DEUTSCHE BANK NAT'L TR. CO. v. COLLEGIUM FUND LLC SER. 16
142 Nev. Adv. Op. No. 1
Nev.2026Check Treatment 142 Nev., Advance Opinion
IN THE SUPREME COURT OF THE STATE OF NEVADA
DEUTSCHE BANK NATIONAL TRUST No. 88184
COMPANY, AS TRUSTEE UNDER THE
POOLING AND SERVICING
AGREEMENT RELATED TO IMPAC
SECURED ASSETS CORP.,
MORTGAGE PASS-THROUGH FILED
CERTIFICATES, SERIES 2006-3.
Appellant,
vs.
COLLEGIUM FUND LLC SERIES 16, A
NEVADA LIMITED LIABILITY
COMPANY,
Respondent.
Appeal from a district court judgment in an action to quiet title.
Eighth Judicial District Court, Clark County; Anna Albertson, Judge.
Reversed.
Akerman LLP and Scott R. Lachman, Las Vegas,
for Appellant.
Hanks Law Group and Karen L. Hanks, Las Vegas,
for Respondent.
BEFORE THE SUPREME COURT, PICKERING, CADISH, and LEE, JJ.
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OPINION
By the Court, PICKERING, J.:
This is an appeal from a judgment quieting title in favor of the
buyer at a homeowners' association (HOA) lien foreclosure sale and against
the bank holding a first deed of trust on the property. Before the sale, the
homeowner made payments to the HOA that were sufficient to pay off its
superpriority lien. We hold that these payments converted the sale to a
subpriority lien foreclosure sale and that the homeowner did not need to
also pay off the separate superpriority lien that a second HOA held on the
property for this conversion to occur. Because a subpriority lien is junior to
a first deed of trust, the bank's first deed of trust remained an encumbrance
against the property and the foreclosure sale buyer took title subject to the
deed of trust. We therefore reverse.
I.
Appellant Deutsche Bank National Trust Co. held a first deed
of trust on a residential property governed by two HOAs: Aliante Master
Association and Autumn Ridge at Aliante Cornmunity Association. When
the homeowner fell behind on his monthly assessments, both HOAs
recorded notices of claims of lien but only Aliante proceeded to foreclosure
sale. Before the sale, the homeowner made several payments to Aliante.
Had Aliante applied the payments to the oldest assessments first, they
would have satisfied the superpriority portion of Aliante's lien.
Respondent Collegium Fund LLC Series 16 bought the property
at the foreclosure sale, then sued to quiet title. Collegium argued that
Aliante properly foreclosed its superpriority lien and that, since a
superpriority lien is senior to a first deed of trust, the sale extinguished
Deutsche Bank's deed of trust. Deutsche Bank countered that the
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homeowner's payments satisfied the superpriority portion of Aliante's lien,
leaving it with only a subpriority lien to foreclose. Since a subpriority lien
is junior to a first deed of trust, Deutsche Bank maintained that its deed of
trust survived Aliante's foreclosure sale and that Collegium took title
subject to its deed of trust.
After a three-day bench trial, the district court ruled in
Collegium's favor. It found that Aliante applied the homeowner's payments
to the past-due assessments as a whole, not to the older assessments
comprising its superpriority lien first. This left a small piece of Aliante's
superpriority lien outstanding, so the sale proceeded as a superpriority lien
foreclosure and extinguished Deutsche Bank's first deed of trust. The
district court alternatively found that it did not matter how Aliante applied
the homeowner's payments since "there was zero evidence any rnoney was
paid toward Autumn Ridge's lien." In Southern Highlands Community
Association u. San Florentine Avenue Trust, 132 Nev. 24, 29-31,365 P.3d 503
, 506-07 (2016), this court held that when two HOA liens have equal
priority, the foreclosure of one extinguishes the other, with the lienholders
then sharing the proceeds from the foreclosure sale. The district court
interpreted Southern Highlands as holding that "the foreclosure of one
[HOA lien] is the foreclosure of all"—meaning that the superpriority
portions of both Aliante's and Autumn Ridge's liens needed to be paid off
before the sale for it to become a subpriority-lien-only sale. Since that did
not occur, the district court deterrnined Collegium took title free and clear
of Deutsche Bank's first deed of trust. Deutsche Bank appeals.
