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August 2018

Las Vegas Team Obtains Summary Judgment on Superpriority Lien Case on Behalf of Landscape Maintenance Company

Las Vegas partner Robert Larsen and associate Wing Wong recently obtained summary judgment in state court on a superpriority lien case. In this case, Gordon & Rees' client Coronado Ranch Street and Landscape Maintenance Corporation (“Coronado HOA”) foreclosed on a parcel of real property after the homeowners failed to pay assessments.  At the time of the sale, a securitized trust managed by Bank of New York Mellon held the mortgage which was extinguished by the foreclosure sale.  SFR Investments purchased the property for $25,000.

Bank of New York Mellon sued Coronado HOA for quiet title, wrongful foreclosure, breach of contract, misrepresentation, and unjust enrichment among other claims.  Bank of New York Mellon claimed over $639,000 in damages against Coronado HOA.

Coronado HOA served an offer of judgment which Bank of New York Mellon rejected. Subsequently, the court granted summary judgment in Coronado HOA’s favor on all claims. As a result of the offer of judgment, Coronado HOA is now seeking attorneys’ fees against the Bank of New York Mellon.

Background of Superpriority Liens in Nevada

Nevada has a unique law related to liens of homeowners associations.  The law grants priority to a portion of a homeowners association assessment lien over all other liens, including a deed of trust/mortgage which would otherwise be in first position.  This is commonly described as the superpriority lien.  Foreclosure of the superpriority lien can extinguish a mortgage.  During the recent recession, home values plummeted and many homeowners stopped paying their mortgages and homeowners association assessments.  Several thousand foreclosure sales were conducted by homeowners associations from 2012-2015.

In 2014, the Nevada Supreme Court validated the statute establishing the superpriority lien and held that a foreclosure of a homeonwers association lien which includes a superpriority lien operates to extinguish the deed of trust.  See SFR Inv. Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408, 411 (Nev. 2014).

This led to race to the courthouse by banks claiming wrongful foreclosure in an effort to protect the interest in the now extinguished mortgages. 

Gordon Rees Scully Mansukhani Las Vegas attorneys Rob Larsen, Dave Gluth, Brian Walters, Wing Wong and Lynne McChrystal have defended homeowners associations in more than 200 cases involving superpriority liens.

Robert S. Larsen
Wing Yan Wong