Nevada Supreme Court Limits Attorney Fees and Costs in Collateral Third-Party Litigation Arising from HOA Foreclosure Sales

Author: Margaret Schmidt

Guest Editor: Issa Mikel

July 9, 2018 9:00am

In its most recent decision concerning Nevada’s ever-problematic home owners’ association (“HOA”) lien statute, [1] the Nevada Supreme Court addressed the statute’s mandatory award of attorneys’ fees and costs.  Nevada Revised Statutes (“NRS”) 116.3116(8) provides, “[a] judgment or decree in any action brought under this section must include costs and reasonable attorney’s fees for the prevailing party.”  Parties have invoked this provision as a means for obtaining fees and costs in any lawsuit invoking NRS 116.3116.  However, the holding in Carrington Mortg. Holdings, LLC v. R Ventures VIII, LLC, 134 Nev. Adv. Op. 46 (Nev. 2018), upends NRS 116.3116(8)’s application outside a very specific context.

Nevada Supreme Court Uncharacteristically Aligns with Ninth Circuit in Holding HOA Super-Priority Lien Statute is Preempted by Federal Foreclosure Bar

Author: Margaret Schmidt

Guest Editor: Leslie Price

May 31, 2018 1:28pm

After years of litigation in the lower courts and countless appeals to the Ninth Circuit and Nevada Supreme Court concerning the “Federal Foreclosure Bar,” the issue was finally put to rest by the Nevada Supreme Court on May 17, 2018 in in Saticoy Bay LLC Series 9641 Christine View v. Fed. Nat’l Mortgage Ass’n, 134 Nev. Adv. Op. 36 (2018).

Nevada’s Voluntary Payment Doctrine is a Viable Defense in HOA Lien Overpayment Cases

Author: Christopher Lund

Guest Editor: Raymond K. Wilson Jr.

April 27, 2018 3:15pm

Aliante Master Assoc. v. Prem Deferred Trust, No. 71026 (Nev. Feb. 23, 2018).

Background

In a recent order, the Nevada Supreme Court held a defendant homeowners’ association (HOA) is not precluded from asserting the voluntary payment doctrine as a defense to an assessment lien overcharge claim.    Aliante Master Assoc. v. Prem Deferred Trust is a class action case, in which plaintiff’s class representative, Prem Deferred Trust (“Prem”) purchased property within Aliante Master Association’s (the “HOA”) community at a bank foreclosure sale for $41,000 in 2010. At the time of the foreclosure sale, the HOA had a lien on the property for unpaid assessments.

Aliante Decision is Good News for Nevada HOAs

Author: Tom McGrath

Guest Editor: Tiffany LeMelle

April 4, 2018 9:33am

Homeowners Associations (HOAs) in Nevada have become accustomed to their involvement as parties in quiet title and declaratory relief litigation, arising from HOA foreclosure sales.  In HOA foreclosure litigation, the primary dispute is between the real estate investors who purchased properties at the HOA foreclosure sales and the lenders who claim their first deed of trust interest survived the sale and continues to encumber the property.  The HOA foreclosure litigation exists primarily because before October 2015, Nevada’s HOA foreclosure statute (NRS 116.3116) did not expressly clarify whether the “super-priority” portion of an HOA’s lien for delinquent assessments, could include attorneys’ fees and costs. 

Nevada Supreme Court Clarifies an HOA’s Obligation to Notify New Homeowners of Foreclosure Proceedings

Author: Margaret Schmidt

Guest Editor: Jeremy Freedman

March 5, 2018 2:27pm

SFR Investments Pool 1, LLC v. First Horizon Home Loans, 409 P.3d 891 (Nev. 2018)

The Nevada Supreme Court recently reversed a district court’s decision to set aside a homeowner’s association (HOA) foreclosure sale in favor of the mortgage lender.  Upon purchasing the subject property at its own foreclosure sale, the lender claimed it was entitled to be re-served all NRS Chapter 116 notices as the property’s new owner.  On appeal, the Nevada Supreme Court clarified that an HOA need not start the entire foreclosure process anew each time the property changes ownership.

Does it Matter to HOAs how Courts Interpret the Bourne Valley Holding?

Author: Tom McGrath

September 5, 2017 1:22pm

Nevada Federal District Judges continue to interpret and apply Bourne Valley differently in cases involving quiet title disputes arising from HOA non-judicial foreclosures under the previous version of Nevada’s HOA lien statute (NRS 116.3116).  At least half of the judges in Nevada Federal District Court require lenders to establish the HOA’s collection agent failed to provide them actual notice of the disputed HOA foreclosure sale.  When the lenders fail to meet their burden in this regard, these judges hold that the lenders lack standing to assert a Constitutional substantive Due Process argument.  But other judges interpret Bourne Valley to hold that NRS 116.3116 is facially unconstitutional and therefore, lenders are not required to prove lack of actual notice of the foreclosure sale for the Court to invalidate the same.

HOA Update: Sufficient Tender Of Super Priority Liens

Author: Christopher Lund

September 5, 2017 1:17pm

Wynn Resorts, Ltd. v. Eighth Judicial Dist. Court of Nevada, and Kazuo Okada, et al, No. 70050 and 70452, 133 Nev., Advance Opinion 52 (Nev., July 27, 2017).

The Nevada Supreme Court recently provided guidance on two evidentiary issues important to any company who retains an attorney to assist in a matter currently the subject of a lawsuit or that the company believes may lead to a lawsuit. These two evidentiary issues are: (1) when a party may obtain an opposing party’s documents otherwise protected by the attorney-client privilege if the opposing party asserts the “business judgment rule” as a defense, and (2) “under what circumstances a document may be protected by the work-product privilege even if it is at issue in the litigation.”

Semantic Changes Do Not Allow Class Action Claims To Circumvent Need Jurisdiction

Author: Christopher Lund

July 30, 2017 11:12am

In a recent unpublished opinion, the Nevada Court of Appeals reversed a district court’s denial of a homeowner association’s motion to dismiss a class action complaint. The court of appeals affirmed that claims involving the interpretation of an HOA’s covenants, conditions, and restrictions (CC&Rs) must be submitted to the Nevada Real Estate Division’s (NRED) alternative dispute resolution program before a district court has jurisdiction.  In addition, a court should look to the substance of a complaint to determine whether it involves interpreting CC&Rs and not blindly accept a plaintiff’s assertion in its complaint that its claims do not involve interpreting CC&Rs.

U.S. Supreme Court Denies Writ Re: Bourne Valley; What Now?

Author: Tom McGrath

July 30, 2017 11:03am

On June 26, the U.S. Supreme Court denied Bourne Valley Trust’s Writ of Certiorari, challenging the Ninth Circuit Court of Appeal’s decision in Bourne Valley Trust v. Wells Fargo.  In Bourne Valley, the Ninth Circuit held the “opt-in notice” language in Nevada’s previous version of its HOA foreclosure statute (NRS 116.3116), did not provide lenders with adequate notice and therefore, deprived them of their substantive Due Process rights under the Constitution.  Therefore, it overturned a Nevada Federal District Court Judge’s Order granting summary judgment in favor of Bourne Valley Trust, an investment company who acquired a property at an HOA foreclosure sale.  Bourne Valley Trust’s Writ was based on the fact that Wells Fargo admitted receiving actual notice of the foreclosure sale.

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