Nevada’s HOA Scandals Threaten to Return |

Nevada’s HOA Scandals Threaten to Return

Content provided by Nevada Housing Now

Just four years after landmark legislation protected Nevadans from the predatory practices that resulted in homeowner-association scandals, corruption, and convictions, a brand-new bill threatens to overturn those exact homeowner protections.

In 2015, Nevada passed AB 125, the common-sense safeguard against the scandalous takeover of homeowner associations, or HOAs, that made headlines:

  • FBI searches attorney’s office as political corruption probe continues (The Las Vegas Sun, 2008)
  • Central figure, conspirators in HOA scheme indicted by federal grand jury (The Las Vegas Review-Journal, 2013)
  • Fourteen more plead guilty in HOA fraud, corruption case (The Las Vegas Review-Journal, 2013)

The pre-AB 125 conditions paved the way for massive crime and fraud:

  • Construction defect litigation was a payday for corrupt players. Shady construction firms and their attorneys rigged HOA boards with their cronies and steered lucrative lawsuit and construction fees their own way, pocketing millions.
  • Despite the lawsuits, there were few if any repairs. What little work was done was shoddy and substandard. The few defects that did exist could have easily been resolved by accessing home warranties. Without the protections of AB 125, the schemers could brazenly perpetrate an entire new round of fraud.
  • Nevada homeowners were the real losers. Despite the multiple convictions (and even suicides) of the corrupt defendants, homeowners got sucked into a vortex of fraud that none could afford, fueling the state’s dire housing crisis. Many became party to lawsuits without their knowledge and couldn’t sell their homes until the lawsuits were settled.

Without any legal protections for homeowners, the widespread scandal was easy for the scammers to pull off. They were able to stack HOA boards with their own puppets and rig elections of HOA boards to serve their own purposes. The string of scandals—the biggest of its kind in state history—led to the sentencing of nearly 40 individuals, for crimes ranging from mortgage fraud to obstruction of justice, election fraud, and threats of violence and intimidation, to name but a few.

While AB 125 has been shown, conclusively, to have held down costs, litigation, and corruption, powerful forces converging on Carson City are backing a new bill—AB 421—which would overturn the exact protections currently written into Nevada law. AB 421 has passed the Assembly and will be heard the Senate in the next few weeks.

Nevada is in the midst of an affordable housing crisis. Passage of AB 421 would overturn critical consumer protections, exacerbate the affordability crisis and set the stage for a new round of HOA scandals.