April 1, 2015

HOA Lien Foreclosures No Longer Permitted in Las Vegas (GLVAR) MLS

NOTE: The information below contains opinion of its author who is not an attorney. Consult a real estate attorney if you need real estate law advice.


foreclosed home pictureThere has been a lot of talk about the recent Nevada Supreme Court ruling that an HOA foreclosure sale extinguishes the first mortgage (first deed of trust) security interest from the property. Be aware: It doesn’t mean the the note (the actual loan) disappears–the original borrower still is on the hook for it. In other words, according to the literal interpretation of the ruling, an HOA can foreclose on a property without the consent of the first mortgage and the security interest (the lien) goes bye-bye. In theory, this means that the new owner now has the ability to enjoy or resell the home without any worry about the former mortgage. But this may not be the case. The State’s court ruling left many questions unanswered. And in fact some of the questions will be adjudicated by an even higher authority–the Federal court. Already lenders are suing anyone and everyone involved in these HOA foreclosure actions and subsequent sales.


GLVAR LogoBecause of the questions and potential litigation, the Greater Las Vegas Association of Realtors (GLVAR) (“the Board”) has made it policy now that properties that have gone through an HOA foreclosure sale cannot be resold using the Board’s MLS. It is unclear as of yet of the Board will allow properties that have prevailed in a quiet title action to be allowed to be listed. Likewise many title insurance companies will not insure such properties. So, if you are planning to purchase a home through an HOA foreclosure be aware that they may be difficult to resell.

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