By Megan McArdle

October 21, 2014

No one looks forward to a bank foreclosure. It’s miserable for the people being kicked out of their homes, it’s miserable for the law enforcement folks who have to do it, and it’s expensive as hell for the banks.

Nevada bankers have discovered something even worse than foreclosure: not being able to foreclose themselves because the homeowners association got there first:

Like lenders, homeowners associations can foreclose on homes to recoup delinquent payments, an option that many have taken after waiting years for lenders themselves to foreclose, a scenario that has left homes without dues-paying owners and some HOAs strapped for cash. Nevada and about 20 other states have laws that allow HOA liens to get priority over first mortgages.  Read more: