When the Law and HOA Practices Collide
Have Nevada's HOA Regulators Abandoned Owners? — Part 2
This post examines the 19 representative questions raised in Part 1 of our series Have Nevada's HOA Regulators Abandoned Owners? They are questions that homeowners regularly ask and reasonably expect to have clear answers. Yet, as readers will discover, many do not. They share an important characteristic: the absence of a timely, authoritative, and accessible answer that can become a substantial burden on homeowners.
This is not necessarily because the questions are unusually complicated. Some involve existing statutory protections that have not been consistently interpreted or enforced; others expose gaps or uncertainties that the responsible regulatory institutions have not adequately examined, clarified, or addressed.
Here explain explain briefly why these questions matter, what remains unresolved, and directs readers to more detailed articles where available for a better understanding. For thsoe seeking a more indepth understanding we point to additonal resources.
Because of the breadth of issues covered, this post is considerably longer than our usual articles. As such we have indexed the questions. This post is intended not only to examine persistent problems, but also to serve as a reference resource for homeowners, lawmakers, and others seeking to understand specific issues and our call for meaningful regulatory reform.
The Common Thread: Unresolved Questions Become Homeowner Burdens
The questions and associated controversies that follow involve different statutes, different practices, and different interpretations. Some require regulatory clarification. Others may require legislative amendment or judicial determination.
But they share an important characteristic: the absence of a timely, authoritative, and accessible answer can itself become a substantial burden on homeowners.
Consider what happens when the regulatory system leaves a recurring question unresolved.
One association's attorney develops an interpretation. Its board relies on that advice. An owner challenges the practice. NRED may investigate and close the complaint without publicly resolving the legal question. Another association may then adopt a similar practice, and another homeowner must begin the process again.
This cycle does not necessarily demonstrate that the association's interpretation was wrong or that the regulator acted improperly.
It does demonstrate a structural weakness: Nevada's HOA system does not consistently produce accessible interpretations that help prevent the same disputes from recurring.
The consequences are particularly serious because homeowners cannot simply choose not to participate in their association. Assessments are mandatory. The association exercises powers over their property and finances. Its directors and managers make decisions homeowners must live with.
The Legislature established Chapter 116, an Ombudsman's Office, NRED's enforcement responsibilities, and the CIC Commission to provide legal protections and administrative oversight.
Homeowners should reasonably expect more from that system than the opportunity to file a complaint, receive a closure letter, and hire an attorney if they disagree.
Index of the questions from Part 1 addressed below.
A. Control and Authority Limits
1. Can HOA boards sidestep competitive bidding before committing substantial owner money?
2. Can a developer control an HOA indefinitely?
3. Can a board decide that an owner is not qualified to run for the board?
4. Can a board remove an elected director without an owner recall?
5. Who decides when a board actually has the statutory authority it claims to exercise?
B. Homeowners Meaningfully Participation
6. Can HOA boards conduct private workshops?
7. Can a board make decisions in private?
8. Can an HOA require an affidavit restricting publication or impose other conditions before releasing records?
9. Does a virtual-only meeting satisfy Nevada's meeting requirements?
10. Can associations withhold board packages or delay access to supporting documents until after the board acts?
11. Must HOA boards inform homeowners about litigation—and account for their decisions?
C. Decision Authority
12. Can an HOA board bypass an owner vote on litigation by declaring it a health, safety and welfare matter?
13. Should the board be permitted to bring litigation committing owner funds side-stepping an owner vote by declaring the matter one of health, safety and welfare?
14. Should reliance on association counsel, by itself, satisfy the board's fiduciary obligation to act on an informed basis?
15. Should NRED independently determine whether the legal advice relied upon by a board is actually consistent with Chapter 116?
16. Do directors fulfill their duty to exercise independently when significant decisions originate with management or association counsel then merely approved absent a transparent examination?
17. Should a developer or board be allowed to approve contracts involving affiliated management companies or other related businesses?
D. Statutory Protections in Practice
18. Should HOA owners be required to complete alternative dispute resolution (ADR) when the process often provides no decision at all?
19. When lawmakers make alternative dispute resolution mandatory before litigation should the courts make it waiverable?
20. Should civil litigation be the primary means of resolving disputes over HOA governing documents?
A. Control and Authority Limits
1. Can HOA Boards Sidestep Competitive Bidding Before Committing Substantial Owner Money?
This should not be a difficult question. Nevada recognizes competitive bidding as an important protection when associations spend homeowner money. NRS 116.31086 establishes requirements concerning bids for certain association projects, while NAC 116.405 directs community managers to obtain multiple bids when practicable.
Yet NRED has taken the position that the decision to solicit bids may itself be discretionary. That interpretation creates a significant loophole: an association may effectively avoid the protection by choosing not to solicit bids in the first place.
