NEVADA – Nevada Supreme Court Rules Bank Tender Defeats HOA Superpriority Lien
April 4, 2019
By Bradley Arant Boult
As lenders and servicers continue to litigate in Nevada’s state and federal courts about the effect of homeowner associations’ (HOAs) foreclosure sales, some questions have proven particularly sticky. What happens when a lender mails in a check to an HOA for its superpriority lien, but the check is refused? How about when the lender offers to pay the superpriority lien, but the HOA indicates that a payment will not be accepted? In our last post touching on Nevada’s HOA superpriority lien litigation, we noted that the Nevada Supreme Court had not yet given the final word on these topics. Over the last few months, the court announced its final word—or, more accurately, two final words. In a pair of published opinions, the court held that lenders had preserved the priority of their deeds of trust when attempting to pay off the superpriority portion of an HOA’s lien.The decision in Bank of America v. SFR Investments Pool 1 dealt with one typical fact pattern. After the HOA’s lien was recorded, a lender sent a check to the HOA’s foreclosure agent for the correct superpriority amount. However, the HOA’s agent rejected the check and (incorrectly) asserted that the lender was required to pay collection costs and fees to satisfy the superpriority portion. In an opinion issued on September 13, 2018, the Nevada Supreme Court confirmed what lenders had long argued: that this offer of payment with a check, regardless of the rejection, was a valid tender that discharged the superpriority portion of the lien. Although the HOA was free to foreclose on the remaining portion of its lien, the foreclosure would not wipe out the senior deed of trust. Read more:
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