If a homeowner fails to pay HOA assessments, the HOA may
assert a lien and foreclose on the property. NRS 116.3116-.31168; SFR Invs.
Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742, 758,334 P.3d 408
, 419 (2014),
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superseded by statute on other grounds as stated in Saticoy Bay LLC Series
9050 W Warm Springs 2079 u. Neu. Ass'n Servs., 135 Nev. 180,444 P.3d 428
(2019). NRS 116.3116 splits an HOA lien into two parts: a superpriority
piece, which is senior to a first deed of trust; and a subpriority piece, which
is junior to a first deed of trust. SFR Inus. Pool I, 130 Nev. at 745, 334 P.3d
at 411. Deutsche Bank argues that because the homeowner's payments
were sufficient to satisfy Aliante's superpriority lien, the sale proceeded as
a subpriority lien foreclosure that its deed of trust survived.
"After a bench trial, this court reviews the district court's legal
conclusions de novo" but will leave its factual findings "undisturbed unless
they are clearly erroneous or not supported by substantial evidence." Wells
Fargo Bank, N.A. u. Radecki, 134 Nev. 619, 621,426 P.3d 593, 596
(2018).
Reviewing de novo, we reverse for two reasons. First, the district court
failed to recognize that "[i]n the absence of express allocation by the debtor,
the HOA may not direct payments in a way that preserves the HOA's
superpriority lien to the detriment of the homeowner and bank" in whose
interest it is to protect the first deed of trust by paying off the superpriority
lien. Deutsche Bank Tr. Co. Ams. ex rel. Rali 2006QA5 u. SFR Inus. Pool 1,
LLC, 140 Nev., Adv. Op. 43,551 P.3d 837
, 843 (2024) (referred to as
"Swaggerty," after the narne of the homeowner involved). Second, when two
HOAs record liens against the same property, the pre-sale payment of the
foreclosing HOA's superpriority lien converts its sale to a subpriority-lien-
only sale; nothing requires the non-foreclosing HOA's superpriority lien to
also be paid off for that conversion to occur. See Bank of N.Y. Mellon u.
Seuen Hills Master Cmty. Ass'n, No. 2:16-cv-01128-APG-NJK, 2020 WL
620273, at *4-5 (D. Nev. Feb. 10, 2020).
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A.
By law, Aliante's superpriority lien consisted of, at most, the
homeowner's unpaid common expense assessments for the nine months
predating its notice of claim of lien, NRS 116.3116(2) (2013); see Prop. Plus
LLC u. Mortg. Elec. Registration Sys., Inc., 133 Nev. 462, 465,401 P.3d 728
, 730 (2017),1 and did not include foreclosure fees and collection
costs, see Horizons at Seven Hills Homeowners Ass'n u. Ikon Holdings, LLC,
132 Nev. 362, 369-71,373 P.3d 66
, 71-72 (2016), or the assessments that
were incurred and became delinquent after it recorded its notice of claim of
lien, cf. Prop. Plus Inus., 133 Nev. at 465-67, 401 P.3d at 731-32.
When Aliante recorded its notice of lien, its monthly
assessments were $34 and the homeowner was either six or maybe seven
months behind in paying them. Aliante's superpriority lien thus came to
$238—seven months of delinquent pre-notice assessments at $34 per
month. Aliante's total lien exceeded that sum because it included the
unpaid assessments that continued to accrue after it filed its notice of lien
and the other costs and fees comprising its subpriority lien. The homeowner
made two payments totaling $550 against Aliante's lien. He did not direct
Aliante to pay off the superpriority lien first, and Aliante applied the
payments to the lien debt as a whole, which left $19 of the superpriority lien
debt outstanding for it to foreclose. The district court concluded that
'Aliante's foreclosure was governed by the pre-2015 version of NRS
Chapter 116, so that version's provisions are cited in the text. NRS
116.3116(2) (2013) is now codified as NRS 116.3116(3)(b). A superpriority
lien can also include maintenance or nuisance-abatement charges, Prop.
