attend their annual meetings. Local governments post budgets, agendas, and contracts online. Even small nonprofits must make their tax filings public.
HOAs do none of this — yet they’re sold to the public every day.
The Bottom Line
Calling HOAs “private” has become a convenient fiction — one that allows developer-drafted corporations to govern neighborhoods with virtually no outside scrutiny.
They may be private on paper. But they function as public-facing, public-impacting entities — and the law should treat them that way.
Transparency isn’t about punishing boards.
It’s about giving consumers — and communities — the information they need to make informed choices.
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This post is part of the NVHOAReform.com series exploring how Nevada’s HOA system drifts further from public accountability — and how it can be fixed.
Readers may also be interested in:
Nevada Supreme Court Ignores the Law on HOA Disputes—Become Policy Makers In Robes
Nevada Knows Fee-Shifting Is Dangerous — But Uses It In HOAs
The Secrecy Wall: Regulator’s “Confidentiality” Undermines HOA Accountability and Trust
Nevada’s HOA System Remains “Unfinished”
Dispute resolution (ADR) reform must be a Legislative priority
For a complete list of our posts go here.
Go here for NVHOAReoform's current list of HOA Law Changes – Remedies for Consideration.
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[1] Andrew N. Vollmer, Abandon the Concept of Accredited Investors in Private Securities Offerings, 49 Sec. Reg. L.J. 5 (2021), available at https://ssrn.com/abstract=3719280.
[2] See Community Associations Institute, Best Practices: Community Association Governance (2005) (asserting that “the disclosure process gives prospective buyers all the information they need to make informed decisions”); see also CAI, Public Policy: Disclosure Before Sale (position statement, updated 2021) (promoting resale disclosure packages as the primary consumer protection mechanism for HOA homebuyers).[2]
[3] Paula A. Franzese, Privatization and Its Discontents: Common Interest Communities and the Rise of Government for “the Nice”, SSRN (2005) (“cloak the powers of government in the garb of private contract” and impose “significant constraints on fundamental liberties” without public-law safeguards); Evan McKenzie, Privatopia: Homeowner Associations and the Rise of Residential Private Government (1994) (describing HOAs as having “amassed powers normally reserved to public governments” even though “entry requires nothing more than the ability to buy a home”).
