Robart Realty Group | Nevada Real Estate | Keller Williams

There are a number of bases on which lenders can defend a claim by the HOA or third party purchasers that the HOA lien extinguished a first priority deed of trust. If the secured loan is an FHA loan, Federal Courts have held that Nevada law cannot be interpreted to extinguish the deed of trust. In  Washington & Sandhill Homeowners Assoc. v. Bank of Am. N.A. et al. , No. 13-cv-01845-GMN-GWF (D. Nev. Sept. 25, 2014), an HOA, relying on its super-priority lien, foreclosed on a property that was subject to a mortgage insured by the federal Department of Housing and Urban Development (HUD) pursuant to its Single Family Mortgage Insurance Program (SFMI Program). The federal district court found that federal law, not state law, governs federally insured mortgages and that state law cannot prevent HUD from acquiring title to an insured property pursuant to the terms of the SFMI Program. It thus held that the HOA’s foreclosure pursuant to NRS 116.3116 was preempted and invalid. Th...

The recent Nevada Supreme Court decision that allows homeowners associations to trump mortgage lenders in foreclosing on homes sent a shot from Carson City across the state and through the Nevada real estate community. The ruling has the potential to affect the delicate relationships among homeowners, HOAs and lenders covering more than 500,000 properties in nearly 3,000 HOAs in Nevada. Kolleen Kelley, president of the Nevada Association of Realtors, referred to it as “Armageddon” on the day the decision was announced. She said banks would further restrict mortgage lending if their loans couldnt be protected. Other industry observers agreed. The case centered on an $885,000 home in Southern Highlands sold at auction for $6,000 by an HOA. The court ruled that super priority liens held by HOAs for unpaid assessments take precedence over first trust deeds held by banks or other mortgage lenders. Further, it said HOAs don't need to go to court for permission to seize a prop...

A recent decision by the Nevada Supreme Court empowers homeowner associations in matters concerning foreclosure. The court in September ruled that unpaid homeowner association dues can establish a superior lien, or right to ownership, regardless of a bank's mortgage on a home. “They just got a landslide. They just got a windfall if the sale was conducted properly. They just got home for a few thousand versus market value, whatever that is. From the bank side, if the sale was conducted properly, they just lost their security for their loan,” home ownership attorney Avece Higbee said. In some instances investors are purchasing liens from homeowner associations for thousands of dollars, using them to foreclose on homes and reaping hundreds of thousands of dollars. Banks lose out because interest accrued from the loan is lost. Attorneys for homeowner associations are applauding the decision, claiming associations have lost out on unpaid dues for y...