Note: This page features only a few of the main articles from our bar journal. COMMUNIQUÉ is printed and mailed to all CCBA members. An electronic version (PDF) of the full issue is available too.

The Continued Evolution of the Trustee’s Sale Process in Nevada

By Matt Watson, Esq. and Pearl Gallagher, Esq.

© 2013 This article was originally published in the printed magazine communique, the official publication of the Clark County Bar Association. (November 2013, Vol. 34, No. 11). All rights reserved. For permission to reprint this article, contact the publisher Clark County Bar Association, Attn: COMMUNIQUÉ Editor-in-Chief, 725 S. 8th St., Las Vegas, NV 89101. Phone: (702) 387-6011.

For several sessions, the Nevada legislature has changed the trustee’s sale process and the method of obtaining deficiency judgments after a trustee’s sale. The most recent session was no exception, and was notable both for new procedures and for the lack or guidance on prior legislation.

Assembly Bill 273 (2011)
Assembly Bill 273 (2011), among other things, limited the amount a deed of trust beneficiary could recover in a deficiency action and when a beneficiary acquired the right to obtain the judgment from another person. Whether the language, now NRS § 40.459(c), limits the deficiency amount to the amount of consideration paid for the acquisition of a secured obligation, or merely the post-trustee’s sale acquisition of the right to seek a deficiency judgment, will likely require interpretation by the Nevada Supreme Court. The legislature made two attempts to clarify NRS § 40.459(c) in the 2013 session. Assembly Bill 273 would have limited a deficiency judgment to the amount a creditor who did not make the loan paid for the loan. Assembly Bill 431 would have limited a deficiency judgment to the amount paid by a creditor only if the creditor acquired its rights after a trustee’s sale. Each of those bills took an opposite view of the issue. Both failed.

Notice of breach affidavit
Assembly Bill 284 (2011) required that an affidavit of authority be recorded with a notice of breach and election to sell, which begins the trustee’s sale process, setting forth information regarding the loan. That requirement is codified in NRS § 107.080(2)(c). Anecdotes and empirical data, such as median home prices, foreclosure mediations, completed trustee’s sales and an increase in judicial foreclosures suggest that the affidavit requirement has deterred beneficiaries from beginning the trustee’s sale process.

Assembly Bill 300 revised the information required to be in the affidavit, as well as the source of the information. Originally, the statute required the affidavit to be based on the personal knowledge of the affiant, but there was no guidance on what constituted personal knowledge. The revisions clarify that the knowledge may be based on the direct, personal knowledge of the affiant or personal knowledge acquired by a review of business records of beneficiary, its successor, or the servicer of the obligation. Information regarding prior assignments of the deed of trust may also be based on information contained in the records of the county recorder, or a title guaranty or title insurance issued by a licensed title agent. These changes allow the affiant to collect the information from a variety of sources where he or she may not have first-hand knowledge, a helpful change given the scope of the information the affidavit requires.

Gone is the requirement that the affidavit include a statement that the trustee has the authority to exercise the power of sale. Instead, the affidavit must include that beneficiary, its successor, or the trustee is entitled to enforce the obligation or debt secured by the deed of trust. In most cases, the obligation being enforced is the obligation to pay on a promissory note. Beneficiary, its successor, or the trustee is entitled to enforce a promissory note, when it is (i) the holder of the note, (ii) a nonholder in possession of the note who has the rights of a holder, or (iii) a person not in possession of the note who is entitled to enforce the note pursuant to a court order issued under NRS § 104.3309. Regarding item (iii), one may argue whether a person not in possession of the note must actually obtain a court order or merely be within the category of persons who is entitled to obtain a court order pursuant to NRS § 104.3309.

The final significant change is the removal of a requirement to include the amount in default, principal amount of the obligation secured by the deed of trust, and estimates of the fees and costs imposed as a result of exercising the power of sale. Instead, the affidavit must state that beneficiary, its successor, the servicer, trustee, or an attorney representing any of them has sent to the obligor a written statement of (i) the amount required to make good the deficiency in payment or performance, (ii) the amount in default, (iii) the principal amount of the secured obligation, (iv) the amount of accrued interest and late charges, (v) a good faith estimate of all fees imposed in connection with the exercise of the power of sale, and (vi) contact information for obtaining the most current amounts due and a local or toll-free telephone number an obligor may call to receive the information. There is no requirement that the notice be sent at any particular time, but only that the affiant state that the notice has been sent. It is not clear whether the local telephone number must be local to the area where the collateral property is located, or whether it can be local to the area where beneficiary is located.

