Who’s running your HOA?
Malleable association rules at heart of homeowner’s spat with developer
State law effectively allows developers to extend control over homeowners by adding units to the development. (Photo: Ronda Churchill)
A Nevada law that gives developers control of master planned communities until they are almost complete allows developers to have their way, absent oversight from regulators, says Las Vegas resident Mike Kosor.
Like countless other Nevada homeowners at odds with their HOA over fines, fees, paint color, or super priority liens, Kosor, who purchased a home in Southern Highlands in 2012, has a laundry list of complaints — from a promised sports complex that was scaled back and built years late — to what he says are developer Garry Goett’s efforts to profit by extending his control over the community.
Today, almost two decades after its formation, the Southern Highlands Master Community Association remains in the developer’s control. The board currently has five seats, three appointed by Goett’s Olympia Companies.
Kosor is primarily irked by what he calls the state’s failure to enforce a state law that says a developer “may not in any event increase the number of units in the planned community beyond the number stated in the original declaration…”
In 2005, the Southern Highlands Master Community Association’s three members, all appointed by Goett, approved an amendment that, among other things, increased the number of allowable units in the master planned community from 9,000 to 10,400.
Kosor says the addition of units in the master planned community dilutes homeowners’ votes, puts a strain on services, and extends the duration of the developer’s control over the association.
He says there’s no record the amendment was properly adopted, but the Nevada Real Estate Division refused to investigate. Kosor appealed.
On Monday, the Nevada Supreme Court denied his petition for judicial review.
Kosor says the ruling allows developers to change covenants, conditions & restrictions (CC&Rs), a document provided to buyers, detailing the association’s rules, “even when the laws specifically preclude doing so. If this remains, how are owners to ever know the terms of their CC&Rs if they can be changed by the declarant (developer) at will?”
According to ipropertymanagement, a service that provides property management for HOAs, 56.6% of Nevada homeowners belong to one of the state’s 3,500 associations.
Ensuring that master planned community associations abide by the law and don’t increase the number of units without approval of homeowners falls to the state Office of the Ombudsman for Common-Interest Communities and Condominium Hotels, according to an NRED spokeswoman.
In legal pleadings, the state said Kosor was demanding “an archaeological investigation into decade-old records, which may no longer exist, of the Southern Highlands Development Corporation in furtherance of his own wholly personal crusade against Southern Highlands.”
The former Ombudsman for Owners in Common-Interest Communities and Condominium Hotels, now a Real Estate Division administrator, says “he was not aware of a single complaint regarding the issue in recent memory,” according to the department’s spokeswoman.
Between July 1, 2020 and June 30, 2021, the most common complaints to the Ombudsman involved the power of HOA executive boards and their fiduciary duty to the association, followed by threats and harassment, fines, and alleged retaliatory action, according to the agency’s annual report.
Nevada residents with homeowners associations have one year to contest amendments adopted by their association. But Kosor contends the one-year limitation is triggered by the association’s proper adoption of the amendment, which he maintains never happened in the case of the Southern Highlands 2005 amendment.
But even if the amendment was properly passed, the developer-controlled association was prohibited by state law from adding units to the community, according to Kosor, without approval of homeowners.
“The amendment is void on its face and can’t be made whole with the passage of time,” he argues.
Olympia Management Services and the Southern Highlands Community Association, which share a location and phone number, did not respond to requests for comment. Goett also did not respond to requests for comment.
The Attorney General, who defended the Real Estate Division against Kosor’s petition, declined to comment.
The state says in legal documents that Kosor had the responsibility to perform due diligence before buying his home in 2012 by reading his CC&Rs.
“I’ve never met anyone who read the CC&Rs,” Kosor said. “Why give owners CC&Rs when they can be changed by the developer without owner approval? He (the developer) can add and subtract properties. He can change the regulations on what you can do with your house. He continues to appoint the board majority.”
Kosor contends controlling a master planned community’s association can financially benefit a developer who, on behalf of the association, enters into contracts or leases with himself or affiliated companies.
“Olympia Management is the management company. The majority of the association board is appointed by the developer. So, as a homeowner, who is your fiduciary?” Kosor asks.
He says the lack of representation for homeowners has allowed Goett to delay promises for parks and other amenities.
“If the association had been independent, the Board of Directors would have been standing before the county to demand enforcement of the development agreement.” Kosor says. “I argue under the law he can appoint who he wants but once you are appointed you have a fiduciary duty to the homeowners, not the developer. When the developer is your employer, that puts you in a difficult spot.”