The Coalition has repeatedly asked NRED and the CIC Commission to clarify what circumstances make competitive bidding practicable and when failing to solicit bids violates Nevada's requirements.
The question remains unresolved despite formal efforts to obtain clarification.
2. Can a Developer Control an HOA Indefinitely?
The legal answer is unequivocally no. Enforcing that requirement is the problem. NRS 116.31032 establishes conditions requiring termination of declarant control. Association governing documents can establish earlier termination requirements. Lawmakers have also rejected multiple efforts to allow Master Associations to operate without definitive termination requirements. Yet that very outcome is occurring in practice.
Developers have demonstrated that control can continue for nearly three decades without a clear end in sight—evne absent a realistic prospect of completing the development needed to trigger turnover. This reality, even if only a small sample size of HOAs state wide, cannot be reconciled with the purpose of Nevada's statutory termination requirements and the continued inaction of its regulators.
Disputes exist today over what constitutes a "unit", whether the 2015 legislative change in the turnover threshold from 75% to 90% altered declarations already in place, and whether a "maximum number" of units can be sufficiently established without a definite numerical limit.
The problem is not that these disputes arise, whether for legitimate reasons or otherwise. It is that Nevada's regulators have left them unresolved. That uncertainty is being leveraged in some cases to prolong developer control indefinitely, denying homeowners the opportunity to elect all those who govern their association.
The problem becomes particularly troubling when the developer also owns or controls the management company receiving substantial association contracts. The developer-controlled board is responsible for recognizing when control must terminate, while the developer has a financial interest in its continuation.
The Coalition's position is that the statutory meaning of a unit cannot be altered by a declaration; the 2015 change in the turnover threshold did not displace earlier termination requirements in existing declarations; and a purported maximum number of units that provides no ascertainable numerical limit should not be permitted to defeat as the Legislature's termination requirement.
None of our interpretation nor the developer's competing interpretation has the force of law. We are not asking regulators simply to accept our interpretation or developer's. We are asking them to resolve these disputes, explain the statutory basis for their conclusions, and enforce the resulting requirements. Homeowners should not have to finance years of administrative proceedings and litigation merely to establish when they are entitled to govern their own association.
Related NVHOAReform articles: Developer Control and the Infamous AB 192 (2015); Declarant's Control—Misunderstood; Developer Control Even After Control Termination—Dark Secret #2; and Declarant Control: When Elections Can Be Merely Symbolic.
NRED reference: Elections and Board Member Removal — Frequently Asked Questions
3. Can a Board Decide That an Owner Is Not Qualified to Run for the Board?
NRS 116.31034(13) directs an association not to place an ineligible candidate on the ballot and to prohibit an ineligible person from serving as a director or officer. But NRS 116.3103(2)(d) expressly prohibits the executive board from "determining the qualifications, powers, duties or terms of office of members of the executive board."
The issue is who makes that determination when eligibility is disputed. When lawmakers added the personal-profit disqualification in 2015, they were warned that determining its application could involve disputed facts and legal interpretations. Importantly, they did not amend the existing prohibition on incumbent boards determining director qualifications, create an exception for eligibility determinations, or otherwise grant boards the authority now asserted by some association counsel.
In cases where eligibility is contested or reasonably subject to dispute, how to obtain a timely, independent determination remains a legitimate procedural question. Potential avenues include regulatory adjudication, judicial review, independent association procedures consistent with Nevada law, and the Commission's authority to establish hearing panels within its jurisdiction. Which approaches are appropriate and whether additional procedures are needed, warrant examination by NRED and the CIC Commission. But what is clear is that such determinations may not be made by incumbent directors themselves.
More than a decade later, NRED has neither publicly clarified how contested eligibility should be independently determined nor advanced reforms to resolve the procedural uncertainty. Nevertheless, some boards, acting on the advice of counsel, have asserted that authority themselves. NRED's failure to confront that interpretation or clarify the lawful alternatives illustrates precisely the kind of implementation problem Nevada's regulatory institutions were established to identify and address.
Read: Can Incumbent HOA Directors Decide Who Is Eligible to Serve?
4. Can a Board Remove an Elected Director Without an Owner Recall?
An incumbent board cannot unilaterally remove an owner-elected director. As explained in Question 3, NRS 116.3103(2)(d) expressly prohibits the executive board from determining directors' qualifications, powers, duties, or terms of office. NRS 116.31036 establishes a homeowner-controlled procedure for removing an elected director, with or without cause. Lawmakers intended homeowner recall to be the exclusive method by which an association may remove an owner-elected director.
