Nevada Says HOA Owners Have Rights. Try Enforcing Them.
Updated: 1 day ago
Hearings, fine limits, NRED complaints, mediation and “you can sue” sound reassuring. Then comes the reality.
Nevada HOA owners are told they have substantial legal protections. You get a hearing. Fines are limited. You can complain to NRED. You can use dispute resolution. And if all else fails, you can sue.
All of that sounds reassuring. The problem begins when an owner actually tries to use those protections. The hearing may be conducted by the same association accusing you. A health, safety and welfare label can change the ordinary fine rules. NRED may never decide the legal question. Mediation may produce no decision. The referee process requires the association’s consent.
And then there is the ultimate protection: “You can sue.”\
That may be true. But before relying on it, you should understand what comes next.The problem is how far they often do not go.
Start With HOA Fines
HOA fines are always an upfront topic, with many well-intended discussions beginning with a simple question: How, and by how much, can my HOA board fine me?
An article by Nevada Real Estate Group—notably worth the read—is illustrative. It tells readers:
Nevada HOAs cannot fine you without written notice, cannot deny you a hearing, and cannot foreclose on a lien made up solely of fines. NRS 116.31031 requires a published fine schedule and a hearing before any fine sticks; NRS 116.4117 lets you sue an association that breaks those rules.
That sounds reassuring. Much of it is also technically correct. But now read between the lines.
“Cannot Deny You a Hearing”
Yes, Nevada law requires notice and an opportunity to be heard before an HOA imposes a fine. But who conducts that hearing? Usually the same association that accused the owner of violating the rules.
The board is not a court. Remember—they are your neighbors and most likely have no legal training. The hearing is not before an independent decision-maker. Too often, association counsel is in control. You may therefore receive your statutory “hearing” without receiving anything resembling neutral adjudication.
“Cannot Foreclose on a Lien Made Up Solely of Fines”
Not necessarily.
Nevada law contains an exception for violations involving an imminent threat to health, safety or welfare. Once the HOA classifies the violation that way, fines can enter the foreclosure process in circumstances where ordinary fines cannot.
And who initially makes that HSW determination?
The HOA itself. That is a fairly important fact hidden behind the words “cannot foreclose.”
“Requires a Published Fine Schedule”
Again, not the whole story.
HSW fines are different. The ordinary statutory fine schedule and dollar limitations do not operate the same way once the HOA labels the conduct an HSW violation.
The protection sounds quite different once you understand the exception.
“Lets You Sue”
Maybe. But for what—and at what risk? And is court even your allowable next step?
Not every questionable HOA decision gives an owner a viable lawsuit. Even when an owner does have a viable claim, there are other questions. So: What are the prerequisites to litigation?
Start with NRED. Nevada lawmakers recognized the problem with forcing HOA disputes directly into the civil litigation system. They gave the Real Estate Division an investigative and enforcement role and created the CIC Commission with adjudicative authority over matters brought before it.
That sounds like an obvious first line of protection. Again, read between the lines.
NRED investigates violations of law, not contractual disputes over CC&Rs. When it does investigate, the process occurs largely outside public view. Investigative information is protected by broad statutory confidentiality. More importantly, filing a complaint does not assure an owner that NRED will answer the legal question presented, initiate enforcement or place the matter before the Commission for an adjudicated result.
We have written extensively about that problem and link those discussions. Start here: When Confidentiality Becomes Unexplained Government Decision-Making
If NRED does not—or cannot—resolve the dispute, or makes policy in secret, as the post above suggests, and litigation remains the intended path, the owner may next confront Nevada’s alternative dispute-resolution requirements.
For many HOA disputes involving governing documents, Nevada law requires ADR before a civil action may proceed. The system offers mediation, a referee program and arbitration.
That sounds reassuring too: Ways to resolve the dispute without going to court.
Again, read between the lines.