Some beneficiaries may have neither a toll-free nor a Nevada telephone number.
While the revised affidavit requirements should make affiants more comfortable certifying the information in the affidavit, new rules in Senate Bill 321, the Homeowner’s Bill of Rights, will make trustee’s sales and judicial foreclosures of owner-occupied housing more cumbersome for beneficiaries. See Troy Atkinson’s article at pages 30-31 of the September, 2013, Communiqué, for a summary. Record numbers of notices of breach were recorded just before the October 1 effective date of the statute according to the Las Vegas Review-Journal and lvdefault.com.

Abandoned residential property
Senate Bill 278 provides an expedited process for a trustee’s sale of abandoned residential property. The process became effective July 1, 2013, and expires on June 30, 2017. It allows a beneficiary to record a notice of sale 60 days, rather than three months, after recording a notice of breach and election to sell, accelerating a sale date by up to 30 days. However, such acceleration is not without risk.

Eligibility requires that a beneficiary:

  1. after an investigation, determine that the property is abandoned residential property;
  2. receive a certification from an agency or contractor designated by the board of county commissioners or governmental body of an incorporated city that the additional conditions (discussed below) have been met; and
  3. include in its notice of breach an affidavit supporting the determination that the property is abandoned residential property together with the certification described above.

Abandoned residential property is defined as residential real property of not more than four family dwelling units or more than one single family residence that grantor has surrendered. Surrender may be established by grantor’s affirmative acts of either written confirmation or giving the keys to beneficiary. Failing either of those acts, beneficiary may establish surrender by confirming that six criteria are met, including that the property is not occupied as a principal residence, utility services have been terminated, and no children residing at the address are enrolled in school. Moreover, two or more of the eight additional conditions set forth in Section (1)(b)(7) of Section 2 of the bill must also exist. They include the existence of multiple unrepaired broken windows, broken doors, and the removal of copper or other materials. Abandoned property does not include property occupied on a seasonal basis or displaying rental or sale signs. A beneficiary must pay careful attention to the applicable requirements to confirm eligibility.

Prior to issuing the required certification, the designated agency or contractor must notify and give grantor 30 days to dispute that the property is abandoned. If grantor fails to contact the designee within 30 days, the designee will issue the certification for which beneficiary may be charged up to $300.

If beneficiary proceeds under the expedited process without grantor’s written confirmation of surrender or delivery of the keys, grantor may, any time before the sale, record an affidavit stating that the property is not abandoned residential property, in which event the notice of breach is deemed withdrawn and the entire sales process must be restarted. Further, if the sale is not conducted within six months after the notice of breach is recorded, the notice of breach is deemed withdrawn and beneficiary is liable to grantor for a civil penalty not to exceed $500.

Given that the expedited process only accelerates the notice of sale date by 30 days while imposing additional requirements of (1) a 30 day process to receive the required certification, (2) allowing the cancellation of the notice of breach by grantor recording an affidavit that the property is not abandoned and (3) a six-month deadline to complete the sale, the use of this expedited process may not be attractive to residential lenders.

Conclusions
Assembly Bill 300 provided helpful revisions to the affidavit of authority requirement that may make deed of trust beneficiaries more comfortable proceeding with a trustee’s sale. The expedited process regarding abandoned residential property seems less likely to have a significant effect on trustee’s sales. As for the language in NRS § 40.459(c) regarding acquiring judgments, it will take legislative action or decision by the Nevada Supreme Court to resolve what is meant by “acquired the right to obtain the judgment.”

Matthew Watson is a shareholder in the Las Vegas office of Lionel Sawyer & Collins whose practice includes real estate finance, commercial foreclosures, and real estate & general transactional law. He is a member of the Executive Committee of the Real Estate Section of the State Bar of Nevada.

Pearl Gallagher is a shareholder in the Las Vegas office of Lionel Sawyer & Collins whose practice includes real estate law, corporate law and commercial transactional matters. She is also a contributor to the firm’s Bishop and Zucker on Nevada Corporations and Limited Liability Companies and Doing Business in Nevada, A Practical Guide publications.


Legal Options for Nevada Homeowners

By Tara D. Newberry, Esq.

