Nevada Ct. Rules HOA Superpriority Lien Does Not Cover Collection Fees and Foreclosure Costs

Supreme Court of Nevada decision (April 28, 2016)

This case involved issues pertaining to a superpriority lien claimed by a homeowners association (“Association”). Association contended that under the applicable Nevada statutes , its superpriority lien included collection fees and foreclosure costs that had been incurred by Association. Additionally, the court addressed the issue of whether or not an HOA’s CC&Rs which purported to create a superpriority lien covering certain fees and costs incurred during the six months preceding a foreclosure sale are superseded by the provisions contained in Nevada’s statute that creates superpriority liens.

Association contended that, in addition to unpaid dues, its superpriority lien included an additional amount for the collection and foreclosure expenses it incurred during the nine month period leading up to the foreclosure sale.

The Nevada State Supreme Court that reviewed the lower district court’s decision in the case ruled that the superpriority lien allowed by Nevada Revised Statutes (§116.3116(2)) does not allow for the inclusion of an additional amount incurred by Association for the collection fees and foreclosure costs prior to the foreclosure sale, and the superpriority lien is limited to an amount that is equal to nine months of common expense assessments. The court further ruled that conflicting provisions in Association’s governing documents regarding the time period and fees and costs incurred are superseded by the applicable Nevada statute.

See case decision: Horizons_at_Seven_Hills_Home