Nevada HOA Foreclosures

In Nevada, if your home is part of a homeowners' association (HOA) and you fall behind in assessments:

• The HOA can usually get a lien on your home.
• The HOA can charge you penalties, late charges, fines, and interest in addition to overdue assessments.
• If you make a written request, the HOA has to provide you with a statement of the amount of unpaid assessments.
• Once the association has a lien on your property, the HOA may foreclose, but not a lien based on a fine or penalty, except under limited circumstances.
• Lien priority determines what happens to other liens, like a mortgage lien, if an HOA lien is foreclosed.
• If you lose your home to an HOA's foreclosure, you get limited time to redeem it (pay off the debt and reclaim the property).

If the HOA initiates a foreclosure, you might have a defense to the action, such as the HOA charged you too much, assessed unreasonable fees, or failed to follow state laws.

Or you might be able to negotiate a way to get caught up on the overdue amounts and save your home. For example, you might be able to pay off the entire delinquency, negotiate a reduced payoff amount, or enter into a repayment plan.

How HOA Assessments and Liens Generally Work

When you buy a single-family home, townhome, or another home in a planned community with covenants, you'll most likely pay fees and assessments, often collectively called "assessments," to an HOA. If you fall behind in the assessments, the association will likely initially try to collect the debt using traditional methods. For instance, the association will probably call you and send letters.

But if those tactics don't get you to pay up, the association might try other ways to collect from you. The association could take away your privileges to use the common facilities or file a lawsuit for a money judgment against you.

Based on the association's Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and state law, most HOAs also have the power to get a lien on your property if you become delinquent in assessments. Once you fall behind in payments, a lien will usually automatically attach to your property. Sometimes, the association will record its lien with the county recorder to provide public notice that the lien exists, regardless of whether state law requires recording.

An assessments lien clouds the title to the property, hindering your ability to sell or refinance the home. In addition, the property can also be foreclosed to force a sale to a new owner—even if the property has a mortgage.

How HOA Liens Work In Nevada

In Nevada, the recording of CC&Rs constitutes record notice and perfection of the lien. So, the HOA doesn't have to record the lien in the county records it to be valid. (Nev. Rev. Stat. § 116.3116(9)). However, the association might choose to record its lien.

Charges a Nevada HOA May Include in the Lien

Nevada law limits the types of charges that the HOA may include in an assessments lien. (Nev. Rev. Stat. § 116.3116(1)).

Unless the CC&Rs provide otherwise, the HOA can include charges for the following:

• Assessments. Of course, the HOA can include amounts for unpaid assessments in the lien.
• Construction penalties. The HOA may also include penalties for failing to adhere to a schedule to construct or improve a unit.
• Late charges. Fees for the late payment of assessments may also be included in the assessments lien.
• Penalties and Fines. The association may also include penalties and fines in the lien.
• Interest. The HOA may also include interest.

Requesting a Statement of Unpaid Assessments

Within ten business days after you make a written request, the HOA has to provide you with a statement of the amount of unpaid assessments. The statement is binding on the association. (Nev. Rev. Stat. § 116.3116(13)).

HOA Lien Foreclosures in Nevada

In Nevada, the HOA may hold a foreclose sale and sell the property to a new owner after sending the homeowner a notice of delinquent assessments, recording a notice of default and election to sell, and providing notice of the foreclosure sale.

Notice of Delinquent Assessments Before Foreclosure Starts

Before starting the foreclosure, the HOA must mail a notice of delinquent assessment by certified or registered mail, return receipt requested, to the homeowner, which states:

• the amount of the assessments and other sums that are due
• a description of the unit against which the lien is imposed, and
• the name of the record owner of the unit. (Nev. Rev. Stat. § 116.31162).

Notice of Default and Election to Sell

Not less than 30 days after mailing the notice of delinquent assessment, the association has to record a notice of default and election to sell (NOD) with the county recorder. The NOD must contain much of the same information as the notice of delinquent assessment, along with a warning that if you don't pay the delinquent amount, you could lose your home, even if the amount is in dispute. The HOA must also mail a copy of the NOD to you, the homeowner. (Nev. Rev. Stat. § 116.31162).

The homeowner (or successor in interest) may pay the amount of the lien, including costs, fees, and expenses pertaining to its enforcement for 90 days after the notice of default and election to sell is recorded or the date when notice of default was mailed to the owner, whichever is later. (Nev. Rev. Stat. § 16.31162).

Notice of the Foreclosure Sale

After the 90-day period described above expires and before selling the unit, the association has to give notice of the time and place of the sale by:

• recording a notice of sale
• posting a similar notice describing the property, for 20 consecutive days, in a public place in the county, and
• publishing a copy of the notice three times, once weekly for three consecutive weeks, in a newspaper of general circulation in the county.

