HOA Super Priority Lien

More often than not, today’s homeowner has a residence that is part of a homeowners association (HOA). As such, you are generally required to pay to the HOA assessments, which are typically monthly or annual. In addition to such assessments, most owners have at least a first mortgage against their property for funds they borrowed to purchase their home.

When an owner in an HOA fails to pay their assessments, the HOA acquires a lien against their home for the delinquent amount. This lien may be foreclosed upon and the owner’s property sold in the same way as a mortgage foreclosure. The buyer at the HOA foreclosure sale thus becomes the owner of the home.

A very hot issue, upon which there are conflicting court decisions, is whether the HOA foreclosure wipes out the first mortgage? In other words, can the buyer at the HOA foreclosure sale acquire the property, free and clear of all mortgages, for just the amount paid at the HOA sale?

The Nevada Supreme Court has not yet decided this issue. Contact us for further details.