Homeowners in Nevada are claiming that the state agency charged with regulating homeowners’ associations (HOAs) is a smokecreen. Critics claim that the agency simply does the bidding of property management companies and developers, often at the expense of property owners. The critics want protection from their own choices.
Part of the problem, says a former staff member of the state’s HOA Ombudsman’s Office, is that “no one reads the CCRs” (Convenants, Conditions, and Restrictions the govern homeowners in HOAs). In other words, many individuals enter into the voluntary and contractual agreement without bothering to inform themselves what they are agreeing to do. When, at some future point, they don’t like what the HOA is doing, they complain and want the government to intervene.
The primary complaint is that the regulatory agency is dominated by industry insiders who generally rule in favor of property management companies and developers. Nobody even bothers to consider the more fundamental issue—should government be regulating HOAs? And the answer to that is a resounding NO.
The critics are essentially arguing that individuals should not be held accountable for honoring the contracts that they enter into. In seeking to unilaterally void the CCRs, they are attacking the very concept of contractual agreements.
Individuals usually enter into contractual agreements because they believe that it will be beneficial to them. Sometimes they are wrong. Sometimes they don’t bother to read the fine print and know what they are agreeing to. The responsibility for understanding a contract lies with those who are party to it, not some government agency. The Nevadans complaining about the state’s regulatory agency are unwilling to take responsibility for their own choices.
Regulations prevent individuals from engaging in voluntary transactions as they deem best. Instead, individuals are forced to conduct transactions on terms and conditions established by the regulators. Certainly, regulators may prevent some individuals from making poor decisions. However, regulators also prevent individuals from making good decisions. Individuals cannot act as they would freely choose, but only as the regulators permit.
The solution to the controversy in Nevada isn’t regulatory reform. The solution is the abolishment of the regulatory agency.