When Confidentiality Becomes Unexplained Government Decision-Making
Recent communications between NRED, the Nevada HOA Reform Coalition, and a Nevada homeowner who contacted the Coalition, point to large problems in Nevada’s HOA regulatory system. NRED is no longer simply using confidentiality to protect an investigation. It is in effect making policy in secret.
NRED is using confidentiality in a way that can prevent the public—and even the Commission charged with overseeing HOA regulation—from knowing what legal standards NRED is applying and why it reached the decisions it did.
Requiring public officials to give reasons for their actions is central to accountable government. That principle applies just as strongly to administrative agencies.
The Recent Example
An owner filed an NRED complaint involving her association’s decision to disqualify her from serving on the board. NRED ultimately closed the matter. Her experience is not isolated.
NRED’s closure letter reflected a substantive enforcement conclusion that appeared to treat the board’s reliance on association counsel as sufficient to defeat the alleged fiduciary violation. The owner then attempted to submit public comment asking the CIC Commission to examine the broader legal and policy issues raised by that determination. She included NRED’s closure letter from her own case.
NRED responded:
“Please note that the Division cannot facilitate or accept disclosures through public comment channels that would breach the confidentiality of investigative and complaint matters under NRS 116.757.” NRED further stated that because the owner’s submission was “not reasonably severable” from her case, it would simply be “administratively filed.”
But NRED did not disclose the closure letter. The owner did. That distinction matters.
NRS 116.757 makes complaint and investigative materials confidential and expressly provides that the Division shall not disclose confidential information before a formal complaint is filed. NRED appears to read that provision much more broadly—as making all complaint-related material confidential regardless of who possesses it or who chooses to disclose it.
That interpretation matters well beyond NRED. It can affect not only what the Division will disclose, but what complainants and respondent HOAs are told they may disclose about complaints involving them. That is a significant expansion of the practical effect of the statute. The text expressly restricts disclosure by the Division. If NRED believes the Legislature intended to impose a gag rule on owners and associations concerning complaint-related material in their own possession, NRED should identify the statutory language that says so—especially when NRS 116.760 expressly requires disclosure of the alleged violation to the respondent before the complaint is filed.
The practical consequence is significant. Under NRED’s interpretation, an HOA may be prevented from informing its own members that the association is under regulatory investigation, what conduct is being questioned, or ultimately how the matter was resolved. Owners may therefore remain unaware that their association is defending allegations of violations of Nevada law—even though those same owners fund the association, bear its legal expenses, and may ultimately be affected by the conduct under investigation.
The contrast with other governance systems is striking.
Public companies are not required to announce every allegation or investigation simply because one exists. But securities law and exchange rules recognize a basic principle: material legal proceedings, regulatory developments and governmental actions cannot simply disappear from the people whose financial interests are affected.
Nevada’s laws governing public bodies reflect the same general commitment to transparency. Confidentiality may protect particular information but governmental action and decision-making ordinarily remain subject to public accountability.
NRED’s interpretation can produce the opposite result for an HOA. An association may be investigated for violating Nevada law, spend association funds responding to that investigation, receive a substantive regulatory disposition, and yet its owners—the people funding and governed by the association—may never be told that the investigation occurred or how it was resolved.
The issue is not whether every allegation should immediately become public. It is whether confidentiality should permit a regulatory matter involving an association to begin, end and effectively disappear without the membership ever learning the outcome
The Result Is a Closed Regulatory Loop
Consider what this means in practice. A homeowner can allege that an HOA violated Nevada law. NRED can investigate the allegation confidentially. NRED can interpret Chapter 116 and determine that no further enforcement action is warranted. If NRED does not file a formal complaint, the Commission never reviews that interpretation.
Then, when the affected homeowner attempts to bring NRED’s decision and legal reasoning to the Commission’s attention, NRED can invoke confidentiality again. The result is a regulatory system in which substantive interpretations of Nevada HOA law can be made inside confidential investigative files and never meaningfully exposed to public or Commission review.
