HOA Design Restrictions Must be Authorized by Governing Documents and Must Be Reasonable to be Enforceable

This case involved a dispute between a homeowner (“Owner”) and his homeowners association (“Association”) over Association’s power to adopt rules restricting the use and design of individually owned properties within the common interest community. In his action for injunctive and declaratory relief, Owner sought an order from the court forcing the adoption of two sections of the Nevada “Restatement (Third) of Property: Servitudes” (“Restatement”). Section 6.7 of the Restatement pertains to use restrictions, and 6.9 pertains to design restrictions. The two sections of the Restatement provide that a homeowners’ association does not have the implied power to impose use or design restrictions on individually owned unless the association’s governing documents expressly authorize the imposition of such restrictions, and if so, the restrictions must be “reasonable.” In his action, Owner sought to invalidate Association’s newly adopted architectural and design rules.

Association’s Bylaws contained a provision that authorized its board to make rules and regulations necessary to carry out its powers, but which are not inconsistent with the laws of the State of Nevada and Association’s Articles of Incorporation and Bylaws. The Bylaws also included a provision that required Association’s preapproval of the planned construction on individually owned lots prior to the commencement of construction.

In 2018, Association established an architectural review committee and Architectural Guidelines that created detailed restrictions on individually owned lots concerning such things as building height and setbacks, along with design control restrictions regarding exterior lighting, building materials, and landscaping. The newly adopted regulations required owners to submit: