SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742, 334 P.3d 408 (Nev. 2014)
Legal information, not legal advice. Verify against the cited opinion.
- Citation: SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742, 334 P.3d 408 (Nev. 2014) (en banc).
- Court / Year: Supreme Court of Nevada (en banc); 2014.
- Topic tags: assessment_lien · super_priority · nonjudicial_foreclosure · due_on_sale · equitable_interest
- Facts: A home in a Nevada common-interest community subject to recorded CC&Rs was encumbered by a note and deed of trust held by U.S. Bank. The homeowners fell delinquent on their association dues and also defaulted on the loan. The homeowners’ association (SHHOA) and U.S. Bank each initiated nonjudicial foreclosure proceedings. SFR Investments Pool 1, LLC bought the property at the association’s trustee’s sale and sued to quiet title, contending that the association’s trustee’s deed had extinguished U.S. Bank’s first deed of trust.
- Holding: Under NRS 116.3116(2) (Nevada’s enactment of UCIOA § 3-116), a homeowners’ association has a true “super-priority” lien for a limited window of unpaid common-expense assessments that is prior to a first deed of trust, and a proper foreclosure of that super-priority lien extinguishes the first deed of trust. Chapter 116 permits the association to foreclose its lien nonjudicially. The district court’s judgment for U.S. Bank was reversed and remanded.
- Reasoning: NRS 116.3116(2) splits the association’s lien into a sub-priority piece and a super-priority piece consisting of the common-expense assessments that would have come due in the months immediately preceding institution of the enforcement action (plus certain charges). The court read the statute’s “prior to” language and its UCIOA model commentary to mean the super-priority piece is a true lien priority, not merely a payment-priority in distributing sale proceeds — so its foreclosure wipes out the junior first deed of trust. Chapter 116’s incorporation of the NRS 107 nonjudicial-foreclosure machinery (and its notice provisions to the deed -of-trust beneficiary) confirmed that the association may foreclose without a judicial proceeding.
- Practical impact for CFD operators/buyers: SFR is the landmark establishing that an HOA’s super-priority assessment lien can extinguish even a first-priority mortgage through a nonjudicial sale. For a contract-for-deed seller, the retained legal title is junior security — economically no better protected than a first mortgagee — so if the buyer-in-possession stops paying association dues, a foreclosure of the super-priority lien can wipe out both the buyer’s equity and the seller’s retained interest, fast and without court supervision. The case is the core reason a CFD operator in a UCIOA/nonjudicial state should escrow dues and reserve a protective-advance right to cure the buyer’s delinquency before the super-priority window matures. See hoa-and-cfd.
- Good-law status: Good law in Nevada as the foundational super-priority holding. Its scope was later refined by Bank of America, N.A. v. SFR Investments Pool 1, LLC (the “tender” line of cases) and subsequent decisions, and the Nevada Legislature amended NRS 116.3116 in 2015 (S.B. 306) to add lender-protective notice/cure procedures for foreclosures noticed after that date — but SFR’s core holding that the super-priority lien is a true priority extinguishing a first deed of trust remains good law. Confirm the post-2015 statutory procedure for any current deal.
- Source (retrieved): https://law.justia.com/cases/nevada/supreme-court/2014/63078.html · also reported at https://www.leagle.com/decision/innvco20140918238 · Verified: 2026-06-08
Jurisdictions that follow / cite: nevada (NRS 116.3116). The super-priority structure derives from UCIOA § 3-116, enacted in varying form across UCIOA states (minnesota, missouri, connecticut); see hoa-and-cfd.
Disclaimer. Legal information, not legal advice. Confirm the opinion is still good law before relying on it. Nevada’s HOA-lien statute (NRS 116.3116) was amended in 2015; verify the procedure applicable to the deal at hand.