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Petition for Review Denied in Nevada – Allows HOA to Extinguish Mortgages

UTA’s Petition was deniedUTA joined ALFN in filing an amicus brief in opposition to the Nevada’s Supreme Court decision (by a 4-3 vote in SFR Investments Pool 1 LLC v. U.S. Bank, N.A.). The court had ruled that a nonjudicial foreclosure sale of an HOA lien extinguishes a first deed of trust, meaning HOAs can foreclose on homes ahead of first-mortgage providers. This puts thousands of first liens at risk. Unfortunately, the Nevada Supreme Court denied the Petition for Review.

Several lenders had appealed the decision and asked the court to reverse the decision. U.S. Bank had argued that a judicial foreclosure action was required in order for a superpriority lien to be created and to be superior to a first deed of trust. Key to the majority’s decision was the argument that ‘the Legislature’s use of the term “action” indicates that a superpriority lienholder must file a judicial foreclosure complaint.’

“All is not lost,” said Robert Finlay, Esq., UTA’s Legislative Committee Chair, who filed the brief on UTA’s behalf. “We still have arguments in many cases that could set aside the foreclosure sale or obtain recovery from HOA.”

Read the UTA/ALFN Brief

Read the Court’s decision

Read story in Las Vegas Review Journal

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