By Mike Kosor

There is grave danger in existing HOA laws. Two pieces of HOA legislation currently being considered in the guise of “reform” are representative.  As usual, important public interests are quietly being “debated” by a limited few. The voice of homeowners in Nevada’s common interest communities is regularly absent in the HOA “sausage making” process that occurs in alternating years in Carson City, and this year is (apparently) no different. It represents a clear and present danger to property owner rights.

A move to free the Nevada Real Estate Division’s Ombudsman’s Office from the shackles of developer and political influence has become a regular effort in legislative sessions. (Currently, the ombudsman’s mandate is to inform and educate homeowners. Although a needed function, it is insufficient to protect property owners and also restricts the ombudsman’s office from actually advocating for reforms — reforms in which the ombudsman’s office is expert, and should be able to communicate to lawmakers.) SB 392 was introduced this session in an effort, once again, to remove the ombudsman’s “gag order.”

The bill’s sponsor, Sen. Woodhouse, on the day of the bill’s first committee hearing, withdrew it in its entirety. It was replaced at that first committee meeting with a completely new measure. This previously unknown plan was supported in testimony by the ombudsman’s current boss’s boss, Michael Brown, the new director of Nevada’s Department of Business and Industry. Sen. Woodhouse’s alternative bill, as voiced in testimony, did not seek to move the ombudsman’s office to the attorney general’s office and free it up to do its job. Rather, the measure keeps it located and influenced (as it is currently) within the Division of Real Estate under the Department of Business and Industry. If passed, the legislation will ensure that the ombudsman’s office will remain barred from voicing support for the reforms that homeowners seek — and deserve.

Within 48 hours of being presented, this still “conceptual” bill, not available to the public and not available to the other senators on the committee, was passed. Was the intent to avoid a difficult conversation? As a concerned homeowner and HOA board member, I must ask, “What’s the hurry?”

Another measure, SB 382, is a bill advertised as a "simple cleaning up of the language” in Nevada’s often confusing real property statutes. A provision of the bill (Section 30) provides HOA associations with the ability to change the use permitted on an owner’s property, without his/her authorization. Vacation rentals, long term rentals are legitimate issues for communities. For many homeowners; this change could, among other things, affect resale value, remove income opportunities that were part and parcel of the original sale, and more. Some will find this outrageous in and of itself. “Grandfather” was suggested, but how would that work?

But I have even more serious concerns regarding the larger implications of the “solution” this bill proposes. CC&Rs are the foundational document of an HOA; its constitution, in other words. If SB 382 is passed as written, rights of owners in the minority will be in jeopardy and potentially no longer protected. In addition, community developers, authoring new “flexible” constitutions, will have the ability to veto any community action, even after control of the HOA change passes to owners — and even following unanimous approval by unit owners. For an as yet unspecified purpose, SB 382 will undermine the fair and democratic principles of the current law.

Giving an association the ability to change and adversely affect an owner’s right of use, especially after a purchase, is a mistake — and will create countless legal objections in our courts.

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Meanwhile, the lack of an effective, unified homeowner voice combined with the prohibition against the ombudsman acting as an alternative representative voice has been recently made worse by our courts. Nevada's once highly acclaimed anti-SLAPP (strategic lawsuits against public participation) law was enacted to address the all-too-common “defamation” tool once used to intimidate and silence critics of businesses engaged in local land development. But a Nevada lower court has recently interpreted the anti-SLAPP law to exclude members of HOAs attempting to engage in the fair governance of their own communities.

This, too, is outrageous. HOAs have long been recognized as quasi-governmental entities and a protected class under anti-SLAPP laws. This is widely accepted in California, after which Nevada patterned its legislation, as it is in many other states.  I have thus appealed the lower court’s decision to the Nevada Supreme Court.

I am not a troublemaker for trouble’s sake. I am a retired USAF officer who felt compelled to again serve, this time in my own community where, not unlike most communities, homeowner ignorance of what is happening around them is widespread. I soon discovered that many of the democratic values I had spent my career defending were absent or under attack by my own HOA.

I opposed the actions of my community developer in its resistance to transferring Board control to the community. Three members of my five-person community Board are direct employees of the developer. My community’s management company is also wholly owned by the developer, and its pricey contract is renewed without any competitive bid process. Approaching 20 years in existence, my large Las Vegas community still has no democratically elected governance and no non-conflicted fiduciary oversight.

Initially, I ran for the single board seat open to owners in the hopes of raising awareness and stemming the effects of my neighbor’s lack of knowledge. As the election period opened, in a blatant effort to silence me and the few others assisting me with similar concerns, I was slapped with a defamation action by the developer and the community manager. While I am confident the court will eventually recognize the error of the lower court, I decided to act during this legislative session in the hope of preventing others from undergoing a similar difficult (and very expensive) experience. I proposed a simple clarifying addition to Nevada’s anti-SLAPP language.

Despite reaching out to over half of all legislators seeking a sponsor, having no paid voice in the halls, none have yet stepped up. All have turned a blind eye and deaf ear to the conversation.

Developers reap huge benefits from their tightly controlled boards. Many other industry players see HOAs as a rainmaker and easy source of revenue. Nevada’s HOA communities are therefore a target; they have become a vehicle for providing services local governments are unable or unwilling to provide. Municipal “cost-shifting” is widely seen as a solution to public fiscal challenges, while developers use HOAs as a vehicle to market desired amenities to homebuyers that are ultimately funded by others. Not surprisingly, unsustainable financial burdens and/or huge liabilities loom over all but the most affluent of HOAs.

As stated at the outset of this piece, conversations are being conducted behind legislative doors where owners are not permitted or invited, but where the voice of the influential and deep-pocketed industry creating and managing HOAs is being heard. People elected at the state level, most with the best of intentions, are set to facilitate the passage of new laws — after the facade of “public” hearings that primarily feature the voices of professional paid lobbyists representing the interests of developers and community managers.

Owners cannot afford to remain ignorant, nor stand by while their interests are steamrolled and their voices silenced. We are entitled to democratic governance. It is unacceptable to promote any legislation or legal mechanism to ensure our silence — and it is unacceptable for state lawmakers to refuse to listen to reason.

Mike Kosor is a Las Vegas resident and three-term HOA board member. He is a retired USAF Colonel and fighter pilot. In a second career, Mike served as CEO for two for-profit hospitals. He is now active in efforts to return democracy to Nevada HOAs.