Plus Inus., 133 Nev. at 465, 401 P.3d at 730; NRS 116.3116(2) (2013); see
NRS 116.3116(3)(a), but the record does not show that Aliante's lien
included such charges.
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Aliante had discretion to apply the payments in this way because the
homeowner did not specify how he wanted the payments applied.
The district court's conclusion cannot be squared with our
recent decision in Swaggerty, 140 Nev., Adv. Op. 43, 551 P.3d at 840. There,
as here, a homeowner made payments to his foreclosing HOA without
instructing the HOA how to apply them. Id. at 844-45. If the HOA had
applied the payments to the superpriority lien first, they would have been
enough to pay it off entirely, thereby protecting the bank's first deed of
trust. Id. Instead, the HOA applied the payments in a way that preserved
its superpriority lien. Id. Reversing, we held that an HOA "may not,
without express direction from the homeowner, allocate the payment so as
to forfeit the first deed of trust holder's interest and deprive the homeowner
of the security in the home." Id. at 846. Any such unauthorized allocation
is "invalid" as a matter of law. Id. at 842. Regardless of the homeowner's
silence on the payments' application, "principles of justice and
equity . . presume that the superpriority lien is paid first, unless the court
has a compelling reason to conclude otherwise." Id. at 846.
Under Swaggerty, the homeowner's payments satisfied the
superpriority portion of Aliante's lien as a matter of law. Indeed, Collegium
does not argue otherwise, observing only that the district court resolved this
case before Swaggerty was decided and that Swaggerty "changed the law."
Assuming for argument's sake that Collegium is correct, but see id. at 843-
44 (relying on our 2020 decision in 9352 Cranesbill Trust v. Wells Fargo
Bank, N.A., 136 Nev. 76,459 P.3d 227
, as the foundation for its holding),
Swaggerty still controls. See 20 Am. Jur. 2d Courts § 149 (2015) (noting
that when an appellate court "announces a new rule of law," the new rule
ordinarily applies "to all similar cases pending on review in which the issue
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had been preserved for appellate review, even if the decision constitutes a
clear break with past precedent. Thus, generally, judicial decisions are
applied retroactively to all civil matters that have not reached final
judgment.") (footnote omitted).
B.
The district court alternatively concluded that, even if it found
that the homeowner's payments satisfied Aliante's superpriority lien, the
foreclosure sale nonetheless extinguished Deutsche Bank's deed of trust. In
its view, the superpriority portions of both Aliante's and Autumn Ridge's
liens needed to be paid off before the sale for it to become a subpriority-lien-
only foreclosure sale. Since the evidence did not show any payments to
Autumn Ridge, the district court determined that the sale proceeded as a
superpriority lien foreclosure that the deed of trust did not survive.
The district court based its decision on Southern Highlands,
132 Nev. at 30-31, 365 P.3d at 507, to which it erroneously ascribed the
holding that "the foreclosure of one [HOA lien] is the foreclosure of all." Like
this case, Southern Highlands involved two HOAs with liens against the
property, one of which proceeded to foreclosure sale. But from there,
Southern Highlands and this case diverge—in Southern Highlands, no
payments were made (or tendered) to the foreclosing HOA to pay off any
portion of its lien before the sale; rights arising under a first deed of trust
were not in dispute; and the sale proceeded as a straight superpriority lien
foreclosure. Id. at 25-26, 365 P.3d at 504.2 After the sale, the second HOA
2Although sums due from the homeowner that comprised the second
HOA's lien apparently predated the first HOA's foreclosure sale, the opinion
notes the second HOA did not record its lien until after the foreclosure sale.
