Wells Fargo Bank, N.A. v. Radecki
426 P.3d 593
| Nev. | 2018Background
- Property at 2102 Logston Drive secured by a 2006 deed of trust later assigned to Wells Fargo; property is in an HOA subject to CC&Rs and assessment liens.
- Homeowner defaulted on loan and HOA assessments; HOA recorded delinquency notices and later held a nonjudicial foreclosure sale under NRS Chapter 116.
- Wells Fargo had previously sued for judicial foreclosure and obtained a default judgment declaring its deed of trust superior except as to any HOA superpriority lien under NRS 116.3116.
- At the HOA sale, Tim Radecki purchased the property for $4,000; declaration of value showed a tax value of $56,197.
- Radecki intervened in Wells Fargo’s foreclosure lawsuit; after a bench trial the district court held the HOA foreclosure valid and that Wells Fargo’s deed of trust was extinguished under SFR Investments Pool 1, LLC v. U.S. Bank.
- Wells Fargo appealed, arguing (1) equitable invalidation for unfairness/irregularity, (2) the sale was a fraudulent transfer under the UFTA, and (3) the foreclosure deed failed to convey title; the Nevada Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument (Wells Fargo) | Defendant's Argument (Radecki/HOA) | Held |
|---|---|---|---|
| Whether the sale should be invalidated for "unfairness or irregularity" | HOA rushed sale to beat Wells Fargo's judicial process and sale price was grossly inadequate | Sale complied with NRS 116; Wells Fargo’s judgment expressly excepted superpriority liens; buyer need not show BFP status | No unfairness or irregularity; sale not invalidated |
| Whether the HOA foreclosure was a fraudulent transfer under the UFTA (NRS Ch. 112) | Sale for $4,000 was not "reasonably equivalent value" and thus fraudulent as to preexisting creditor (Wells Fargo) | NRS 112.170(2) treats regularly conducted, noncollusive foreclosure sales as reasonably equivalent value, exempting them from UFTA | Sale was a regularly conducted, noncollusive NRS Ch. 116 sale and thus exempt from UFTA; fraud claim fails |
| Whether defects or irregular language in the foreclosure deed voided the transfer | Foreclosure deed allegedly failed to state it transferred ownership to purchaser | Foreclosure statutory compliance vests title in purchaser; deed language irregularities are remediable without undoing the sale | Deed inaccuracies do not invalidate an otherwise valid foreclosure sale |
Key Cases Cited
- SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742, 334 P.3d 408 (Nev. 2014) (holding valid HOA superpriority foreclosure can extinguish a first deed of trust)
- Golden v. Tomiyasu, 79 Nev. 503, 387 P.2d 989 (Nev. 1963) (sale invalidation requires evidence of unfairness or irregularity)
- Shadow Wood Homeowners Ass'n v. New York Community Bancorp, Inc., 132 Nev. 49, 366 P.3d 1105 (Nev. 2016) (equitable relief limited where party had access to facts and made legal mistake)
- BFP v. Resolution Trust Corp., 511 U.S. 531 (1994) (price received at a foreclosure sale is the reasonably equivalent value if state foreclosure law requirements are met)
- Herup v. First Boston Financial, LLC, 123 Nev. 228, 162 P.3d 870 (Nev. 2007) (UFTA’s purpose is to prevent debtors from placing assets beyond creditors’ reach)