If you are new to Nevada and have not been paying attention to the special assessments and fees imposed by the homeowners association, you could be in trouble. In such cases, a lien is automatically attached to your property without your consent.
This gives the homeowners association super lien status over your property. If you wish to learn more about super liens in Nevada and how it affects a foreclosure then read on.
Everything you need to know about Super Liens in Nevada
Before you understand how the HOA (homeowners association) super liens work, you need to learn a bit more about some basic terminologies like:
The super lien belongs to one such category of lien where the pursuant to state statue is actually given utmost priority. All other types of lien are given less importance and in the case of the HOA super liens, the term is used to describe the part of the association given higher authority over the first-mortgage holder himself/herself. The interests of the HOA are greatly emphasized upon rather the first-mortgage holder’s in this case.
In most cases when you buy a home, you may end up taking out a mortgage. The first mortgage you take out for this purpose is referred to as the first lien. However, there may come a time when you may need to take out another mortgage, which is then recorded as the second lien. Priority between both liens can be established based on the dates each mortgage was taken out.
The priority of the lien is essential in order to fulfill the proceedings of a foreclosure.When a specific property’s market value is way below the total outstanding debt, the proceeds of the foreclosure are transferred and handed over to the first-mortgage holder.
An assessment lien is required in order to determine whether an individual has been making monthly payments for the special assessments and fees to the homeowners association. The assessment lien automatically attaches to the property when the date of the assessment is due.
What if the HOA Forecloses on its Super Lien
Nevada is one of the 20 states where the HOA assessment lien is given super lien status, but only if certain conditions are met. In Nevada for instance, the HOA super lien can eliminate a first deed of trust during a foreclosure as ruled by the Supreme Court itself. This means that when a lender has received a notification for unpaid dues by the HOA in a super lien state then he/she will have to pay off those dues to ensure their position as a first-lien holder remains unaffected or unchallenged.
What if the First-Mortgage Holder forecloses first instead
On the other hand, there are cases when the first-mortgage holder chooses to foreclose instead. In such a case, the HOA will need to be paid any and all unpaid dues first up to the months of overdue assessments.
The Importance of HOA Super Liens
There is a perfectly good reason why HOA super liens exist. They are necessary to preserve the essence and values of a community. However, during the housing crisis, many have argued that people and neighborhoods suffer primarily because of unpaid fees and irregular maintenance. Super liens actually ensure that the HOA receives the necessary funds for the benefit of the neighborhood for years to come.
Keeping these factors in mind, you now have a better understanding of HOA super liens and how it can affect the first-mortgage holder and the community itself. Additionally, since you also know more about the super liens specific to the state of Nevada, you can now determine whether it would be a good idea to move and invest in a new property or not.