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.
Chapters 116 and 116A of the Nevada Revised Statutes govern common-interest communities in Nevada.
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.)
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:
An association’s lien is prior to all other liens, except for:
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.)
Most super lien laws require an HOA to give notice to a first mortgage lienholder before foreclosing. But before 2015, HOAs in Nevada were not required to notify first-mortgage lenders of a foreclosure unless the lender requested notification. In 2016, the Ninth Circuit Court Appeals ruled that this older version of Nevada’s super-lien statute is unconstitutional. (Currently, under an amended version of the statute, Nevada HOAs need to provide notice to junior lienholders in a foreclosure.) The Nevada Supreme Court, though, upheld the constitutionality of Nevada’s pre-2015 super lien statute, while failing to address the statute’s notice requirements. Prior to the Nevada Supreme Court ruling, Nevada federal district court judges had begun invalidating HOA foreclosures conducted under the pre-2015 statute. The Nevada Supreme Court is not bound by the Ninth Circuit and therefore its ruling will stand unless reversed by the United States Supreme Court. Federal district courts, however, are bound by the Ninth Circuit and will likely to continue to invalidate HOA foreclosures. This conflict will most likely lead to forum shopping regarding cases involving HOA foreclosures conducted while the pre-2015 law was in effect.
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.
Before starting the foreclosure, the HOA must mail a notice of delinquent assessment to the homeowner, which states:
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.)
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:
A redemption period is a specific time period given to homeowners following a foreclosure during which they can buy back, or “redeem,” their property from the entity or person that purchased it at the foreclosure sale. (Learn more about redemption periods.)
In Nevada, the homeowner can redeem the property within 60 calendar days following an HOA foreclosure sale.
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.)