NRED's position is particularly troubling. In its published educational Q&A on board member removal, the Division describes the law as silent on whether a board majority can remove another director without a homeowner vote, then points to association bylaws. But it is clearly not silent. As noted, NRS 116.31036 expressly provides a homeowner removal procedure, while NRS 116.3103(2)(d) prohibits incumbent boards from determining directors' qualifications, powers, duties, or terms of office. NRED has not explained how its guidance reconciles these provisions.
NRED's published guidance also points to association bylaws, but does not expressly explain how NRS 116.3106 authorizes an alternative removal procedure. Requiring bylaws to describe how directors are removed is properly understood as allowing associations to establish procedures for conducting a homeowner removal vote consistent with NRS 116.31036—not as authority to create alternative methods of removal that bypass homeowners altogether. Nor does it override the express statutory restriction on incumbent boards determining directors' qualifications or terms of office.
This is not a hypothetical concern. In full disclosure, my declarant-controlled association removed me, one of only two owner-elected directors, without a homeowner recall election.
NRED had alleged that I was ineligible to serve, directed the association to address the alleged violation, and threatened to file a formal complaint targeting the association-notably not me- if it failed to remove me. Yet the Division did not identify the lawful procedure or authority for doing so. My association subsequently declared my position vacant. The dispute remains in litigation.
Regardless of whether alternative removal procedures are permissible, incumbent directors cannot make determinations expressly prohibited by NRS 116.3103(2)(d). NRED should provide a transparent statutory interpretation addressing both questions. The Coalition has requested clarification and if necessary, will submit a request for a formal determination.
For additional background, read Understanding Nevada's HOA Recall Process, including its October 26, 2026 update.
5. Who Decides When a Board Actually Has the Statutory Authority It Claims to Exercise?
Nevada law grants associations broad powers under NRS 116.3102 and generally authorizes executive boards to act on their behalf. But the association's possession of a power does not necessarily establish that its board may exercise it in a particular manner or impose additional conditions upon homeowners.
Consider records access. Nevada law permits associations to withhold, albeit limited, certain records from disclosure. But can a board require a homeowner to sign an affidavit restricting publication of association records before granting access? The Coalition disputes that authority. The larger point is that a board cannot be the final judge of its own disputed authority.
Too often, the debate moves immediately to whether a board exercised reasonable judgment. But before asking whether a board exercised a power reasonably, it must first be established the board possesses that power at all. Fiduciary-duty standards and business-judgment protections and advice of counsel cannot create statutory authority that does not exist.
But obtaining an independent resolution when that authority is disputed creates its own challenge. Nevada has established institutions and procedures for doing so. NRED investigates alleged violations of Chapter 116, the CIC Commission adjudicates regulatory complaints, and NRS 116.623 provides for petitions seeking declaratory orders and advisory opinions concerning HOA law. Courts can also resolve disputes through declaratory judgments.
Yet these mechanisms are not consistently producing timely, accessible, and authoritative answers. Some difficulties arise from the nature of HOA disputes; others reflect institutional procedures and resistance to resolving contested interpretations. When NRED declines to address a disputed interpretation, closes a complaint without resolving the underlying question of authority, or alternative dispute resolution produces no independent answer, the association's position often prevails in practice—not necessarily because it is legally correct, but because homeowners lack an effective means of challenging it.
Equally troubling is the Division's reliance, in some investigations, on association counsel's legal interpretation when closing complaints. An attorney's opinion does not establish that the association or its board possesses the claimed statutory authority. Reliance on counsel cannot substitute for an independent regulatory determination.
The imbalance is substantial. Associations can use homeowner-funded legal counsel to defend their claimed powers, while individual homeowners may have to finance years of litigation simply to establish whether those powers exist.
Nevada's regulators should resolve disputed questions of statutory authority rather than leave homeowners to seek costly judicial intervention. Where existing law is genuinely inadequate, regulators should identify the problem and recommend legislative action. But their first responsibility is to make the protections already enacted work as intended.
Read more: HOA Boards & The “Right to Be Wrong" But Not To Be Abusive, When Advice of Counsel Becomes De Facto Law and On Advice of Counsel Should Begin the Inquiry, Not End It.
B. Homeowners Meaningfully Participation
6. Can HOA Boards Conduct Private Workshops?
Hold workshops? Yes. Conduct then in private? They should not. Yet private board workshops continue, illustrating perhaps better than any other question in this series the failure of Nevada's HOA regulatory system to make existing statutory protections work as intended.
Board workshops can serve a valuable purpose. Directors need opportunities to examine budgets, evaluate contracts, discuss proposals, and consider alternatives before making consequential decisions. The controversy is not whether workshops should exist. It is whether a quorum of directors may deliberate association business privately, without the notice, agenda, and homeowner-access requirements of NRS 116.31083.
Some associations argue that because no formal vote occurs during a workshop, the gathering is not a board meeting. But deliberation is an essential part of decision-making. If directors develop budgets and reach practical agreement privately, the subsequent noticed meeting can become little more than a formality.
