Recent Ruling - Foreclosing on Nevada HOA liens

[Rick H.]

For those of you who invest in either NV real estate and/or trust deed notes or even judgment liens, I just got the official ruling:

HOA liens that are foreclosed on are given a priority status and wipe off 1st mortgages. There have been several threads on this topic in recent months here on BP

[Hal Thompson]

@Conny W.

Maybe you should read the statute in Florida before trying to sell HOA Lien assignments to investors. The Florida Statute says:

5)(a) The association has a lien on each condominium parcel to secure the payment of assessments. Except as otherwise provided in subsection (1) and as set forth below, the lien is effective from and shall relate back to the recording of the original declaration of condominium, or, in the case of lien on a parcel located in a phase condominium, the last to occur of the recording of the original declaration or amendment thereto creating the parcel. However, as to first mortgages of record, the lien is effective from and after recording of a claim of lien in the public records of the county in which the condominium parcel is located. Nothing in this subsection shall be construed to bestow upon any lien, mortgage, or certified judgment of record on April 1, 1992, including the lien for unpaid assessments created herein, a priority which, by law, the lien, mortgage, or judgment did not have before that date.

So unless your HOA lien was filed before the first mortgage was recorded (and I can guarantee you it wasn't), your HOA lien is not super in any way that matters. HOA super priority lien laws, while available in a number of states, diverge in many important ways from state to state. In Florida, the lien does not trump first mortgages under any circumstances, and you are not going to get any court to agree that they do. The statute is plain as day.

In addition, be aware that the SFR Decision in Nevada is under assault from the Feds, who are attempting to assert their own federal super priority. It's not clear what is going to happen at the Federal level, but the Feds have already won at the Federal District Court Level with regards to FHA/HUD insured mortgages, and it's unclear what will happen with regards to mortgages back by Fannie and Freddie. This is all subject to appeal and years of court rangling, and that is in states like Nevada where the fight has been won at the state level.

I'd love to hear how Conny W. plans to make money for investors by selling Florida HOA liens that have no super priority whatsoever. Caveat Emptor...buyer beware.