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...

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...