Litigation Still Necessary for HOA-Fee Foreclosure Buyers in Nevada

Las Vegas, Nevada, May 25, 2017 (Newswire.com) - Investors who snapped up Nevada residential properties encumbered with homeowners association liens got some positive news with a recent district court ruling in the state.

But a prominent real estate attorney in Las Vegas says many property owners may not realize that they need to undertake legal action before they can receive full value for their property.

Although the investors paid mere pennies on the dollars for residential properties in HOA foreclosures, most have been unable to obtain title insurance when they are ready to sell. That, in turn, has dramatically cut sales prices — and created a class of unwary secondary buyers who may not realize the problems they face.

Sarah Morris, a real estate attorney and a partner at Morris Law Center in Las Vegas, says owners of homes purchased through HOA foreclosures generally need to file a legal action to quiet title so they can get full value for their property.

Morris, whose firm represented an investor who successfully battled Bank of New York Mellon to get a clean title to a residential property in Las Vegas, says some buyers are so giddy about low prices that they don’t realize the legal hassle they face to get title insurance.

Here’s the problem:

Under Nevada law, homeowners associations can place a “superpriority lien” on a property once HOA fees are nine months past due. The superpriority lien allows the HOA to sell the property for the amount of fees that are past due. Often, the bank that holds the primary mortgage on the property makes the payment to get the HOA fees current.

But hundreds of properties were sold to investors for only the cost of the past-due HOA fees. Homes valued at hundreds of thousands of dollars sometimes were sold for less than $10,000 through HOA foreclosures.

Banks have challenged those sales in court — hundreds of cases are pending in Nevada — and title insurance companies are waiting to see what happens before they issue title insurance.

“Unfortunately, there are many people out there that do not understand this and are buying properties for fair market value on the secondary market from investors that bought at an HOA sale,” says Morris. “If you bought a property either at an HOA foreclosure sale or from someone who bought it at an HOA foreclosure sale, then you will need to file a lawsuit to quiet title in order to obtain title insurance and eventually sell it for fair market value. This can be a costly and lengthy process.” 

Although Nevada District Judge Valerie Adair recently ruled in favor of an investment company represented by Morris Law Center in a case brought by Bank of New York Mellon, Morris notes that the decision did not set a precedent for other judges in Nevada.

Other buyers will need to hire experienced attorneys and undertake their own legal action to obtain clear title on properties that were purchased through HOA foreclosures.

About Morris Law Center

Morris Law Center is a Las Vegas-based law firm made up of experienced trial and transactional attorneys that have successfully represented thousands of clients in complex business litigation, real estate, estate planning and personal injury matters. Their unique talents, extensive experience, and deep understanding of Nevada and California law permits them to consistently provide their clients with results-driven legal representation that works.

The firm is located at 6085 W. Twain Avenue, Suite 201, in Las Vegas, Nevada, 89103 and can be reached by phone at (702)-850-7798 or by email at info@morrislawcenter.com. 

Source: Morris Law Center