It’s been a rough year for homeowners associations in Nevada. There’s the ongoing federal corruption and fraud investigation into 12 HOA boards across Southern Nevada, highlighted by 27 people pleading guilty to a variety of charges and four untimely deaths. And just this month, the Nevada Commission for Common-Interest Communities voted to remove an entire HOA board in North Las Vegas after discovering hundreds of alleged state law violations. No one disputes the potential for fraud at any level of bureaucracy, but HOAs are rewriting the book on corruption in 2012.
Still, apart from the occasional replacement of board members, don’t look for much to change when it comes to HOAs. Mike Randolph, manager of Home Association Services, a collection agency for HOAs, says it’s difficult, if not downright impossible, to disband an HOA. For starters, every property in an HOA has a set of conditions, covenants and restrictions (CC&Rs) attached to it before building even starts. Those are binding legal documents, and as part of dissolving an HOA, new deeds would have to be recorded on every individual property to remove the CC&R restrictions. In addition, at least 75 percent of the homeowners in an association would have to vote to disband the HOA, not to mention getting the approval of all the lenders. “Trust me, it would be a huge court case to get it done,” Randolph says.
And it’s not just the legal headaches and hurdles that all but ensure HOAs will remain intact in Nevada in perpetuity: They’re a huge boon to local governments. As Randolph puts it, the reason Southern Nevada has so many HOAs — currently more than 2,300 — is because they provide a sort of financial relief to their cities and counties.
“In a situation where the HOA owns all the gutters, curbs, sidewalks, streets and sewer systems, the county or city still get all the property taxes but have to provide no services,” Randolph says. “In my HOA, if we have a problem with the sewer system, we have to pay for it. The county doesn’t fix it. The county or cities have figured out a way to increase their tax base without having to increase their infrastructure. That’s why we have so many HOAs — because it’s good for the government.”
It’s oddly comforting, then, that in a recent national survey by Zogby International, seven in 10 community association residents said they were “satisfied” with their communities. If HOAs are here to stay, at least most people seem to be enjoying the ride.