Bank of Am., N.A. v. SFR Invs. Pool 1, LLC
427 P.3d 113
| Nev. | 2018Background
- In 2012 the homeowner at 3617 Diamond Spur Ave. defaulted on HOA assessments; the HOA recorded a delinquent assessment lien and initiated foreclosure.
- Bank of America held the first deed of trust and, after contacting the HOA to determine the superpriority amount, tendered $720 (nine months of assessments) with a letter stating acceptance would be an "express agreement" that Bank of America’s obligations were paid in full.
- The HOA returned the check, proceeded with an HOA lien foreclosure sale, and SFR Investments Pool 1, LLC bought the property at the trustee sale.
- Bank of America sued to quiet title; the district court granted summary judgment to SFR, the court of appeals reversed, and the Nevada Supreme Court granted review.
- Court framed central legal questions: whether Bank of America’s tender satisfied the superpriority portion of the HOA lien, whether the tender was invalid because conditional or unrecorded/unchanged, and whether SFR took title free of the deed of trust as a bona fide purchaser.
Issues
| Issue | Bank of America (Plaintiff) Argument | SFR (Defendant) Argument | Held |
|---|---|---|---|
| Validity/amount of tender for superpriority lien | Tendered nine months' assessments ($720), which satisfied the statutory superpriority amount | Superpriority scope unsettled; tender might be insufficient | Held: Tender of $720 satisfied superpriority portion under NRS 116.3116 as it then read |
| Conditionality of tender | Condition (receipt = acknowledgment payment "paid in full") was within bank's rights to insist on and did not make tender invalid | Clause made tender impermissibly conditional and thus ineffective | Held: Condition was permissible; tender was not impermissibly conditional |
| HOA’s alleged good-faith rejection | HOA gave no reason; rejection was not a valid defense to an otherwise valid tender | HOA reasonably rejected because scope unsettled; good-faith rejection defeats tender | Held: HOA’s asserted good faith rejection does not defeat valid tender; SFR waived this argument below and court rejects it here |
| Recording/keeping tender & BFP status of purchaser | No statutory recording or paying into court required; valid tender cures superpriority default by operation of law, so purchaser takes subject to deed of trust | Bank should have recorded tender or paid funds into court to keep it good; purchaser is a BFP under Shadow Wood | Held: No recording or court deposit required pre-2015 statutes; valid tender cured default, sale void as to superpriority portion, and SFR took subject to the first deed of trust |
Key Cases Cited
- SFR Investments Pool 1 v. U.S. Bank, 130 Nev. 742, 334 P.3d 408 (Nev. 2014) (interpreting scope of HOA superpriority lien)
- Shadow Wood Homeowners Ass'n v. New York Community Bancorp, Inc., 132 Nev. 49, 366 P.3d 1105 (Nev. 2016) (bona fide purchaser considerations in HOA foreclosure context)
- Wood v. Safeway, Inc., 121 Nev. 724, 121 P.3d 1026 (Nev. 2005) (summary judgment standard)
- Butler ex rel. Biller v. Bayer, 123 Nev. 450, 168 P.3d 1055 (Nev. 2007) (definition of genuine issue of material fact for summary judgment)
- Henke v. First S. Props., Inc., 586 S.W.2d 617 (Tex. App. 1979) (a sale is void where the foreclosing party lacked the right to foreclose after payment cured default)