Toree Robinson

Document Type

Case Summary

Publication Date

6-27-2024

Case Synopsis

The Supreme Court of Nevada considered whether a homeowner’s partial payments failed to satisfy the superpriority lien, meaning that the subsequent HOA foreclosure extinguished the first deed of trust. The Court examined the parameters set forth in Cranesbill which provided for allocation of a defaulting homeowner’s partial payments to an HOA superpriority lien. Court’s applying Cranesbill must: (1) look for direction of the homeowner allocating payment at the time payment was made, (2) then, if the homeowner fails to provide direction, a court must determine if the HOA allocated the payment prior to the dispute over the allocation, and (3) if the allocation by neither homeowner nor the HOA resolves the question, the court considers principles of justice and equity which presume that the superpriority lien is paid first, unless the court has a compelling reason to conclude otherwise. Here, after the Court’s analysis of Cranesbill, the Court held that absent express direction of the homeowner to the contrary, the HOA may not apply a payment in a way that jeopardizes the first deed of trust holder’s interest and deprives the homeowner of the security on the homeowner’s mortgage.

The Supreme Court of Nevada disagreed with the district court’s conclusion that the homeowner’s partial payments failed to satisfy the superpriority lien, meaning that the subsequent HOA foreclosure extinguished the first deed of trust. Therefore, the Court reversed the lower judgment and remanded for entry of judgment for Deutsche Bank.

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