VEGAS UNITED INV. SERIES 105, INC. VS. CELTIC BANK CORP.
2019 NV 61
| Nev. | 2019Background
- In 2005 Gibson Road, LLC purchased commercial property in Henderson and executed a first‑priority deed of trust later assigned to Celtic Bank.
- The property lies inside two nonresidential common‑interest communities; Center POA adopted CC&Rs in 2004.
- Center POA's CC&Rs expressly incorporated only the delinquent assessment lien enforcement procedures of NRS 116.3116–.31168, not the remainder of NRS Chapter 116.
- Gibson Road defaulted on assessments and mortgage; Center POA conducted a nonjudicial foreclosure under NRS 116.3116 and Vegas United bought the property at the sale.
- Celtic Bank later sued for judicial foreclosure; Vegas United counterclaimed that the POA sale extinguished Celtic’s deed of trust. The district court held the mortgage survived; Vegas United appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the POA foreclosure extinguished Celtic Bank’s mortgage by creating a superpriority lien under NRS 116.3116(2) | Vegas United: The CC&Rs incorporated NRS 116.3116–.31168 so the lien had superpriority and extinguished the mortgage | Celtic: CC&Rs only adopted the enforcement procedures; they did not incorporate statutes that create superpriority assessment obligations | Held: No superpriority portion existed because CC&Rs did not incorporate the statutory bases (e.g., NRS 116.31031/116.3115) that give rise to superpriority; mortgage not extinguished |
| Enforceability of the mortgage‑savings clause in nonresidential POA CC&Rs | Vegas United: Clause unenforceable under SFR Investments precedent | Celtic: Clause enforceable because POA only partially incorporated NRS Chapter 116 and NRS 116.1104 (precluding contract terms that limit the chapter) does not apply | Held: Mortgage‑savings clause can be enforced in this context and must be harmonized with the incorporated procedures; it prevented impairment of the prior mortgage |
| Scope of NRS Chapter 116 application to nonresidential POAs | Vegas United: Incorporation of NRS 116.3116–.31168 yields the full effect intended by that statute (including priority effects) | Celtic: Nonresidential POAs may elect partial incorporation; only the referenced provisions are incorporated | Held: Nonresidential POAs may elect in whole or in part; here only the procedures were incorporated, so other NRS Chapter 116 provisions did not apply |
| Whether the purchaser at the POA sale took title free of the prior mortgage | Vegas United: Purchased free and clear from mortgage | Celtic: Purchaser took subject to Bank’s deed of trust | Held: Vegas United took the property subject to Celtic Bank’s deed of trust |
Key Cases Cited
- SFR Invs. Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev. 2014) (held mortgage‑savings clauses unenforceable in residential HOAs where entire NRS Chapter 116 applies)
- Boulder Oaks Cmty. Ass'n v. B & J Andrews Enters., LLC, 215 P.3d 27 (Nev. 2009) (nonresidential CICs may elect to incorporate NRS Chapter 116 in whole or in part)
- Diaz v. Ferne, 84 P.3d 664 (Nev. 2004) (treat CC&R interpretation like contract interpretation; review de novo when facts undisputed)
- Wells Fargo Bank, N.A. v. Radecki, 426 P.3d 593 (Nev. 2018) (bench‑trial legal conclusions reviewed de novo; factual findings upheld if supported)
- Rd. & Highway Builders, LLC v. N. Nev. Rebar, Inc., 284 P.3d 377 (Nev. 2012) (contracts must be read as a whole to avoid negating provisions)
- Saavedra‑Sandoval v. Wal‑Mart Stores, Inc., 245 P.3d 1198 (Nev. 2010) (appellate court may affirm correct result even if for wrong reason)