During the April 14, 2026 CIC Task Force Meeting NRED counsel explained that a gathering of a quorum of directors to discuss association business is subject to NRS 116.31083, regardless of whether it is called a workshop or produces a formal vote. That is also the Coalition's interpretation, consistent with Nevada's Open Meeting Law definition of a meeting, which expressly recognizes deliberation toward a decision, even without a formal vote. Although the Open Meeting Law does not directly govern HOA boards, its recognition of deliberation as part of decision-making reinforces the Coalition's interpretation of NRS 116.31083.
Yet the Coalition has identified instances in which NRED declined to enforce meeting requirements against alleged private workshops. During the Task Force's examination of the issue, members also saw no need for additional regulatory action. We find this hard to reconcile.
The problem is the disconnect between the interpretation NRED's counsel articulated publicly and the Division's investigative and enforcement practices. Homeowners should be able to rely on the legal interpretation provided by NRED during an official Task Force meeting, rather than encounter a different interpretation when filing a complaint.
If the Division agrees with its counsel's interpretation, it should publish clear guidance and apply that interpretation consistently. If it disagrees, it should explain why. Homeowners should not need another statute simply to obtain the protections the existing one was intended to provide.
7. Can a Board Make Decisions in Private?
This is related to the workshop question but raises a distinct issue: actual board action outside a properly noticed meeting.
Some associations approve contracts, expenditures, policies, and other significant decisions through email exchanges or written consents. They may rely on provisions of NRS Chapter 82, Nevada's nonprofit corporation law, or their own governing documents. But NRS 116.31083 establishes meeting-notice, agenda, minutes, and homeowner-participation requirements for HOA executive boards. If significant board decisions can be made by email and merely reported or ratified later, those protections lose much of their practical value.
NRED's Advisory Opinion 11-01 recognized concerns about email voting, yet questions persist over how Chapter 116 interacts with general nonprofit corporation provisions permitting action without a meeting.
General corporate procedures do not provide an alternative means of avoiding the specific homeowner protections lawmakers established for HOAs.
We have formally requested regulatory clarification. NRED and the Commission should explain when, if ever, HOA directors may take action without a properly noticed board meeting and how such action complies with NRS 116.31083.
8. Can an HOA Require an Affidavit Restricting Publication or Impose Other Conditions Before Releasing Records?
NRS 116.31175 gives homeowners broad rights to inspect association records, subject to specified statutory exclusions. The statute does not expressly authorize associations to impose additional contractual conditions before honoring those rights.
A recent Sun City Summerlin example illustrates the concern. An owner requesting financial records was presented with an affidavit imposing restrictions on publication and distribution, together with warnings of possible legal consequences for violating its terms.
An association's authority to withhold particular records under a statutory exception is not the same as authority to condition access to otherwise available records on a homeowner surrendering additional rights. If Nevada law grants homeowners access to association records, boards should not be permitted to impose additional restrictions that diminish those statutory protections without a lawful basis.
NRED and the Commission should clarify whether associations possess authority to require such affidavits and, if so, identify the statutory basis and permissible limits of those conditions.
9. Does a Virtual-Only Meeting Satisfy Nevada's Meeting Requirements?
The should be no. Yet the Division has taken no apparent action to address the widespread and growing use of virtual-only HOA meetings or clarify the statutory support for their use.
Electronic participation can make HOA meetings more accessible. Virtual meetings may be convenient for homeowners who travel, work unusual hours, or cannot attend in person. But allowing electronic participation is different from requiring homeowners to participate exclusively online, whether the board itself meets in person or virtually.
NRS 116.31083 establishes meeting-notice requirements, including identification of the meeting's time and place, while permitting participation through electronic communications. We view “place” required by NRS 116.31083 means a physical location accessible to owners when directors meet in person. Best practice would provide both a physical location and a virtual link.
This is about more than convenience. When homeowners cannot gather together at a meeting, they lose opportunities to compare information, discuss concerns, and visibly support one another. A virtual-only format can isolate dissenting homeowners and diminish their ability to hold directors accountable. The risk is particularly troubling when directors meet together physically while homeowners are restricted to watching or participating remotely.
As with private workshops, the widespread adoption of a practice does not establish that it complies with Nevada law. On July 28, 2025, the Coalition submitted a formal rulemaking petition seeking clarification of the statutory requirements for virtual-only HOA meetings. More than a year later, the Commission has yet to place the petition on its agenda for consideration.
Virtual participation should expand homeowner access—not become a substitute for the physical attendance rights contemplated by Nevada's meeting requirements.
Read more: Virtual-Only Meetings—An HOA Warning Flag.