© 2013 This article was originally published in the printed magazine communique, the official publication of the Clark County Bar Association. (November 2013, Vol. 34, No. 11). All rights reserved. For permission to reprint this article, contact the publisher Clark County Bar Association, Attn: COMMUNIQUÉ Editor-in-Chief, 725 S. 8th St., Las Vegas, NV 89101. Phone: (702) 387-6011.

Since October 2011 the foreclosure world in Nevada has been in upheaval. While there are many theories as to why foreclosures stopped, why inventory dropped, and how the real estate market has changed over the past two years, all seem to agree that there are tens of thousands of homeowners who are more than 90 days delinquent on their mortgage payments, and against whom a foreclosure action is inevitable. Various sources have reported anywhere between 60,000 and 120,000 homes still in default with no pending foreclosure trustee sale on the horizon. Ultimately, these homeowners will be faced with either a judicial or non-judicial foreclosure to address the default status and likely will seek legal counsel as a result. In the foreseeable future, there are two issues every attorney should consider when meeting with a client about home loan default and possible legal options: taxes and deficiency.

Retention options: To keep or not to keep a home?
By now everyone in Nevada is familiar with loan modifications, but there is still a gap in understanding as to how the various tiers of the Making Home Affordable (“MHA”) program works, including the most prominent Home Affordable Modification Program (“HAMP”) and the hidden variable of “who” actually owns the loan which dictates for which programs a loan could be eligible. (Most servicers at present offer an internal modification that mimics one of the MHA programs if the homeowner is not eligible for HAMP.) Some provisions of MHA allow for principal reduction, but it depends on who the investor is and NPV test results. It is still rare for principal reduction to be offered, but it occurs more frequently now than it has in the past as a result of the National Mortgage Settlement.

The servicers who agree to participate in HAMP are required to send out loss mitigation packages with HAMP request documents whenever a loan is in default. With the Homeowner Bill of Rights now in effect in Nevada, at least 30 days prior to initiating a foreclosure, all servicers must provide homeowners with information regarding loss mitigation options regardless of whether or not the servicer participates in HAMP/MHA. See SB 321 State of Nevada 77th Legislative Session. The real challenge will be educating homeowners to open the mail and respond to the loss mitigation packages. Homeowners receive such a litany of mail after going into default they often stop opening the mail or assume the package is yet another foreclosure scam.

HAMP will still be the primary loan modification program most homeowners are offered by a majority of the servicers over the next two years, especially when the parties end up in foreclosure mediation. (MHA programs expire December 31, 2015.) But there are very limited situations where the loan modification makes sense financially for the homeowners in both a long and short term setting. While most HAMP modifications reduce the monthly payment for the homeowner, after the first five years, the interest rate adjusts up from the typical 2% in 1% increments per year till it caps at the market rate. As the past four years have shown, redefault rates are in high percentages before the first interest rate adjustment even occurs, which means the loan modification is simply a band aide on a hemorrhaging problem: income is down, expenses and unemployment are up, and nearly all homeowners are still underwater. So long as the loan to value ratio is underwater, there is no escape hatch for a homeowner who experiences financial hardship to sell the property in satisfaction of the debt. As the monthly payments begin to go up for homeowners under the terms of the modification, if they have not been able to increase their income or reduce their expenses, inevitably they will default on the HAMP modification creating a cyclical foreclosure wheel.

As will be discussed below, if mortgage forgiveness is included in any loan modifications after December 31, 2013, there could be tax implications for homeowners who accept principal reduction if the Mortgage and Debt Relief Act (“MDRA”) is not extended. So for many, the question isn’t simply will the bank let the homeowner keep the house, but should the homeowner keep the house & at what cost when looking at the totality of the circumstances.

A short sale is not typically a retention option. However, there is a provision in the MHA-HAFA program that allows a non-profit to purchase a house via short sale, and then resell the property back to the former owner, provided the mortgage loans is not owned or guaranteed by Fannie Mae or Freddie Mac, insured or guaranteed by the Veterans Administration, or insured or guaranteed by the Department of Agriculture’s Rural Housing Service or the Federal Housing Administration. See MHA Supplemental Directive 12-07. The program is only allowed IF the loan is non-GSE, IF the non-profit is approved and if the servicer and the investor agrees to it. As of the date of publication, this author has not been able to find an example of where a short sale closed under this HAFA exception, nor could a short sale approval from a major servicer be located that doesn’t require an arms-length affidavit. Neither Freddie Mac nor Fannie Mae permit a short sale in this manner and according to their Servicing Guidelines, all short sales must be at an arms-length. There was fervor in the Nevada legislature this past year about a provision in SB 321 which would allow a homeowner to short sell without the requirement of “arms-length.” And while the enrolled bill contains a provision that Nevada state law does not require a short sale to be at arms-length, it doesn’t change the policy of the vast majority of servicers and investors to require an arms-length transaction in order to approve a short sale with a waiver of deficiency. Misrepresentations in the short sale request or failure to disclose the relationship between the buyer and seller could result in a homeowner being pursued for deficiency down the road.

