Nevada HOA Foreclosures
If you default on HOA dues for your Nevada condo, townhome, or other community interest home, the homeowners association can foreclose.
If you live in a house, condo, or townhome in Nevada that is part of a common interest community, you are responsible for paying dues and assessments to the homeowners’ association (HOA). If you don’t pay, in most cases the HOA can get a lien on your property that could lead to a foreclosure.
Read on to learn about the particular requirements for HOA foreclosures in Nevada.
Nevada HOA Laws
Chapters 116 and 116A of the Nevada Revised Statutes govern common-interest communities in Nevada.
How HOA Liens Work
In most cases, once you fall behind in payments, the HOA can obtain a lien on your property. Almost all HOAs have the power to place a lien on the property if the homeowner becomes delinquent in paying the monthly dues and/or any special assessments (collectively referred to as “assessments”). Once a homeowner becomes delinquent on the assessments, a lien will usually automatically attach to that homeowner's property.
In Nevada, the recording of the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) constitutes record notice and perfection of the lien. This means the HOA does not have to record the lien in the county records in order for it to be valid (Nev. Rev. Stat. § 116.3116(5)). (In some states, the association must record the lien.)
Charges the HOA May Include in the Lien
Nevada law limits the types of charges that the HOA may include in the assessments lien (Nev. Rev. Stat. § 116.3116(1)). Unless the CC&Rs provide otherwise, the HOA can include charges for:
- Assessments. Of course, the HOA can include amounts for unpaid assessments in the lien.
- Construction penalties. The HOA may also include any penalties for failing to adhere to a schedule to construct or improve a unit.
- Late charges. Fees for the late payment of assessments may be included in the assessments lien as well.
- Penalties and Fines. The association may also include penalties and fines in the lien.
- Interest. The HOA may also include interest.
HOA Lien Priority in Nevada
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, and
- liens for real estate taxes (and other governmental charges)(Nev. Rev. Stat. § 116.3116(2)). (Learn more about lien priority and what happens to a first mortgage in an association foreclosure in Nolo’s article What happens to my mortgages if the HOA forecloses on its lien?)
HOA Super Liens
Under certain circumstances, an association lien for delinquent assessments may have priority over a lender’s first mortgage or deed of trust. This is called a “super lien.” In Nevada, nine months worth of delinquent assessments are given super lien status (Nev. Rev. Stat. § 116.3116). (Learn more in Nolo’s article Homeowners’ Association Super Liens.)
HOA Foreclosures in Nevada
If you default in paying the assessments, the HOA can foreclose. A common misconception is that the association cannot foreclose if you are current with your mortgage payments. However, the association’s right to foreclose has nothing to do with whether you are current on your mortgage payments. (Learn more about HOA liens and foreclosure.)
In Nevada, the HOA may hold a foreclose sale 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 to the owner.
Notice of Delinquent Assessments
Before starting the foreclosure, the HOA must mail a notice of delinquent assessment 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
Not less than 30 days after mailing the notice of delinquent assessment, the association may then record a notice of default and election to sell (NOD) with the county recorder. (The NOD must contain the same information as the notice of delinquent assessment along with a warning that if you do not pay the delinquent amount you could lose your home.) The HOA must also mail a copy of the NOD to the homeowner (Nev. Rev. Stat. § 116.31162).
If the owner does not pay the amount of the lien, including costs, fees, and expenses within 90 days following the recording of the NOD, the home will be sold at a foreclosure sale. The HOA must provide notice of the date and time of the sale to the owner (Nev. Rev. Stat. § 116.31162). (Learn more about foreclosure laws and procedures in Nevada.)
Foreclosure Limitation: No Foreclosure for Penalties and Fees Only
Fines and penalties, in contrast to assessments, are the 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 can result in fines and associated fees.
In Nevada, the association may not foreclose a lien based on a fine or penalty 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 a construction schedule (Nev. Rev. Stat. § 116.31162(5)).
What to Do if You Are Facing Foreclosure by an HOA
If you are facing an HOA foreclosure, you should consult with an attorney licensed in Nevada to discuss all legal options available in your particular circumstances. (See our HOA Foreclosure topic page for articles on HOAs, possible options to catch up if you are delinquent in payments, how bankruptcy can help discharge dues, HOA super liens, and more.)