That is no longer simply protection of an investigation. It is unexplained government decision-making.
Nevada Law Deliberately Limits NRED’s Policy Role
That concern is especially important because Nevada’s HOA regulatory structure does not give NRED unlimited authority to establish policy on its own. Lawmakers created the CIC Commission as the body charged with adopting regulations, exercising oversight and making the policy judgments assigned to the regulatory system. NRED administers and enforces the law, but the Commission occupies a distinct oversight and approval role.
That structure matters. If NRED can use confidential complaint investigations to develop substantive interpretations of Chapter 116, close those matters before they reach the Commission, and then use confidentiality to keep those interpretations from meaningful public review, NRED effectively acquires policy-making authority through enforcement practice that lawmakers did not expressly give it.
The concern is therefore not simply that NRED is keeping too much information confidential. It is that confidentiality may be allowing the Division to expand its institutional role at the expense of the Commission structure the Legislature created.
A confidentiality statute should not become a backdoor delegation of policy-making authority.
Government Should Have to Explain Itself
That principle should not be controversial. If a government agency exercises authority over citizens, closes complaints, interprets statutes and determines what conduct does or does not violate the law, it should be required to explain the basis for those decisions.
Confidentiality can legitimately protect complainants, witnesses, sensitive evidence and an ongoing investigation. But confidentiality should not protect the government’s reasoning from scrutiny after the government has acted.
If NRED concludes that an HOA board satisfied its fiduciary obligations merely because it consulted association counsel, owners should be able to know that.
If NRED concludes that a board had authority under Chapter 116 to disqualify a board candidate, NRED should identify the statutory basis for that conclusion.
If NRED closes a complaint because it interprets a statute in a particular way, the Commission and the public should be able to know what interpretation was applied.
Otherwise, Nevada risks developing a body of HOA law that exists only inside confidential NRED files.
Protect the Process—Not the Government’s Reasons
There is a legitimate reason for confidentiality during an investigation. A complainant may face retaliation. Allegations may ultimately prove unfounded. Witnesses and evidence may require protection. That does not require permanent secrecy.
The better policy is straightforward: Protect the complainant. Protect the investigation. Disclose the outcome—and the reasons for it.
Once NRED closes a matter, there should be a redacted public determination explaining the general allegation, the statutes or regulations considered, NRED’s conclusion and the reasoning supporting that conclusion. Identifying information and genuinely sensitive investigative material can remain confidential.
In addition, the Commission should regularly review NRED closure actions and should not be barred by confidentiality from examining the legal standards and reasoning the Division applies in closing complaints. What should not remain secret is how Nevada’s HOA regulator interprets and applies Nevada HOA law.
I have submitted public comments asking the CIC Commission to address this broader confidentiality and accountability problem directly.
The Commission Cannot Continue to Look Away
This issue is particularly important as the CIC Commission considers regulations that would give NRED additional authority and discretion. The Commission cannot responsibly expand regulatory authority while ignoring how existing authority is being exercised. For too long, the Commission has largely treated NRED’s investigative and enforcement practices as matters internal to the Division.
That approach is no longer sufficient.
If confidentiality is being interpreted so broadly that owners cannot effectively bring NRED’s enforcement decisions before the Commission, the Commission needs to examine that interpretation.
If NRED is making substantive legal determinations that never reach the Commission because the underlying matters are closed confidentially, the Commission needs to address that system.
And if proposed regulations would further expand NRED’s discretion, the Commission should first determine whether meaningful transparency and accountability accompany that authority.
The Commission must stop turning a blind eye to what increasingly appears to be a regulatory grab for authority lawmakers never intended to operate without meaningful oversight.
The Commission Must Act
The Commission cannot responsibly consider giving NRED greater authority while ignoring how existing authority is being exercised. Confidentiality should protect complainants and legitimate investigative interests. It should not allow NRED to make substantive legal determinations that are never meaningfully explained or reviewed.
Protect the complainant. Protect the investigation. Disclose the outcome—and the reasons for it.
That is the policy issue the Commission must confront.
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