Non-retention options: Let it go now or later?
With MDRA set to expire at the end of this year and with a strong sense the act will not be extended again, many homeowners whose foreclosure will not be completed until 2014 or who do not close their short sales till 2014 are going to be shocked when they receive a 1099-C for cancellation of debt and are told by their tax advisor the cancelled debt is ordinary taxable income according to the IRS. (Since 2007, most homeowners who have walked away from their principal residence or have participated in a short sale avoided tax liability as a result of MDRA.) There may be situations where the cancelled debt will not result in tax liability despite the expiration of MDRA, such as when the debt was discharged through bankruptcy or when the homeowner was insolvent just prior to the taxable event.

But it is important for legal practitioners to understand a taxpayer is insolvent when their total debts exceed the total fair market value of all assets; assets include everything owned, e.g., car, house, condominium, furniture, life insurance policies, stocks, other investments, or pension and other retirement accounts. See IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17. Insolvency does not directly translate to liquidity and state law exemptions do not factor on an insolvency worksheet. For many union and government-employed homeowners with life insurance policies and pensions, despite having measly bank accounts and exempt assets that are beyond the reach of creditors under state law, they may not be insolvent and may face tax consequences as a result of a foreclosure or short sale.

In a situation where the homeowner has assets, an analysis must be conducted by a qualified tax professional to determine if there will be any exposure to tax liability prior to the completion of foreclosure or short sale. If the homeowner is solvent and likely to incur substantial tax liability, the client should be evaluated for bankruptcy relief. In Nevada, state exemptions could allow the homeowner who is solvent on paper to retain their assets while discharging the home loan debt (if they are otherwise eligible to receive a bankruptcy discharge), and avoid tax consequences since the debt is being canceled in a title 11 bankruptcy case. If the tax analysis is not done or if the homeowner is simply unaware of the potential tax consequences, walking away from the home or agreeing to a short sale could result in financial peril. Most tax debts are non-dischargeable so by the time most homeowners find out about the ordinary income tax treatment of cancelled debt, it is too late to use bankruptcy protection.

Lastly, there is the matter of deficiency. While a majority of the servicers trended towards waiver of deficiency in either a short sale or deed-in-lieu resolution in the peak of the foreclosure crisis, it is probable servicers will eventually shift back to non-waiver policies with regard to deficiency. There have been multiple investor suits filed for improper servicing and the MHA government incentives to waive deficiency will conclude by the end of 2015 (as well as the incentive to servicers subject to the National Mortgage Settlement). Eventually a reservation of right to pursue deficiency will be a greater incentive for servicers than to simply allow the homeowners to walk away. Any homeowner relying on trends now with regard to cancellation of debt and deficiency waiver, may in the future find themselves caught in the foreclosure wake of creditor pursuit.

Tara D. Newberry, Esq. is the Managing Partner at Connaghan Newberry Law Firm, where she practices primarily in the areas of bankruptcy and consumer protection. She has been an appointed mediator by the Supreme Court of the State of Nevada for the Foreclosure Mediation Program since its inception in 2009, and has participated in hundreds of foreclosure mediations.


The HOA Foreclosure and Priority: Who Is In First?

By Melissa Waite, Esq.

© 2013 This article was originally published in the printed magazine communique, the official publication of the Clark County Bar Association. (November 2013, Vol. 34, No. 11). All rights reserved. For permission to reprint this article, contact the publisher Clark County Bar Association, Attn: COMMUNIQUÉ Editor-in-Chief, 725 S. 8th St., Las Vegas, NV 89101. Phone: (702) 387-6011.

