Nevada Sup Ct. Says HOA Notification of Rule Change Was Insufficient to Uphold Fines for Violations

Nevada Supreme Court decision (October 16, 2015).

In this case, a homeowners association (“Association”) fined homeowners (“Owners”) for bringing their dog into the community clubhouse in violation of the Association’s amended rules that prohibited non-service animals in the clubhouse. Owners contested the fines imposed by Association in an arbitration proceeding concerning the matter. Owners contended that they had never been given proper notice of the change in the HOA rules that contained the prohibition on dogs into the clubhouse.

The arbitrator ruled in favor of the Association after finding that Owners had been constructively notified of the rule change. The arbitrator then concluded that the fines had been properly assessed and an award was issued in favor of the Association which included $17,000 in legal fees. When the Association sought to have the award confirmed in the District Court, Owners filed opposition and sought an order vacating the arbitration award on the grounds that the award was based on an unsupported false statement that they had been provided with proper notice of Association’s amended rules. The District Court ruled in favor of the Association after finding that Owners had not proved a deficiency in the award that justified vacating of the award. Owners then appealed the matter to the State Supreme Court.

The evidence reflected that the constructive notification of the rule change was based on the Association’s management personnel sending all homeowners a welcome letter that contained a website address, which if visited would contain a link to Association’s rules. Notwithstanding same, the rules that were actually linked to the website at that time were the original rules, and not the amended rules that contained the prohibition against non-service animals in the clubhouse. The State Supreme Court reversed the lower court’s decision based on a finding that there was no justification for the award and the finding that Owners had been provided with proper notice of the amended rules. Aside from questioning whether the alleged constructive notice was valid, the court found that NRS 116.12065 required Association to notify homeowners of the amended rules by either mailing or hand delivering a copy of the change that had been made– and that was never done. Thus, the Association had failed to provide the required statutory notice of the amended rules.

See case decision: Sanzaro_v._Ardiente_Homeowne