In Nevada’s common-interest communities—such as condominiums and townhomes—it’s not always clear who is responsible when water damage occurs between neighboring units. Does the homeowner pay, or is the homeowners association (HOA) on the hook? Nevada law provides a clear answer: if the units are separated by vertical or horizontal walls, the HOA likely has a legal obligation to insure and repair the damage—at least to the unit’s original condition.
The Legal Duty to Insure Units with Shared Walls
Under NRS 116.3113(2), an HOA must maintain property insurance not only on the common elements of the community but also on the units themselves if those units are separated by horizontal boundaries (such as stacked units in a condo building) or by vertical boundaries (such as a common wall in a townhouse). This requirement applies whether the units are side-by-side or stacked on top of one another.
The Nevada Real Estate Division made this responsibility clear in Advisory Opinion 20-03, which explained that this 2011 change in the law was modeled after the national Uniform Common Interest Ownership Act. The purpose of the rule is to ensure that when damage occurs—especially water damage involving multiple units—the HOA’s master policy will provide coverage, avoiding finger-pointing between insurance companies and allowing for faster resolution.
Importantly, this insurance coverage includes the unit itself—not just the common wall or structure—but does not include personal property or upgrades made by individual owners. For example, the HOA’s policy would cover replacing the unit’s original flooring or drywall, but not an owner-installed marble countertop.
The Duty to Repair or Replace
Insurance coverage is only half the story. When damage does occur, NRS 116.31135(1) imposes a clear duty on the HOA:
“Any portion of the common-interest community for which insurance is required under NRS 116.3113 which is damaged or destroyed must be repaired or replaced promptly by the association.”
This means that once a water leak causes damage to a covered area—whether it’s from a leaking pipe in a shared wall or roof—the HOA is required to oversee and fund the repair of the damaged unit (excluding betterments and personal property), restoring it to the condition it was in when originally sold by the developer.
What If an Owner Has Their Own Insurance?
Many homeowners also carry their own individual policies, often referred to as HO-6 policies. But if both the HOA and the homeowner have insurance that applies to the same damage, NRS 116.31133(1)(d) mandates that the HOA’s insurance is primary. This means the HOA’s insurer pays first, reducing out-of-pocket costs and claim burdens for individual homeowners.
Exceptions and Reimbursement
There are exceptions. If the damage was caused by the gross negligence or willful misconduct of the homeowner, tenant, or their guest, the HOA may repair the damage but charge the cost back to the responsible unit, even if it falls within the scope of the HOA’s policy.
What Homeowners Should Know
HOAs are not required to cover upgraded or improved features added by a unit owner. If you’ve installed high-end flooring, cabinets, or fixtures, it is crucial to carry your own insurance that covers “improvements and betterments.” The HOA’s insurance will only restore your unit to its original condition.
Transparency Is Key
Although Nevada law doesn’t require the HOA to itemize what is or isn’t covered in its master policy, the Nevada Real Estate Division strongly recommends that HOAs clearly disclose this information to their members. Doing so helps homeowners obtain proper supplemental insurance and prevents disputes when damage occurs.
At Johnson & Associates, LLC, we represent homeowners and associations navigating the complexities of water damage, insurance, and HOA law in Nevada. If you have questions about your HOA’s responsibilities or your rights as a homeowner, contact us today for a consultation.