A 2015 law extended control
Until 2015, developers in Nevada retained control of their community association until 75 percent of the units were sold. That year, Goett spearheaded a bill that extended the developer’s control until 90 percent of the units were sold.
“There are communities around my area where they have built it over a 10 to 15 year period and there is still a lot to be built,” said Assemblyman David Gardner (R-Clark) during a hearing on the bill before the Assembly Committee on the Judiciary. “So for 10 to 15 years, it is basically a declarant’s fiefdom. Do you think increasing the number is going to increase the number of people they will be able to basically, in my opinion, somewhat abuse in this time frame?”
“I am strongly opposed to this bill because I think that proper balance between homeowner interest and developer interest are already in the current legislation,” Robert Frank, a former member of the Commission for Common-Interest Communities and Condominium Hotels, testified in a legislative hearing at the time. “In my opinion, when a developer is trying to extend this period of time, it is all about the money control, the profit control, and it delays the amount of investment into the reserves. It delays a lot of the decisions.”
“A common problem in the development of condominium and planned community projects: the temptation on the part of the developer, while in control of the association, to enter into, on behalf of the association, long-term contracts and leases with himself or with an affiliated entity,” Bob Robey, vice chair of the Nevada Homeowner Alliance, read to lawmakers from the Uniform Planned Community Act. The Alliance opposed the bill.
“Southern Highlands is close to being 75 percent built out, and holds very profitable management contracts for the community in addition to being the developer in that area of Las Vegas,” testified
Jonathan Friedrich, also a former member of the Commission for Common-Interest Communities.
“By increasing the percentage of community completion from 75 to 90 percent, they can hang on for many years longer or possibly forever.”
“This bill was introduced in the last session of the Legislature, was opposed by the Real Estate Division, Department of Business and Industry, and it did not pass. It deserves the same treatment in this session,” Friedrich said.
A representative of the Howard Hughes Corporation testified in support of the 2015 measure on behalf of the Summerlin Master Planned Community.
The measure was approved by lawmakers unanimously, including Gardner.
“If a developer wants to retain control, they can just inflate the projected number of units and never reach 90 percent,” says Kosor.
A SLAPP back
Kosor has been at odds with Goett for years.
He recently prevailed on appeal in a defamation lawsuit filed against him by Goett, who sued Kosor for his statements and literature he distributed at Southern Highlands’ homeowners’ association meetings, on Kosor’s website, and on NextDoor.com, a website where neighbors share information.
Chief Justice Kris Pickering wrote in the Nevada Supreme Court’s opinion that among the allegedly defamatory statements Kosor made were assertions that “Olympia met with Clark County Commissioners in a ‘dark room’ and coerced them to act or vote in a particular manner, and that Olympia was ‘lining its pockets’ at the homeowners expense.”
Kosor, according to Pickering’s written opinion, alleged Olympia “violated the law and breached their fiduciary duties to the homeowners,” and posted on Nextdoor.com that “Olympia obtained a ‘lucrative agreement’ with Clark County by agreeing to shift expenses for the maintenance of public parks to the Southern Highlands homeowners.”
Kosor distributed literature to the Southern Highlands community and stated on his website that “Olympia’s actions have ‘already cost the homeowners millions,’” according to Pickering’s opinion.
Kosor argued his speech was protected by the state’s anti-SLAPP (Strategic Lawsuits Against Public Participation) law, designed to prevent individuals from filing defamation lawsuits in an attempt to silence their detractors’ constitutionally-protected speech about matters of public importance made in a public forum.
The Court agreed. Pickering wrote that Kosor’s statements were intended to “drive civic engagement” among his neighbors. What’s more, the Court determined Kosor’s online statements to his neighbors were made in a public forum. But the court stopped short of declaring all websites and chat rooms as public forums, adding in a footnote, “… the content of any particular post could affect whether the forum is, in fact, one for citizen engagement.”
The case was remanded to District Court, where Kosor prevailed in July.
Kosor says he’s encouraged the Nevada Supreme Court found his HOA-related comments were of public importance and expanded the definition of a ‘public forum’ to include HOA meetings, his postings on his own website and NextDoor.com. But he says the attorneys’ fees and $10,000 judgment afforded by Nevada’s anti-SLAPP law are likely not enough to dissuade Goett and others from attempting to silence their detractors.
“After five years of litigation, $10,000 is really pretty limited,” says Kosor of the amount awarded to the prevailing party in an anti-SLAPP action.
He’s unlikely to see that money any time soon, if at all. Goett is appealing the District Court’s ruling.
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