10. Can Associations Withhold Board Packages or Delay Access to Supporting Documents Until After the Board Acts?
Homeowners are entitled to attend many board meetings and comment on matters affecting their association. But meaningful participation often requires access to the information directors themselves are considering. Community managers routinely prepare board packages containing financial statements, contract proposals, recommendations, analyses, and other supporting information.
Documents do not become exempt from homeowner inspection simply because they are included in a board package or labeled drafts. NRS 116.31175(4)(c) establishes a specific exclusion for documents being developed for final board consideration that have not been placed on an agenda for final approval. The Coalition's interpretation is that both statutory conditions must apply; there is no blanket exemption for everything included in a board package.
A second problem concerns timing. If an owner requests records related to an upcoming agenda item, what practical value does the right of inspection have when access is delayed until after the board acts?
We petitioned for rulemaking addressing timely access to agenda-related records. NRED rejected the request, asserting that legislative amendment was necessary. We subsequently requested reconsideration, challenging whether existing law already permitted narrower regulatory clarification.
NRED and the Commission should clarify the limits of the draft-document exclusion and establish how homeowners can obtain accessible records in time to participate meaningfully in board decisions. Where existing statutory deadlines are insufficient, lawmakers should consider additional protections.
11. Must HOA Boards Inform Homeowners About Litigation—and Account for Their Decisions?
Nevada law generally requires homeowner approval before an HOA initiates litigation. That is a high bar—by design. NRS 116.31083 also requires directors to review the status of litigation at least quarterly. NRS 116.31088 establishes additional notice and financial disclosure requirements when homeowners are entitled to vote on proposed litigation, and requires disclosure of settlement terms. Yet these provisions do not clearly establish what information homeowners must receive about pending litigation undertaken without their approval, its financial risks, or why directors authorized it.
Currently, Nevada law permits associations to initiate civil actions without homeowner approval under exceptions that can swallow the general rule requiring that approval. Although existing law governs board meetings and requires records of board decisions, it does not expressly establish a distinct public-vote and disclosure procedure requiring directors to identify the litigation exception being invoked and explain its application. As a result, homeowners may have no clear public record of which directors authorized the litigation, what exception justified proceeding without homeowner approval, or why the directors believed that exception applied.
When lawmakers dispense with the safeguard of homeowner approval, public accountability becomes more important, not less.
Accordingly, we believe boards should be required to record a public vote before invoking an exception to the statutory requirement for homeowner approval of litigation. In the rare case immediate action is necessary, that vote should occur at the next open board meeting, even if only to ratify an earlier decision to proceed. This would give homeowners timely notice that association resources have been committed to litigation, identify which directors authorized that commitment, and provide at least a general explanation of why the board believed an exception to homeowner approval was justified.
Such transparency need not compromise attorney-client privilege or disclose confidential litigation strategy. The objective is not necessarily to restrict a board's ability to protect the association's legitimate interests, but to ensure that exceptions to homeowner approval do not become a means of avoiding accountability for decisions that may expose homeowners to substantial financial obligations.
But transparency alone is not enough. Actual litigation and legal interpretations advanced by association counsel have raised serious questions about whether the exceptions to homeowner approval are being applied as lawmakers intended. Those questions also require clarification, particularly when the interpretations may substantially diminish the protections lawmakers established. We examine that issue separately and in great detail in our post Nevada's HOA Litigation Protections: How Did We Lose Sight of the Original Purpose?
In its Spring 2014 Community Insights newsletter, NRED addressed whether boards must notify homeowners when their association is sued. Although acknowledging that NRS 116 contains no specific requirement for such notification, the Division explained that directors' fiduciary responsibilities include informing homeowners about potential litigation liabilities and unbudgeted expenses. NRED even suggested placing the matter on a board meeting agenda. More than a decade later, however, clear, enforceable standards for fulfilling that responsibility remain lacking, particularly when litigation proceeds without homeowner approval.
NRED and the CIC Commission should clarify how associations are expected to fulfill their litigation-disclosure obligations, establish appropriate implementation standards, and examine whether the statutory exceptions to homeowner approval are being applied as lawmakers intended. Where existing regulatory authority is insufficient, they should recommend legislative changes.
Homeowners should not have to search courthouse records or wait for a special assessment to discover that their association is involved in costly litigation.
Related: Is Your HOA in Litigation? and Nevada's HOA Litigation Protections: How Did We Lose Sight of the Original Purpose?
C. Decision Authority
12. Can an HOA Board Bypass an Owner Vote on Litigation by Declaring It a Health, Safety and Welfare Matter?
Yes—at least initially. But what happens when homeowners subsequently fail to ratify the litigation? Surprisingly, the answer to this second question is not so straightforward.
NRS 116.31088 generally requires advance homeowner approval before an association commences certain civil actions. The health, safety and welfare (HSW) exception permits litigation to begin without that approval, but requires affirmative ratification by a majority of the association's allocated votes within 90 days.
