HOA’s BE AWARE OF THE TRAP FOR THE UNWARY WITH THE REAL ESTATE OMBUDSMAN

An issue that is receiving increased attention amongst Homeowner Associations and residents is what I like to call the “Ombudsman Statute.”  Under Nevada law, no civil action based upon a claim relating to “the interpretation, application or enforcement of any covenants, conditions or restrictions” (“CC&R’s”) may be commenced in court unless the matter has first been submitted to the mediation or arbitration program administered by the State of Nevada Real Estate Division (“the Ombudsman”).  If a plaintiff fails to do so, the district courts are required to dismiss the civil action.  Although at first blush this law appears to be rather straightforward, the reality is that property managers or homeowners continually invoke the Ombudsman Statute to avoid suit, and the district courts all too often grant improper dismissals.  

 The key is whether the matter at issue constitutes a “violation” as defined in NRS 116.745.  The Nevada Attorney General has opined that where there is no “violation” of the provisions of NRS Chapter 116, neither the Real Estate Division nor its administrative law judges have jurisdiction to consider or take any action concerning the interpretation, application or enforcement of a common interest community’s governing documents.  Yet, numerous district court cases are summarily dismissed because they were not first filed with the Real Estate Division, regardless of the underlying facts, the opinion issued by the Attorney General, or the requirements of NRS Chapter 38 and NRS Chapter 116. 

 If you are an HOA with management or financial issues with your property manager or with a homeowner, before taking any legal action, you should first consult an attorney familiar with the requirements of NRS Chapter 38 and NRS Chapter 116.