Many of us own or rent a home in a Common Interest Community, commonly referred to as a Home Owner’s Association (“HOA”). Many others have strategically attempted to avoid a neighborhood subject to the various restrictions an HOA puts in place, particularly the requirements of complying with the Declaration of Covenants, Conditions and Restrictions (“CC&Rs”) and paying association dues to fund the operation of the HOA, maintenance of the common area, and enforcement of the CC&Rs. In 1991, Nevada adopted, with certain modifications, the provisions of the Uniform Common Interest Ownership Act (1982) and today HOAs in Nevada are governed by NRS Chapter 116 known as the Nevada Uniform Common Interest Ownership Act (“NUCIOA”).

HOA Super priority lien
Prior to the downturn in the real estate market, the incidence of foreclosure and the implication of the foreclosure provisions applicable to HOAs in the NUCIOA were not frequently encountered. When Nevadans began defaulting on their home loans, more frequently than not, they also stopped paying their HOA association dues. Following the rampant defaults on home loans, banks began to foreclose on their deeds of trust, which in turn triggered applicability of the HOA’s “super priority lien.” This is a statutory lien created by NRS 116.3116(2), which essentially provides that the HOA’s lien is prior to all other liens, except (i) liens recorded against the property before the CC&Rs, (ii) first deeds of trust, and (iii) real estate taxes or other governmental assessments. NRS 116.3116(2) also sets forth an exception to these exceptions, which makes a portion of the HOA lien (the amount of 9 months of assessments) prior to the first deed of trust, hence the name “super priority.”

First position bank foreclosing on its deed of trust
Until recently, the most common scenario was a first position bank foreclosing on its deed of trust, after which the bank would voluntarily pay to the HOA the amount equal to the nine months of assessments to “extinguish” the HOA’s lien, resulting in clear title to the third party bidder or the bank, as the case may be. If this amount is not paid after the foreclosure sale, it would arguably remain a lien on the property which itself could subsequently be foreclosed.

Wave of HOA initiated foreclosures
Due to market forces and new legislation, banks slowed or in some cases altogether halted their foreclosure proceedings. A corresponding impact to HOAs was that they stopped receiving payment from the foreclosing bank for the nine month super priority lien. This put HOAs into a difficult financial position and led to the next wave of foreclosures—foreclosures initiated by the HOA. The frequency of third party bidders successfully purchasing a property at an HOA foreclosure sale has increased drastically in the last two years. According to statistics published by the State of Nevada Department of Business and Industry-Real Estate Division, there has been a marked increase in both the number of foreclosures initiated by HOAs and the number of properties sold to a third party at an HOA foreclosure sale. For the fiscal year ending June 30, 2012, there were a total of 2,913 Notices of Sale reported by HOAs and 244 properties were sold to a third party bidding at the sale. For the fiscal year ending June 30, 2013, there were a total of 3,811 Notices of Sale reported by HOAs and 1,151 properties sold to a third party bidding at the sale. The HOA foreclosure sales prices are very low in relation to the fair market value of the property being sold and investors typically pay slightly more than the amount owed to the HOA, with a typical sales price being between $3,000-$12,000.

Historic & customary conduct in Nevada
Historically, banks have ignored HOA foreclosure sales, relying on the customary course of dealing in Nevada, which suggested that the primary threat of extinguishment of their deed of trust would come from a borrower’s failure to pay property tax. Title companies routinely issue to banks a lender’s title insurance policy insuring a first position security interest subject to few exceptions and not specifically including amounts payable to an HOA. The banks also relied on subordination or mortgagee protection clauses in the CC&Rs as a “belt and suspenders” protection. Banks were seemingly unaware of any ambiguity in the NUCIOA, as were third party bidders who historically were rarely willing to pay much more than the amount owed to the HOA, presumably because it was understood they would not be acquiring the property free and clear of liens. However, all of those concepts which historically seemed to be so widely accepted and never before questioned, are now being examined in great detail.

Current litigation
In an instance where the HOA initiates and completes a non-judicial foreclosure and there is a first position deed of trust on the property, the question has now become: is the super priority lien a right to payment or is it a senior lien that will cut off the rights of the first position bank? Who is really in first? Is it the bank that has a “first position” deed of trust? Or is it the HOA who has a “super priority lien” that can cut off the rights of a bank that would otherwise be in first position? This issue has led to a spike in litigation in both the Nevada and federal courts. Third party bidders and banks have filed requests for injunctions to halt the other parties’ pending foreclosure and actions for declaratory relief or quiet title requesting that courts rule on this issue. Currently it is estimated that there are over 50 appeals pending in the Nevada Supreme Court on the issues related to the effect of an HOA foreclosure. Countless cases have been stayed in the lower courts pending a binding decision by the Nevada Supreme Court.