Southern Highlands, 132 Nev. at 26, 365 P.3d at 504.
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initiated its own foreclosure proceedings, which the buyer at the first HOA's
foreclosure sale sued to enjoin.
Under NRS 116.3116(4) (2013) (now, INKS 116.3116(8)), two
HOA liens generally have "equal priority." Analo'gizing Nevada's equal-
!
priority HOA liens to California mechanics' liens, 132 Nev. at 30, 365 P.3d
at 507 (citing 5 Miller & Starr, Cal. Real Estate § 11:130 (3d ed. 2009)),
Southern Highlands held "when one equal priority lienholder forecloses, all
other equal priority liens are extinguished" arid "all equal priority
lienholders share in the foreclosure sale proceeds."1 Id. at 31, 365 P.3d at
507 (emphasis added). We therefore affirmed thr district court's order
enjoining the second HOA's pending foreclosure hale and held that the
second HOA should satisfy its lien from the proceeds of the first sale. Id.
Extinguishing a lien is not the same thing as forebosing it and does not
mean that where, as here, two HOAs have recorded superpriority liens
against a property, the homeowner or the holder of the first deed of trust
must pay off the superpriority portions of both liens o convert a noticed sale
to a subpriority lien foreclosure sale.
The Nevada federal district court's debsion in Bank of New
York Mellon, No. 2:16-cv-01128-APG-NJK, 2020 ,WL 620273, at *4, is
persuasive. In that case, the purchaser—like the district court and
Collegium here—read Southern Highlands to say that "when one HOA
forecloses on its superpriority lien, any other HONs superpriority lien on
the same property is also foreclosed." Id. The federal district court held
that this interpretation misread Nevada law, explaining that under
Southern Highlands, "when one HOA forecloses, the other's lien is
extinguished as if it were a junior lien, with the caveat that unlike junior
lienholders, the second HOA shares in the sale procreds pro rata if there is
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not enough to satisfy both liens." Id. (emphasis added). Thus, by satisfying
the superpriority portion of the foreclosing HOA's lien, the bank "preserved
its deed of trust . . . and it did not need to also tender payment" to the non-
foreclosing HOA. Icl.
Any other conclusion would undermine the split-lien scheme
governing HOA liens. When a homeowner or bank pays off the
superpriority portion of a foreclosing HOA's lien, the payment reduces the
lien being foreclosed to a subpriority lien. See Bank of Am., N.A. u. SFR
Inus. Pool 1, LLC, 134 Nev. 604, 612,427 P.3d 113, 121
(2018). From that
point forward, the liens held by the foreclosing and non-foreclosing HOAs
are no longer of equal priority—the foreclosing HOA has only a subpriority
lien to assert until the foreclosure sale occurs or it rescinds its notice of
claim of lien. See Prop. Plus Inus., 133 Nev. at 465, 401 P.3d at 730. The
non-foreclosing HOA's lien, by contrast, retains its superpriority status.
Since the liens are not of equal priority, Southern Highlands does not apply,
and the non-foreclosing HOA's superpriority lien survives the foreclosure
sale along with the first deed of trust because they are both senior to the
junior subpriority lien being foreclosed. See Restatement (Third) of
Property (Mortgages) § 7.1 (1997) ("A valid foreclosure of a mortgage
terminates all [junior] interests . . . . [It] does not terminate interests in the
foreclosed real estate that are senior to the mortgage being foreclosed."). It
would disserve efficiency and the bank's and the homeowner's interests in
preserving the first deed of trust to, in effect, double the payment required
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to convert the sale to a subpriority lien foreclosure sale by adding a non-
foreclosing HOA's superpriority lien to the mix.
We therefore reverse.
Pitt di J.
Pickering
We concur:
Cadish
..-EPTIEL•Ep
, J.
Lee
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