How Courts Recognize HOA Power Without Extending Public Protections
In an earlier NVHOAReform post, HOAs as Quasi-Governmental?, we examined the growing judicial and policy recognition that homeowners’ associations (HOAs) function much like local governments. This post takes that analysis further — exposing how Nevada courts and others acknowledge HOA power yet refuse to extend constitutional protections to the people they govern.
The Quasi-Governmental Paradox in Nevada and Beyond
HOAs regulate land use, enforce community-wide rules, levy mandatory assessments, and provide municipal-type services. In Nevada, over half of new homes are built in HOAs — making them the default form of local governance for many residents.
But here’s the paradox:
When homeowners challenge HOA authority or seek due process, equal protection, or First Amendment rights, courts fall back on private-law doctrines. They treat HOAs as private corporations governed by:
Property servitudes law
Nonprofit corporate statutes
Contract interpretation
The Constitution doesn’t apply in most HOA disputes. That means public-type powers are exercised without public-type safeguards.
Constructive Consent and the Limits of HOA Contract Law
The prevailing legal justification for enforcing HOA covenants is rooted not in standard contract law — which would require genuine, informed "assent" — but in property law’s servitudes doctrine and broad claims of “public policy.”
Key legal mechanisms:
Constructive notice — CC&Rs are recorded against the land; accepting the deed is treated as agreement, whether or not you actually read or understood them.
Covenants run with the land — The original, developer-drafted terms bind all future owners unless amended, often with near-impossible supermajority requirements.
Delegated authority for future rules — Boards can adopt new restrictions after you buy, based solely on delegation language in the original documents.
Amendment barriers — Developer vetoes and high voting thresholds entrench original terms.
Private-law governance — Constitutional protections generally don’t apply; courts defer heavily to boards under the business judgment rule.
Traditional contract theory assumes both parties can engage in effective bargaining. But as Paula A. Franzese and Steven Siegel write, the “complex CIC servitude regime that buyers ‘assent’ to is more akin to an adhesion contract than the product of informed, meaningful choice. A prospective homebuyer can no more effectively negotiate with respect to the complex provisions of CIC governing documents … than a consumer can negotiate with an insurance carrier with respect to the boilerplate terms and conditions of an insurance policy. In each case, the superior party simply ‘offers’ the contractual provisions on a take-it-or-leave-it basis.” [1] This “constructive consent” problem is also explored in our post, CC&Rs and Constructive Consent.
Why Courts Won’t Close the Gap
This paradox is not lost on the courts. Judges and policymakers increasingly describe HOAs as “quasi-governmental” because their powers resemble those of municipalities. In Nevada, the Supreme Court said as much in Kosor v. Olympia (2020), recognizing that HOAs exercise powers “akin to those of a quasi-governmental entity.” Courts elsewhere have reached the same conclusion: California likens them to municipalities, New Jersey calls them a “new form of governance,” and Colorado has acknowledged the governmental-like control they exercise over property owners. Yet when it comes to enforcement, courts retreat to private-law doctrines — treating CC&Rs as property servitudes or contracts of adhesion — and in doing so, they avoid extending constitutional scrutiny to HOA governance. [2]
The deeper problem is that courts could close this gap but refuse to do so. Expanding constitutional oversight into what is currently considered a private-law domain would require new legal rules, and judges insist that task belongs to the legislature. This stance allows them to acknowledge the tension while declining to resolve it — effectively telling homeowners: “Yes, your HOA acts like a government, but if you want government-type protections, take it up with the legislature.”
The Systemic Factors Locking It In
Judicial efficiency as a shield — Courts uphold CC&Rs in the name of avoiding endless re-litigation of HOA authority.
Developer-drafted governance — The rules owners “consent” to were written to protect developer priorities, not to balance rights of future residents.
Severe power imbalances — HOAs wield foreclosure powers, have insurance/indemnity protections, and benefit from asymmetric fee-shifting rules.
Lack of transparency — Buyers get dense legal packets late in the sale process; post-turnover boards may make changes in sparsely attended meetings.
Asymmetric risk in disputes — Prevailing-party clauses and mandatory ADR discourage owners from challenging unreasonable rules.
As Franzese and Siegel observe: “A healthy marketplace depends on some modicum of equal bargaining power between its players, or, in the alternative, a meaningful governmental role in protecting the consumer.”
In HOAs, neither exists — and the paradox of public power under private law keeps it that way.
Why This Matters for Nevada HOA Reform
Legislatures, not courts, must address the gap — Judicial deference and separation-of-powers reasoning mean that constitutional-type safeguards for HOAs will not come from the bench.
Without reform, the paradox deepens — HOAs will continue exercising quasi-governmental authority without the transparency, accountability, or rights protections expected of public bodies.
Homeowners face public-level obligations with private-level remedies — A structural mismatch the current law is designed to preserve.
Policy Steps to Break the Paradox
Move to greater constitutional-level due process for enforcement actions.
Mandate plain-language disclosures of HOA powers and limits before purchase.
Prohibit municipal policies that make HOAs the only option for new housing.
Establish legislative oversight for HOA governance in markets.
Related NVHOAReform Posts
HOAs as Quasi-Governmental?
CC&Rs and Constructive Consent
Double Taxation and HOAs
FAQ: HOA Power and Public Protections
Do HOAs have to follow the Constitution in Nevada?
Generally no. Courts treat HOAs as private entities governed by property and corporate law, not public constitutional law.
What is the HOA quasi-governmental paradox?
HOAs exercise powers similar to local governments but without public-law safeguards like due process, equal protection, or free speech rights.
Why don’t courts fix this problem?
First, deep pocket interests are not served by changes. They resist any challenge or change. Second, Courts defer to legislatures, seeing expanding constitutional oversight of HOAs a legislative — not judicial — function.
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[1] See Susan F. French, The “Contract” Myth in Common Interest Communities, 33 Hofstra L. Rev. 403, 406–10 (2004) (explaining that enforcement of CC&Rs rests on servitudes law and “community expectations,” not genuine assent); Paula A. Franzese & Steven Siegel, Trust and Community: The Common Interest Community as Metaphor and Paradox, 54 Brook. L. Rev. 135, 154–58 (1988) (describing CC&Rs as adhesion contracts imposed without bargaining); see also Restatement (Third) of Property: Servitudes § 3.1 (2000) (justifying enforcement on efficiency and policy grounds).
[2] See Kosor v. Olympia Cos., LLC, 136 Nev. 475, 480, 473 P.3d 1029, 1034 (2020) (recognizing that HOAs exercise powers “akin to those of a quasi-governmental entity”); Comm. for a Better Twin Rivers v. Twin Rivers Homeowners’ Ass’n, 192 N.J. 344, 365, 929 A.2d 1060, 1073 (2007) (describing HOAs as “a new form of governance” exercising “quasi-governmental powers”); Damon v. Ocean Hills Journalism Club, 85 Cal. App. 4th 468, 475, 102 Cal. Rptr. 2d 205, 209 (2000) (holding that a homeowners association “is a quasi-government entity, paralleling in almost every case the powers, duties, and responsibilities of a municipal government”); Evergreen Highlands Ass’n v. West, 73 P.3d 1, 7 (Colo. 2003) (observing that HOAs exercise “a significant measure of control over property owners” akin to governmental functions); cf. Hidden Harbour Estates, Inc. v. Norman, 309 So. 2d 180, 182 (Fla. Dist. Ct. App. 1975) (explaining that restrictions imposed by condominium associations serve a role similar to municipal regulations).
