SFR Invs. Pool 1, LLC v. U.S. Bank, N.A.Annotate this Case
A common interest community subject to covenants, conditions, and restrictions was encumbered by a note and deed of trust in favor of U.S. Bank, N.A. The former homeowners fell delinquent on their association dues and defaulted on their obligations to U.S. Bank. The community homeowners’ association (SHHOA) and U.S. Bank separately initiated nonjudicial foreclosure proceedings. SFR Investments Pool 1, LLC purchased the property at the SHHOA’s trustee's sale and filed an action to quiet title and enjoin the trustee’s sale on U.S. Bank’s deed of trust, alleging that the SHHOA trustee’s deed extinguished U.S. Bank’s deed of trust. The district court granted judgment for U.S. Bank, holding that a homeowners’ association (HOA) must proceed judicially to validly foreclose its superpriority lien, and since the SHHOA foreclosed nonjudicially, U.S. Bank’s first deed of trust survived the SHHOA trustee’s sale and was senior to the trustee’s deed received by SFR. The Supreme Court reversed, holding (1) Nev. Rev. Stat. 116.3116(2) gives an HOA a true superpriority lien, proper foreclosure of which will extinguish a first deed of trust; and (2) chapter 116 permits nonjudicial foreclosure of HOA liens.