A recent Sun City Summerlin controversy illustrates a problem. According to information provided to the Coalition, the association joined litigation challenging the Southern Nevada Water Authority's artificial-turf mandate under the HSW exception. The subsequent homeowner vote reportedly failed to obtain the required majority for ratification. Yet association counsel maintained that the litigation could continue because a majority had not voted against it. That would seem to defeat the original purpose of requiring homeowner ratification. We agree. Yet the legislative history reveals that lawmakers deliberately negotiated a "compromise" that could produce precisely this result.
Surprisingly, the legislative history provides support for counsel's interpretation. In 1999, lawmakers adopted a provision requiring affirmative majority support before an association could seek dismissal solely because homeowner ratification failed. The result is an unusual distinction: homeowners must affirmatively approve litigation to ratify it, but failure to obtain that approval does not necessarily require its termination. That makes little sense as a homeowner protection, but it appears to be what lawmakers enacted.
The question, one that has deserved an answer for decades, is whether this legislative compromise has undermined the very homeowner protection the ratification requirement was intended to provide—and whether the law needs to be amended. NRED and the CIC Commission should examine that question and recommend statutory changes where warranted.
For the legislative history and a fuller explanation, read: Nevada's HOA Litigation Protections: How Did We Lose Sight of the Original Purpose?
13. Should Reliance on Association Counsel, by Itself, Satisfy the Board's Fiduciary Obligation to Act on an Informed Basis?
The answer here is a clear No. Obtaining legal advice is not the same as exercising informed, independent judgment.
Boards should consult competent attorneys when confronted with difficult legal issues. But NRS 116.3103, requires directors to act on an informed basis, in good faith, and in the honest belief that their actions are in the association's best interests. Those responsibilities remain with the directors, not their attorneys—even after counsel has rendered a legal opinion.
We have documented an NRED complaint-closure determination in which the Division placed substantial weight on the board having consulted and relied upon association counsel. But establishing that directors obtained legal advice does not, by itself, establish that they understood the advice, considered its legal foundation, weighed competing interpretations, or evaluated the consequences for homeowners.
Reliance on counsel may be evidence that directors acted on an informed basis. It is not a substitute for examining whether they actually fulfilled their fiduciary obligations.
NRED should evaluate the substance of directors' decision-making rather than treating consultation with counsel as sufficient to establish compliance with NRS 116.3103.
14. Should NRED Independently Determine Whether the Legal Advice Relied Upon by a Board Is Consistent With Chapter 116?
Yes. An association attorney's legal opinion does not establish what Nevada law permits or requires.
We have identified NRED investigations closed solely because an association board relied on legal advice from its counsel. Yet the underlying question—whether the challenged conduct was actually authorized by Chapter 116—was not independently resolved in the explanation provided.
NRS 116.765 requires the Division to investigate qualifying complaints and determine whether good cause exists to proceed before the Commission. That does not require a formal legal ruling in every investigation. But when an alleged violation turns on whether an association possessed the statutory authority it claims, the Division cannot meaningfully evaluate the complaint without independently examining that authority.
Counsel's opinion is not a statute, regulation, judicial ruling, or Commission decision. It may be persuasive, but it is not binding law. Nor should an association's reliance on counsel establish that its actions complied with Chapter 116.
If NRED independently evaluates the disputed interpretation, the legal standard it applies should be available for meaningful public examination, subject to legitimate confidentiality requirements. If it instead accepts counsel's interpretation without resolving the statutory question, private legal advice can acquire practical authority without independent regulatory scrutiny.
This is not a criticism of attorneys providing legal advice. It is that Nevada's regulatory agency may allow those opinions to determine how the law operates in practice without independently establishing whether they are correct.
Advice of counsel should inform an investigation, not substitute for one.
Read more: When Advice of Counsel Becomes De Facto Law.
15. Do Directors Fulfill Their Duty to Exercise Independent Judgment When Significant Decisions Originate With Management or Association Counsel and Are Merely Approved Without Meaningful Examination?
Nevada law places responsibility for governing an HOA on its executive board, not its management company or association counsel. NRS 116.3103 requires directors to act on an informed basis, in good faith, and in the honest belief that their actions serve the association's best interests.
Yet homeowners may attend board meetings where major recommendations are presented by management or counsel and approved with little apparent discussion or examination by directors.
A lack of public discussion does not establish that directors failed to exercise independent judgment. They may have studied the proposals beforehand, evaluated alternatives, and consulted professionals. But homeowners should be able to determine whether directors actually understood and evaluated the decisions they approved—or merely accepted recommendations developed by others.
