News from Nevada

NEVADA – The Super-Priority Saga Continues – Nevada Supreme Court Holds That NRS 116’s Notice Provisions Are Constitutional

JDSUPRA BUSINESS ADVISOR:  The Super-Priority Saga Continues – Nevada Supreme Court Holds That NRS 116’s Notice Provisions Are Constitutional

By Aaron Chastain, J. Hunter Robinson – Bradley Arant Boult Cummings LLP

January 27, 2017


The Ninth Circuit sent shockwaves through the mortgage industry when it held that NRS 116—the statute allowing an HOA to impose a nominal super-priority lien that can extinguish a senior deed of trust when foreclosed—was facially unconstitutional under the Due Process Clause in Bourne Valley Court Trust v. Wells Fargo Bank, N.A. In Bourne Valley (see our previous blog posts on this decisionhere and here), the Ninth Circuit held that NRS 116’s notice scheme did not mandate that mortgagees receive actual notice of these HOA super-priority lien foreclosures, but instead required that mortgagees request such notice from the HOA in advance of the HOA’s foreclosure sale. The Ninth Circuit determined this “opt-in” notice scheme violated the Due Process Clause’s requirement that statutes authorizing the extinguishment of junior liens mandate that junior lienholders receive actual notice of the foreclosure sales that can extinguish their liens.

Importantly, the Ninth Circuit held that an HOA’s foreclosure under NRS 116 constituted state action, a threshold determination in Due Process Clause challenges, as the Due Process Clause only applies to state actions. Specifically, the Ninth Circuit held that NRS 116 foreclosures constitute state action because HOA liens are purely statutory, rather than contractual, like deeds of trust. Because an HOA could not impose and foreclose on its super-priority lien absent the statutory authority granted to it through NRS 116, an HOA’s super-priority lien foreclosure constitutes state action under Bourne Valley. Read more:

NEVADA – HOAs, foreclosures and property rights

Las Vegas Review Journal: HOAs, foreclosures and property rights
September 17, 2016
By Nona Tobin

Your Sunday editorial, “Super liens: What about property rights?” really missed the mark. It was easy for you to make the same mistake the courts are making because that’s how the big money players have set the stage. The banks, the debt collection companies and the vulture investors have framed the issue in the courts to focus on super-priority details so they can completely obfuscate how they have been victimizing both the homeowners and the HOAs.

Your editorial opined: “But the bank sued, arguing convincingly that the HOA has no right to confiscate its asset.” The bank’s asset? Really? What about the homeowner? The house isn’t the bank’s asset. It belongs to the homeowner, who is the equitable title holder, until there is a legal foreclosure.

It might surprise you that many of these houses that went to HOA foreclosure sales were houses that the banks couldn’t foreclose on because they couldn’t meet the standard of Nevada’s 2011 robo-signing law designed to prevent foreclosure fraud caused by banks recording false affidavits about who actually owned the debt.

It might also surprise you to know that the property rights of the homeowners who lost their houses to HOA foreclosures were violated when their homes were taken without due process.

It might also surprise you to know that the debt collectors are often the same companies that manage the HOAs and have set up a self-serving system whereby the HOA board decides to foreclose without notifying the homeowner or giving him a chance to have an open hearing. Then, once the HOA sale is going to happen and the bank and the homeowner haven’t been told when, the debt collection company sells it and keeps all the excess proceeds after giving the HOA the legal minimum of nine months back dues.

Lot of property rights violated before you even get to the banks, I’d say. Read:

NEVADA – HOA HALL OF SHAME: Homeowner sues Rancho Bel Air

13 Action News:  HOA HALL OF SHAME: Homeowner sues Rancho Bel Air
By Darcy Spears
September 2, 2016

LAS VEGAS (KTNV) – Most of us in Southern Nevada live under the rule of a homeowners association.

That means paying dues every month. But what would you do to get out of having to pay up?

In this edition of HOA Hall of Shame, Contact 13 spotlights one homeowner’s fight for freedom.

In a David and Goliath battle, the homeowner won a big victory over his HOA, and he’s literally screaming about it from the rooftops — posting big, blown-up copies of the checks the court forced the HOA to pay him, for sandbagging and defying court orders.

It’s almost unheard of for an HOA to pay the homeowner.

But Jonathan Friedrich got $10,000 from the Rancho Bel Air board after filing a lawsuit, accusing them of fraud.

“They violated state, federal and municipal laws. And I’ve called them out on it.” Read more:

NEVADA – Nevada HOA Corruption Reaches the Top

NEIGHBORS AT WAR:   Nevada HOA Corruption Reaches the Top
Ward Lucas
August 7, 2016

Once again, Nevada is showing the country that it’s the most corrupt Homeowners Association state in America. Their Supreme Court Chief Justice tipped off her girlfriend, a top suspect in an FBI investigation, that she was about to get raided. That’s an old story.

Here’s a new one: Now a prominent Nevada State Legislator is trying to get a fistful of anti-homeowner bills enacted. Oh yes, she forgot to tell voters that she works for the Del Webb Corporation which sets up some of the most criminal Homeowners Associations in the country.  Read more:

NEVADA – Appeals Court Dashes Hopes for Investors Who Bought Foreclosed Homes in Nevada

Las Vegas Review Journal:  Appeals Court Dashes Hopes for Investors Who Bought Foreclosed Homes in Nevada
By Sean Whaley
August 20, 2016

CARSON CITY — Real estate investors who took advantage of a Nevada law during the foreclosure crisis to acquire several thousand foreclosed homes at bargain prices got what could be bad news recently courtesy of the 9th Circuit Court of Appeals.

In a 2-1 decision Aug. 12, a court panel said a Nevada law requiring mortgage lenders to be alerted of a foreclosure by a homeowners association only if the lender had requested notice is unconstitutional. The panel said the requirement of an “opt-in” request is a violation of the 14th Amendment requiring due process.

In the specific case, the court sent the case favoring Wells Fargo Bank and against the Bourne Valley Court Trust back to District Court for further proceedings.

The complex disputes over Nevada’s foreclosure laws date to the foreclosure crisis that began in 2008. The law was changed by the Nevada Legislature in 2015 to resolve the notice issue and other concerns.

But if the appeals court ruling is upheld, the acquisition of thousands of homes by investors who paid just a few thousand dollars to satisfy HOA-filed super-priority liens could be in jeopardy. The sales could be nullified because of the 9th Circuit ruling, restoring the status of the foreclosed homes with the mortgage lenders again holding valid liens.

Las Vegas attorney Michael Bohn, who represents the Bourne Valley Court Trust in the dispute, has asked the 9th Circuit to put the decision on hold and not formally publish the opinion to prevent it from being cited in legal proceedings in state and federal court.  Read more: