Legal Alert - HOA Super Priority Legal Battles Continue in the Silver State: What Senate Bill 306 Means for Nevada HOAs, Lenders and Homeowners
by Aaron D. Ford and Karl O. Riley
In 1991, the Nevada Legislature enacted the Uniform Common-Interest Ownership Act (UCIOA) which had been promulgated by the National Conference of Commissioners on Uniform State Laws (NCCUSL) (the Statute). This law provides that a homeowners association (HOA) may record a lien on each home in the community it governs and in enacting this law, the Legislature authorized an HOA to foreclose its lien through a nonjudicial foreclosure process. When the lien attaches or comes into existence continues to be a dispute issue in the ongoing litigation. Under this law, the HOA’s lien is prior to the first mortgage lien to the extent of certain maintenance and abatement charges and either six or nine months of assessments for common expenses, depending on the circumstances. This portion of the HOA’s lien is commonly referred to as the “super-priority lien.” In SFR Investments Pool 1, LLC v. U.S. Bank, the Nevada Supreme Court held that the foreclosure of the “super-priority lien” by an HOA extinguishes the first mortgage lien on the unit.