Community managers and attorneys possess specialized expertise. Their recommendations may be entirely appropriate, and directors are expected to consult professionals when necessary. But professional advice cannot substitute for directors exercising their own judgment and accepting responsibility for their decisions. Directors must understand the recommendations, consider their consequences and alternatives, and exercise their own judgment before approving consequential actions.
The concern becomes greater when recommendations are developed outside homeowners' view and approved at public meetings with little explanation. Some may argue that homeowners hold directors accountable through elections, not by scrutinizing individual board decisions. But meaningful electoral accountability depends on homeowners understanding how their directors govern. Owners are entitled to meaningful accountability for decisions affecting their assessments, property rights, and association governance. That includes understanding the reasons for consequential decisions, the alternatives considered, and whether directors independently evaluated the recommendations placed before them.
This is not merely a transparency issue. It concerns whether directors are genuinely governing their associations or simply approving decisions effectively made by management or counsel.
NRED and the Commission should make clear that compliance with NRS 116.3103 requires more than demonstrating that directors received professional recommendations and formally approved them.
Read more: “On Advice of Counsel” Should Begin the Inquiry—Not End It and HOA Board Paper Accountability.
16. Should a Developer or Board Be Allowed to Approve Contracts Involving Affiliated Management Companies or Other Related Businesses?
Nevada law permits certain affiliated transactions, but provides inadequate practical assurance that those transactions serve homeowners' interests when the developer controls the board. The Coalition believes such arrangements warrant heightened scrutiny, particularly when those approving contracts have financial interests in the businesses receiving association funds.
Consider a developer-controlled association in which an affiliated management company receives substantial annual payments from homeowner assessments. The developer may effectively control both sides of the transaction: the board approving the contract and the business benefiting from it. Homeowners fund the arrangement but lack sufficient representation on the board to independently evaluate or challenge it.
An affiliated relationship does not automatically make a contract unlawful or unreasonable. But statutory permission to enter into such a contract is not proof that the transaction serves homeowners' interests.
Nevada law recognizes these conflicts. NRS 116.3103 imposes fiduciary responsibilities on directors, while NRS 116.31084 establishes disclosure and voting requirements involving personal financial interests. Yet NRS 116.31187 contains exceptions allowing certain transactions involving developers and their affiliates.
Yet those protections can be difficult to apply when the developer appoints the board majority and benefits financially from contracts approved by that same board.
The concern extends beyond developer control. Director relationships, family employment, and affiliated vendor arrangements can also create circumstances in which those making decisions may have interests that differ from the homeowners funding them.
Legally permissible affiliated transactions must still withstand meaningful examination of conflicts, pricing, competitive alternatives, and independent director judgment. The essential protection is independent scrutiny of related-party transactions. NRED and the Commission should clarify how existing conflict-of-interest and fiduciary requirements apply to developer-affiliated contracts and identify additional safeguards where those requirements prove inadequate.
On July 28, 2025, we petitioned NRED to clarify director conflict-of-interest requirements and establish stronger safeguards for developer-affiliated contracts, including a proposed restriction subject to Division waiver. The issue is not whether all affiliated transactions are improper. It is whether homeowners receive meaningful protection when the same developer effectively controls both parties to a contract funded by their assessments.
D. Statutory Protections in Practice
17. Should HOA Owners Be Required to Complete Alternative Dispute Resolution When the Process Often Provides No Decision at All?
NRS 38.310 generally requires disputes involving HOA governing documents to undergo alternative dispute resolution (ADR) before litigation. The objective is sensible. Homeowners should have an affordable means of resolving disputes without immediately resorting to court.
But Nevada's default process is mediation. When mediation concludes, it produces no written, independent assessment of the merits of the dispute. Homeowners can complete the mandatory procedure and emerge with precisely the same unanswered legal question—having spent additional time and money simply to qualify for litigation.
Nevada already has an alternative. The Legislature established a referee program capable of producing a written, independent, nonbinding determination. Yet access requires agreement by both parties. An association unwilling to submit its position to independent examination can decline referee review, leaving mediation as the default.
Both arbitration and referee review produce written, independent assessments of disputed legal positions—something mediation does not provide. Such determinations strengthen board accountability. Directors may disagree with an adverse assessment, but their fiduciary responsibility to exercise informed judgment remains. A written determination provides an independent basis for evaluating whether directors fulfilled that responsibility when deciding how to proceed.
We have proposed making referee review the default procedure. It would give homeowners and associations access to an independent assessment before deciding whether costly litigation is justified, without denying either party access to the courts.
The CIC Task Force has considered changes to the ADR system and approved recommending legislative action to make arbitration the default. While a step in the right direction, the Task Force's proposal would eliminate the existing referee program. The Coalition sees no justification for eliminating a potentially less costly means of obtaining an independent assessment.
NRED and the Commission should examine whether the current ADR system actually resolves homeowners' disputes, how much each procedure costs, and whether its outcomes justify requiring participation before litigation.
