## Facts

- A home in a Nevada common-interest community was subject to recorded CC&Rs and a first deed of trust securing a loan later held by U.S. Bank as trustee.
- The homeowners became delinquent on HOA assessments and also defaulted on the loan.
- The HOA initiated nonjudicial foreclosure based on its lien for unpaid assessments; U.S. Bank separately initiated nonjudicial foreclosure under the deed of trust.
- SFR purchased the property at the HOA foreclosure sale and recorded a trustee’s deed reciting compliance with statutory notice requirements.
- Before U.S. Bank’s postponed trustee’s sale, SFR sued to quiet title and to enjoin the bank’s foreclosure, alleging the HOA’s superpriority foreclosure extinguished the deed of trust.

## Issues

1. Whether NRS 116.3116(2) creates a “true” superpriority HOA lien such that foreclosure extinguishes a first deed of trust.
2. Whether the superpriority lien may be foreclosed nonjudicially under NRS Chapter 116, or must be foreclosed judicially to extinguish a first deed of trust.
3. Whether the HOA nonjudicial foreclosure scheme, as applied, violates due process rights of a first deed-of-trust beneficiary.
4. Whether a CC&R “mortgage savings clause” can subordinate the HOA’s superpriority lien to a first deed of trust despite NRS 116.3116.

## Decision

- The Supreme Court of Nevada reversed the dismissal of SFR’s complaint, vacated the order denying a preliminary injunction, and remanded.
- The court held NRS 116.3116(2) grants an HOA a superpriority lien for a limited portion of unpaid assessments that is senior to a first deed of trust.
- The court held an HOA may foreclose that lien nonjudicially under the statutory scheme, and proper foreclosure of the superpriority portion extinguishes a first deed of trust.
- The court rejected the bank’s due process challenge as applied.
- The court held a CC&R mortgage savings clause cannot defeat the statutory superpriority lien.

## Legal Principles

- NRS 116.3116(2) creates a superpriority HOA lien (limited to a specified portion of unpaid assessments) that is prior to a first deed of trust, subject to statutory exceptions.
- Proper foreclosure of the superpriority portion of an HOA lien extinguishes a first deed of trust.
- NRS 116.31162–.31168 authorize nonjudicial foreclosure of HOA liens using procedures tied to Nevada’s deed-of-trust foreclosure notice framework.
- A due process challenge fails where the foreclosure is a private nonjudicial sale conducted under the statute and the statutory notice scheme applies to recorded subordinate interests.
- Under NRS 116.1104, CC&Rs cannot vary the statutory priority scheme; mortgage savings clauses do not subordinate the superpriority lien.

## Conclusion

Nevada’s high court held that an HOA’s superpriority lien is a true priority lien and that, when the superpriority portion is properly foreclosed through the authorized nonjudicial process, the sale extinguishes a first deed of trust; private CC&R provisions cannot contract around this statutory result, and the bank’s due process challenge failed on the record presented.


SFR Invs. Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742, 334 P.3d 408 (Nev. 2014)