HOAs Far More Than Contracts — A Different Path

Mike Kosor
Sep 22
5 min read

Nevada needs to recognize the tension: governance with government-like powers must carry government-like responsibility.

At the turn of the century, legal thinking began to shift. HOAs were no longer seen as just a “private” method of managing common property, nor CC&Rs as mere private contracts between neighbors. Instead, scholars and courts began to recognize HOAs as governments in their own right — exercising public-style powers and therefore carrying public-style responsibilities, albeit under a contract framing.

This post looks at why that shift matters, what the Restatement (Third) of Property says, and what Nevada should learn from it.

What Are the Restatements?

Most homeowners have never heard of the Restatements of Law, yet these volumes quietly shape how judges, lawyers, and legislatures think about our rights.

The Restatements are produced by the American Law Institute (ALI), a body of respected judges, professors, and practitioners founded in 1923. They are one of the most respected and well-used sources of secondary authority, covering nearly every area of common law. Their mission was to bring order to the chaos of state-by-state law by creating authoritative “Restatements.” They are meant to reflect the consensus of the American legal community as to what the law is, and, in some cases, what it should become.

They are not statutes and not binding, but they are persuasive authority. Courts cite them when state law is unclear, law schools teach them as black-letter summaries, and legislatures sometimes adopt their principles outright.

The 2000 Turning Point: HOAs as Private Governments

In 2000, the ALI published the Restatement (Third) of Property: Servitudes. For the first time, it directly addressed common-interest communities — the HOAs, condo associations, and co-ops that now govern over 30% of Americans.[1]

Earlier Restatements treated covenants and servitudes as private contracts: one neighbor agreeing with another. By 2000, it was obvious this framework no longer fit. HOAs had become private governments — with boards that make rules, enforce them, and punish violations.

As Professor Susan French observed:

“Individual owners… have little recourse against board misconduct.”

— Making Common Interest Communities Work: The Next Step, 37 Urban Lawyer 359, 365 (2005)

This was a major intellectual shift. The 2000 Restatement acknowledged what millions of owners already knew: HOAs look and act like governments, and they should be judged by standards of fairness, not just by the fine print of their documents.

Why This Matters in Nevada

Nevada’s HOA statutes — NRS Chapter 116 — were written with heavy input from developers and managers. Courts here often treat CC&Rs as if they were freely negotiated contracts. That leaves homeowners with fewer protections.

HOA powers rest with the Board, and are not divided to provide adequate due process (fair settlement of disputes) or most other “checks and balances” that exist in American government. The only power held by HOA members is the right to elect a new Board — a corporate model, not a constitutional one.

Nevada has already taken steps that show HOAs are not just private contracts. For example, lawmakers deserve credit for extending anti-SLAPP protections to HOA owners — a safeguard once reserved almost entirely for government actors. The Nevada Supreme Court has since confirmed that HOAs fall within that protection. These are not small steps; they acknowledge that HOAs wield public-like powers needing governmental-like responsibilities.

But Nevada has left the job unfinished. Courts still treat CC&Rs as if they were freely negotiated contracts, deferring to boards under corporate standards. The result is a system that recognizes HOAs’ government-like powers but has in practice all but denied owners the government-like protections that should come with them — instead driving disputes into costly civil litigation where HOAs have no business acting.

What the Restatement Says

Key sections of the Restatement (Third) of Property: Servitudes lay out standards that should guide HOA governance:

Reasonableness: Covenants and rules are unenforceable if arbitrary, irrational, or against public policy (§ 6.10).
Fiduciary Duty: Boards and officers must act with ordinary care, prudence, and fairness toward all members (§ 6.13).
Good Faith: Even where boards have discretion, it must be exercised in good faith and not for self-interest (§ 6.14).
Owner Expectations: Changes to community rules must respect the community’s character and the expectations of owners (§ 6.5).

In practice, this means an HOA board that fines selectively, hides information, or plays favorites would not be shielded by a “contract is a contract” approach.

A Guide for Nevada’s CIC Task Force?

Nevada has started down the path of recognizing HOAs as governments, but it has stopped short of finishing the job. The reconstituted CIC Task Force now has an opportunity to close that gap. The Restatement offers a ready-made blueprint:

Acknowledge HOAs as governments. Statutes should stop treating HOAs as mere contracts and recognize their quasi-governmental nature.
Incorporate Restatement standards. Nevada law should codify reasonableness, fiduciary duty, and good faith obligations.
Expand homeowner protections. Owners should have access to due process mechanisms that mirror those available in public governance, not just corporate elections.
Fence HOAs out of the civil litigation system. The civil courts are not the right forum for resolving HOA governance disputes. They are costly, adversarial, and ill-suited for questions of fairness, fiduciary duty, or governance standards. HOA disputes should be handled by independent regulators or tribunals, not by forcing homeowners and boards into expensive litigation.

Conclusion: Finish What Nevada Started

The Restatement (Third) of Property: Servitudes (2000) marked a turning point in how the law thinks about HOAs. It moved beyond the “contract myth” to acknowledge the lived reality of homeowners. Courts and legislatures that embrace it bring balance to a system tilted toward unchecked board power.

Nevada has already begun this shift. By extending anti-SLAPP protections to HOA owners — and with the Nevada Supreme Court confirming their application — lawmakers recognized the public-like character of HOA governance. But that recognition remains incomplete. Statutes and courts still lean on corporate analogies that deny homeowners the protections they would enjoy under real government.

The CIC Task Force should take up where lawmakers left off. Homeowners are not mere parties to contracts they never negotiated. They are citizens of private governments, and they deserve the protections that status demands.

Key Takeaway

Nevada has started to acknowledge HOAs as governments — lawmakers took the first step, and the courts confirmed it. The CIC Task Force could help frame the finish for lawmakers by suggesting making fairness and accountability more a part of Chapter 116, providing for system accountability, and protected homeowners in the very system designed to govern them.

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