U.S. Home Corp. v. Michael Ballesteros Trust, 415 P.3d 32

Developer U.S. Home built and sold homes in a Nevada common-interest community governed by recorded CC&Rs that include a broad arbitration clause covering disputes with the declarant and builders.
Three original purchasers signed PSAs containing an arbitration clause that expressly invoked the Federal Arbitration Act (FAA) and stated the transaction involved interstate commerce; ten subsequent purchasers took title subject to the CC&Rs but did not sign PSAs.
Homeowners served construction-defect notices and sued in state court under NRS Chapter 40 for defect claims; U.S. Home moved to compel arbitration based on the CC&Rs and PSAs.
The district court denied the motion, finding the transactions did not involve interstate commerce (so the FAA did not apply) and, under Nevada law, the CC&Rs’ arbitration clause was unconscionable (procedural and substantive).
Nevada Supreme Court held (1) CC&Rs can create contractual obligations including arbitration agreements enforceable under state arbitration law or the FAA, and (2) the underlying development and construction transactions sufficiently involved interstate commerce so the FAA governs.
Because the FAA applied, the court concluded Nevada rules that single out or disproportionately disfavor arbitration (D.R. Horton / Gonski conspicuousness and abrogation-of-state-procedures tests) are preempted; it reversed and remanded with instructions to compel arbitration.

Issue	Homeowners' Argument	U.S. Home's Argument	Held
Whether CC&Rs can form an enforceable arbitration agreement	CC&Rs are covenants running with the land, not contracts; thus homeowners not bound	CC&Rs were part of the recorded declaration; purchasers assented by taking title and received required statutory notice	CC&Rs create contractual obligations; arbitration clause in recorded declaration can bind homeowners
Whether the FAA applies	Purchase of single-family homes is a local intrastate matter; FAA inapplicable	Development, construction, sale used out-of-state contractors/materials; transactions affect interstate commerce	FAA applies because the development/construction/sale involved interstate commerce in fact
Whether Nevada procedural-unconscionability rules (conspicuousness requirement) can invalidate the arbitration clause	Arbitration clause insufficiently conspicuous; buyers not adequately informed	FAA preempts rules that single out arbitration with stricter form requirements	Preempted by FAA; conspicuousness rule that singles out arbitration is invalid under federal law
Whether invalidating arbitration because it alters Chapter 40 procedures is permissible	Clause abrogates procedural rights provided under NRS Chapter 40, making it unconscionable	Arbitration's streamlined procedures (timelines, discovery, no jury) are defining features, protected by FAA	Preempted by FAA; trading litigation procedures for arbitration procedures does not render clause unconscionable under FAA

Pinnacle Museum Tower Ass'n v. Pinnacle Market Dev., LLC, 55 Cal.4th 223 (Cal. 2012) (recorded CC&Rs may bind homeowners and can contain enforceable arbitration clauses)
Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995) (FAA applies when transaction involves or affects interstate commerce)
AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts state rules that single out or disproportionately burden arbitration, including unconscionability doctrines)
Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996) (state law that imposes special formalities only on arbitration agreements is preempted by FAA)
Tallman v. Eighth Judicial Dist. Court, 359 P.3d 113 (Nev. 2015) (FAA applies broadly where commerce is involved)
Kindred Nursing Ctrs. Ltd. P'ship v. Clark, 137 S. Ct. 1421 (2017) (FAA displaces rules that covertly disfavour arbitration by targeting its defining features)