MAC Law Discusses Ramifications of Nevada Supreme Court Decision That Unpaid HOA Dues Constitute a Superpriority Lien
LAS VEGAS, Oct. 2, 2014 /PRNewswire/ -- It's rare that the Nevada Supreme Court would make a truly bold decision that has the potential to significantly impact home buyers, sellers, banks, title companies and homeowners associations. On September 18, 2014, the Nevada Supreme Court announced a decision in SFR Investments Pool v. U.S. Bank that had sharply divided State District Courts locally and throughout the state. In essence, the court ruled that unpaid HOA dues constitute a "superpriority" lien that, if foreclosed upon properly, would serve to wipe out a bank's mortgage or first deed of trust.
"The decision was a huge win for investors who had been buying liens and lien rights from homeowners associations for several thousand dollars and using them to foreclose upon homes worth hundreds of thousands, or even millions of dollars," said Terry Coffing, Las Vegas civil litigation attorney and founding partner at Marquis Aurbach Coffing (MAC Law). "While these investors are potentially big winners, the banks that provided money to purchase single family homes and condominiums are likely monumental losers in that their interest in the subject property will be completely wiped out."
So how does this affect an existing homeowner? Well first, if you are in a community that has HOA dues, and you have a mortgage against your home, you can expect your bank to shortly demand that all HOA fees be impounded, much like taxes and insurance are currently. If you are a buyer looking for a loan, you may see significant delays while the effects of this decision are processed and lenders do what they can to mitigate potential losses that could come into play by virtue of this decision. Similarly, while it will be more difficult to obtain a loan, it will also be more difficult to sell a home, not only because buyers could have delays in processing a loan, but also because title companies may be hesitant to provide title insurance to a prospective buyer without more exacting and rigorous due diligence.
The ramifications of this decision are potentially immense, and a "fix" is likely to be debated in the upcoming legislative session. For additional insights on the potentially sweeping effects of this decision, contact MAC Law at 702-382-0711 or via email.
Media Contact:
Terry Moore
MAC Law
702-942-2135
Email
SOURCE MAC Law
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