A mandatory dispute-resolution system should be judged by whether it provides a meaningful opportunity to resolve disputes—not merely whether homeowners have completed the required procedure.
18. When Lawmakers Make Alternative Dispute Resolution “Mandatory” Before Litigation, Should the Courts Make It Waivable?
That is effectively what the Nevada Supreme Court did in June 2025. In Kosor v. Southern Highlands Community Association, the Court ruled that NRS 38.310 establishes a mandatory claim-processing requirement rather than a limitation on the court's subject-matter jurisdiction. Consequently, the requirement can be waived or forfeited if not timely raised.
Consider what lawmakers actually wrote. NRS 38.310 states that no covered civil action may be commenced without first completing ADR and that a court shall dismiss an action filed in violation of that requirement. Yet the Supreme Court concluded this language was insufficient to make ADR a jurisdictional prerequisite, noting that the statute never expressly used the word jurisdiction.
Apparently, lawmakers must now use a word they would not ordinarily need when imposing mandatory procedures: jurisdictional.
That is a matter the Legislature should revisit. If lawmakers intend ADR to be an unavoidable prerequisite to litigation, they should expressly establish its jurisdictional effect rather than leave compliance dependent on whether the parties timely raise the issue.
When the Legislature says a court shall dismiss an action commenced without completing mandatory ADR, homeowners should not have to wonder whether the court will enforce that command.
19. Should Civil Litigation Be the Primary Means of Resolving Disputes Over HOA Governing Documents?
The answer should be no. Yet Nevada's system effectively directs homeowners toward civil litigation when they cannot resolve disputes over their governing documents. For many, the expense and potential attorney-fee exposure mean the challenge never begins. The dispute remains unresolved—not because the association's interpretation is necessarily correct, but because obtaining an independent determination carries too great a financial risk.
Many HOA disputes concern the meaning of governing documents or the authority an association claims to possess. Homeowners may seek no monetary damages at all. They simply want an authoritative determination of what the law or governing documents permit.
Yet Nevada lawmakers established a regulatory system to administer and enforce Chapter 116 while leaving disputes over governing documents largely to a civil justice system ill-equipped to resolve routine disagreements involving no monetary damages. Mandatory ADR was intended to keep these disputes out of court, but when mediation fails, homeowners receive no independent determination of the disputed rights or obligations.
The origins of this division lie, at least in part, in treating HOA CC&Rs as ordinary private contracts. But these are not negotiated agreements between parties with comparable bargaining power. They are typically imposed by developers as mandatory conditions of property ownership, then enforced by associations exercising powers granted under Chapter 116. Why should homeowners be directed toward civil litigation simply because these obligations are characterized as private contracts, rather than having access to the regulatory system established specifically for common-interest communities?
Civil litigation is expensive and slow. Although courts can interpret contracts without awarding damages, the civil justice system is poorly suited to resolving routine HOA governing-document disputes involving no monetary damages. Moreover, using litigation to obtain those interpretations creates a significant financial imbalance. Associations generally finance litigation through mandatory homeowner assessments, while individual homeowners must bear personal legal expenses and potential attorney-fee exposure. Homeowners may have little practical alternative to an expensive adversarial process simply to establish what the governing documents regulating their property mean.
Nevada lawmakers need to reevaluate how disputes over HOA governing documents are resolved. The current system is neither equitable nor effective. The legal fiction of negotiated consent to CC&Rs should not justify excluding disputes over those documents from meaningful regulatory review and enforcement.
Nevada established a specialized regulatory system to protect homeowners and reduce reliance on litigation. Lawmakers should now ensure that system provides an accessible, affordable means of resolving CC&R and bylaw disputes—not merely a procedural path to the courthouse.
Read more: Fixing a Dispute Resolution System That Fails Homeowners and Homeowners Deserve More Than Procedural Theater: Fix Nevada's HOA ADR System; and Dispute Resolution (ADR) Reform Must Be a Legislative Priority.
What Comes Next?
Part 1 introduced the questions. This post has illustrated why they matter and provided links to more detailed examinations.
But it leaves us with the most troubling question of all.
Why do recurring legal controversies remain unresolved by the regulatory institutions lawmakers established to address them?
Part 3 — Restore the HOA Regulatory System's Effectiveness
The post suggests Nevada's regulatory institutions appear to have lost an essential part of their intended function: learning from recurring problems and using that experience to improve HOA laws, regulations, and enforcement practices. The issue is not whether these institutions remain active. It is whether their activities are producing meaningful improvements for the stakeholders they were established to serve.
Ultimately, the question for Nevada lawmakers is not merely what additional HOA laws should be enacted in 2027. It is whether Nevada's existing regulatory institutions are fulfilling the responsibilities lawmakers have already assigned to them.