Mediation does not decide who is right. A mediator attempts to get the parties to agree. If they do not, the owner can leave mediation with exactly the same unresolved legal question brought into it. And mediation can become little more than a procedural stop on the way to court when one party has no interest in compromise. Read more: Who Really Does What in Nevada’s HOA System- At Least On Paper
The referee program is different—but it requires mutual consent.
It offers perhaps the most cost-effective avenue in Nevada’s existing system for obtaining an independent written evaluation of the merits. A referee can hear the parties, review the evidence and governing documents, and issue a nonbinding decision.
There is a catch. Both parties must agree to use it. If the association refuses, the dispute goes to mediation.
Think about that. Nevada created a relatively inexpensive process capable of telling the parties who has the stronger position, but the party whose conduct is being challenged can refuse to participate in it. You are unlikely to find that complication in reassuring claims that “Nevada law gives you powerful protections most people never use.”
So owners should ask: Who is really being protected here?
And are the difficulties owners face using these programs simply an unfortunate consequence of the system—or partly a product of how the system was designed?
Arbitration raises its own questions of cost and mutual consent. We address those elsewhere rather than turn this post into a treatise on Nevada ADR.
Two questions remain particularly difficult to ignore: Why would an association refuse a potentially cost-saving, nonbinding independent evaluation of the dispute?
And perhaps more importantly: Why did Nevada make access to that evaluation optional?
The larger point is simpler:
Before an owner ever reaches the courthouse promised by “you can sue,” the owner may already have asked the regulator for help, received no enforceable answer, completed required dispute resolution without obtaining a decision—and spent considerable time and money getting there.
Then comes the lawsuit.
First, try finding a lawyer experienced in Nevada HOA law willing to represent an individual owner. That will not be easy. Many owners find it impossible. You may find a capable attorney, but how much will you spend simply educating that attorney—at $400 an hour or more—on the peculiarities of Chapter 116? Read more: The HOA Access-to-Counsel Problem.
Then ask whether the dispute is worth the financial risk. Under the traditional American Rule, each side ordinarily pays its own attorney fees. But HOA disputes often come with something more dangerous: statutes and governing documents that can allow the prevailing party to recover fees. Lose the case or have it dismissed with prejudice, and you may not simply lose what you paid your lawyer. You may face a substantial claim for the association’s fees as well. Read more: Putting Owners First: A New Framework for HOA Dispute Resolution
Is that in your budget? And even if it is, does the cost-benefit analysis make sense?
Now consider the other side of the courtroom. The association board is spending association money—including money collected from you and your neighbors—to defend its decision. The individual owner feels every litigation dollar personally. The directors making the decision do not. And do not assume someone inside the process will necessarily stop an aggressive board before litigation begins. Association counsel represents the association, directed by the board—not the owner challenging it. Counsel may urge restraint. But a legal opinion can just as readily give the board confidence to proceed. Read more: When Advice of Counsel Becomes De Facto Law.
If the decision is later challenged, two more defenses may enter the discussion: business judgment and advice of counsel. Read more: HOA Board Paper Accountability
So the owner can face an extraordinary imbalance. The board makes the decision. NRED may never resolve the legal question. The association can refuse the referee process.
Mediation may resolve nothing. Association funds defend the decision.
Counsel may provide the legal rationale. And if the decision proves wrong, the individual directors may still argue that they exercised business judgment in reliance upon legal advice.
Meanwhile, the owner’s protection was: “You can sue.”
Read between those lines. Knowing how to do that can make a critical difference.
That Is the Point
None of this means Nevada’s HOA statutes are meaningless. Far from it. The problem is that shorthand descriptions of those statutes can make protections sound much stronger and much simpler than they operate in practice.
Nevada may have some of the strongest HOA laws in the country. But that is not enough. Owners need to understand when those laws protect too little—and require far too much from the owner forced to enforce them.
There is far more to understanding Nevada HOA law than reading the reassuring sentence.
The question needs to be: what comes after it?
