Res. Grp., LLC v. Nev. Ass'n Servs., Inc.
437 P.3d 154
Nev.2019Background
- HODC owned commercial property subject to HOA assessments; it became delinquent and NAS (association agent) scheduled a nonjudicial foreclosure sale under NRS Chapter 116 for Feb 13, 2015.
- HODC mailed a check to NAS for the full delinquency on Feb 6, 2015; NAS stamped the check received on Feb 13, 2015 but could not verify when it arrived relative to the auction.
- Resources Group was the high bidder at the Feb 13 auction and paid $350,000 by cashier's checks immediately after the sale; NAS accepted payment/issued a receipt but declined to deliver the foreclosure deed after discovering HODC’s check.
- Resources Group sued to compel delivery of the deed and to quiet title; the district court set aside the sale on equitable grounds and returned title to HODC.
- The Nevada Supreme Court reversed: it held (1) each party bears the burden to prove superior title in a quiet-title action, (2) a properly conducted sale vests title in the purchaser upon payment and the sale-conducting person must deliver the deed, and (3) equitable relief to set aside a sale requires showing fraud, unfairness, or oppression affecting the sale.
Issues
| Issue | Plaintiff's Argument (Resources Group) | Defendant's Argument (HODC) | Held |
|---|---|---|---|
| Burden of proof in quiet-title dispute over alleged pre-sale cure | Once bidder paid at the valid sale, title vested in bidder; HODC must prove the delinquency was cured pre-sale to void the sale | Title doesn't pass unless the sale was valid; if HODC cured pre-sale, sale was void and bidder has no title; burden on bidder to prove sale validity | Each party must prove superior title; payment/cure is an affirmative defense and HODC (claiming pre-sale cure) bears the burden to prove it. |
| Does payment and acceptance at auction vest title in purchaser? | Payment and acceptance at conclusion of a valid foreclosure sale vests title in purchaser immediately | Title vests only if the sale was valid (i.e., no pre-sale cure); if cure occurred earlier, sale is void | A completed sale with payment vests title in purchaser; Dazet rule applies—sale complete on payment. |
| May the person conducting a Chapter 116 sale refuse to deliver the deed after accepting payment upon learning of possible pre-sale cure? | No—statute mandates delivery ("shall"), so no discretion to refuse after sale completion/payment | The sale can be rescinded if the sale was void due to pre-sale cure; viewing procedural irregularity, the sale-conducting agent acted to avoid conveying title obtained in error | NRS 116.31164(3)(a) is mandatory—once payment is made, the sale-conducting person must execute and deliver the deed; they lack discretion to withhold a deed based solely on post-sale information. |
| Standard for setting aside an HOA foreclosure sale on equitable grounds | Sale was lawful and price was not grossly inadequate; to set aside, HODC must show fraud, unfairness, or oppression caused an inadequate price | Courts should consider totality of circumstances broadly and may set aside where equities favor the owner (e.g., same-day mailed cure) | To set aside on equitable grounds, the challenger must show the sale was affected by fraud, unfairness, or oppression; mere lack of diligence by owner or other equities insufficient to overturn a valid sale. |
Key Cases Cited
- Breliant v. Preferred Equities Corp., 918 P.2d 314 (Nev. 1996) (burden of proof in quiet-title actions rests with the party claiming title)
- Dazet v. Landry, 30 P. 1064 (Nev. 1892) (foreclosure sale is complete and vests title in purchaser upon payment)
- Shadow Wood Homeowners Ass'n, Inc. v. N.Y. Cmty. Bancorp, Inc., 366 P.3d 1105 (Nev. 2016) (equitable relief for HOA sales requires totality-of-the-circumstances review; inadequacy of price alone is insufficient)
- Nationstar Mortg., LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 405 P.3d 641 (Nev. 2017) (reaffirming that a sale can be set aside only upon a showing of fraud, unfairness, or oppression affecting the sale)
- Golden v. Tomiyasu, 387 P.2d 989 (Nev. 1963) (inadequacy of price considered with other circumstances; greater disparity reduces amount of additional unfairness required to set aside sale)