Non-binding authority
A majority of the arguments from both the third party bidders and banks relate to statutory construction of various provisions of the NUCIOA and are far too complex to detail in this article. The center of the debate revolves around NRS 116.3116(2) which states that the HOA’s super priority lien arises at the time of “institution of an action to enforce the lien.” NRS 116.3116(2). There are numerous arguments based on the canons of statutory construction as to when the lien arises and whether the term “action” refers only to a judicial action or whether it also includes a non-judicial foreclosure action. Both sides have also looked to various instances of non-binding authority to support their position, including decisions from other jurisdictions and from federal court judges here in Nevada. For example, in Summerhill Village Homeowners Association v. Roughly, 166 Wash. App. 625, 270 P.3d 639 (2012), the court ruled that an HOA’s judicial foreclosure of its super priority lien completely extinguished a first deed of trust. Banks have attempted to distinguish this case by arguing that in Nevada, almost all HOA foreclosures are done nonjudicially and NUCIOA does not require notice to a first position bank in order for an HOA to foreclosure non-judicially. There are also several federal district court decisions that have found in favor of the first position bank holding that the HOA’s super priority lien does not extinguish a first position deed of trust. Diakonos Holdings, LLC v. Countrywide Home Loans, Inc., 2:12–cv–00949–KJD–RJJ, 2013 WL 531092 (D.Nev. Feb. 11, 2013); Bayview Loan Servicing, LLC v. Alessi & Koenig, LLC, 2:13–cv–00164–RCJ, 2013 WL 2460452 (D. Nev. June 6, 2013); Weeping Hollow Ave. Trust v. Spencer, 2:13–cv–00544–JCM–VCF, 2013 WL 2296313 (D.Nev. May 24, 2013); Kal–Mor–USA, LLC v. Bank of America, N.A., 2:13–cv–0680–LDG–VCF, 2013 WL 3729849 (D.Nev. July 8, 2013); Premier One Holdings, Inc. v. BAC Home Loans Servicing LP, 2:13-CV-895 JCM GWF, 2013 WL 4048573 (D. Nev. Aug. 9, 2013). Banks are also setting forth equitable arguments and have focused on the economic impact a decision wiping out their interest would have on the lending industry in Nevada, as well as setting forth some of the practical obstacles they face. It has been reported that in Nevada, certain HOA’s will not cooperate with providing payoffs to lenders and in some instances, will not accept a payment in satisfaction of a past due balance unless the lender obtains written approval of the borrower.

Third party bidders have relied on Nevada Attorney General Opinion AG13-01, which addresses which costs an HOA can include in the calculation of the dollar amount of its super priority lien. Dep’t of Business and Indus., Real Estate Div., Adv. Op. No. 13-01 (Dec. 12, 2012). In the course of the analysis set forth by the Attorney General’s Office, the opinion offers the following language, albeit not accompanied by any citation to authority or other analysis, “The ramifications of the super priority lien are significant in light of the fact that superior liens, when foreclosed, remove all junior liens. An association can foreclose its super priority lien and the first security interest holder will either pay the super priority lien amount or lose its security.” This opinion, although not binding on the courts, has bolstered the claims of third party bidders who are relying on this language to suggest that a bank would in fact lose its security interest following an HOA foreclosure. While there are no known Nevada district court decisions where a judge has ruled in favor of a third party bidder and extinguished a first position deed of trust, there are many instances where the courts have stayed the actions or refused to grant a bank’s motion to dismiss a quiet title action and are now requiring that the parties proceed to discovery or to an expedited trial.

Until the Nevada Supreme Court clarifies the status of the law on this issue, it is anticipated that third party bidders will continue to acquire properties at HOA foreclosure sales and continue to attempt to quiet title to the property and cut off the rights of the first position bank. Banks will continue to defend against these suits and attempt to avoid a scenario where their first position deed of trust is extinguished. We can only hope that we will soon have an answer to the pressing question, “Who is in first?”

Melissa Waite is an associate at Jolley Urga Wirth Woodbury & Standish in Las Vegas where her practice is concentrated in the areas of real estate transactions, corporate law and administrative law, with a focus on privilege licensing. She serves as secretary and member of the executive committee of the Administrative Law Section of the State Bar of Nevada. She can be reached at 702-699-7500 or at mlw@juww.com.