The association must also mail the notice to the unit owner (or successor in interest) on or before the notice's first publication or posting date. A copy of the notice of sale must also be served to an occupant of the property of suitable age. Or it has to be served by posting a copy of the notice of sale in a conspicuous place on the unit. (Nev. Rev. Stat. § 116.311635).

Participating in Foreclosure Mediation

Nevada offers foreclosure mediation for homeowners in common-interest communities. However, you'll have to pay the association any amounts enforceable as assessments that become due during the pendency of foreclosure mediation. (Nev. Rev. Stat. § 116.31162, § 107.080, § 107.086).

Talk to a lawyer to learn how to file a petition to participate in mediation. You may also contact the state's Office of the Ombudsman for Owners in Common-Interest Communities (see below) for assistance.

Foreclosure Sale

If you don't pay the amount of the lien, including costs, fees, and expenses within 90 days following the recording of the NOD (as discussed above), the home will be sold at a foreclosure sale. (Nev. Rev. Stat. § 116.31162). The sale will be a public auction, with the property selling to the highest bidder.

Foreclosure Limitation: No Foreclosure for Penalties and Fees Only

Fines and penalties, in contrast to assessments, are charges that an HOA imposes if you violate the CC&R's or other governing documents. For example, letting your lawn become overgrown, leaving trash cans outside, and parking in forbidden areas might result in fines and associated fees.

In Nevada, the HOA may not foreclose a lien based on a fine or penalty for a violation of the governing documents of the association unless:

• the violation poses an imminent threat of causing a substantial adverse effect on the health, safety, or welfare of the units' owners or residents of the community, or
• the penalty was imposed for failure to comply with certain schedules relating to design, construction, occupancy, or use of a unit or improvement. (Nev. Rev. Stat. § 116.31162(6)).

Does Nevada Have Right of Redemption for HOA Foreclosures?

In Nevada, the homeowner can redeem the property within 60 days following an HOA foreclosure sale. (Nev. Rev. Stat. § 116.31166(3)-(6)).

To redeem, you'd have to pay the purchaser:

• the amount of the purchase price
• interest at the rate of 1% per month, to the time of redemption
• the amount of any assessment, taxes, or payments toward liens created before the purchase and that the purchaser might have paid after the purchase, and interest on that amount.

Other costs might also apply, depending on the situation. (Nev. Rev. Stat. § 116.31166). Talk to a lawyer to get more information about redeeming the property. You may also contact the state's Office of the Ombudsman for Owners in Common-Interest Communities for assistance.

What Is the Statute of Limitations on HOA Liens in Nevada?

A lien for unpaid assessments is extinguished unless a notice of default and election to sell is recorded or judicial proceedings to enforce the lien are instituted within three years after the full amount of the assessments becomes due. (Nev. Rev. Stat. § 116.3116(10)).

HOA Liens and Your Mortgage

A common misconception is that the association can't foreclose if you're current with your mortgage payments. But an association's right to foreclose isn't dependent on whether you're up to date on your mortgage. Instead, lien priority determines what happens in a foreclosure.

What Is Lien Priority?

The priority of liens establishes who gets paid first following a foreclosure sale and often determines whether a lienholder will get paid at all. Liens generally follow the "first in time, first in right" rule, which says that whichever lien is recorded first in the land records has higher priority than later recorded liens. A first lien has a higher priority than other liens and gets the first crack at the foreclosure sale proceeds.

If any proceeds are left after the first lien is paid in full, the excess proceeds go to the second lienholder until that lien is paid off, and so on. A lien with a low priority might get nothing from a foreclosure sale.

But state law or an association's governing documents can adjust lien priority.

HOA Lien Priority in Nevada

In Nevada, generally, an association's lien is prior to all other liens, except for:

• liens recorded before the Declaration of CC&Rs
• a first mortgage or deed of trust that was recorded before the date on which the assessment became delinquent
• certain municipal liens, and
• liens for real estate taxes (and other governmental charges). (Nev. Rev. Stat. § 116.3116(2)).

Is Nevada a Super-Lien State?

But in Nevada, an unpaid amount of assessments, not to exceed an amount equal to assessments for common expenses that would have become due during the nine months immediately preceding the date when the notice of default and election was recorded, gets super-lien status. So, that portion of the lien has priority over a lender's first mortgage or deed of trust. (Nev. Rev. Stat. § 116.3116).

Talk to a Lawyer If You're Facing an HOA Foreclosure

If you're considering buying a home in an HOA community in Nevada—or you already live in one—take the time to familiarize yourself with state association laws and the community's governing documents, like the CC&Rs. That way, you'll understand how the association operates and any legal restrictions on it. If you have questions about the HOA's governing documents or your legal rights, consider talking to a real estate lawyer.

If you're facing an HOA's foreclosure in Nevada, consider consulting with a foreclosure attorney to learn more about state laws, how they apply to your situation, and to discuss all legal options available in your particular circumstances.