The U.S. Court of Appeals for the Ninth Circuit issued a memorandum decision Monday in *Carrington Mortgage Services, LLC v. Saticoy Bay LLC, Series 10384 Midseason Mist*, addressing Nevada's controversial homeowners' association superpriority lien statute and its impact on mortgage lenders' rights.
The case, filed as No. 24-6690, stems from an appeal of a U.S. District Court for the District of Nevada ruling by Judge Richard F. Boulware, II. The dispute centers on Nevada Revised Statute § 116.3116, which grants HOAs extraordinary lien powers when homeowners default on association dues.
Under Nevada law, when a homeowners' association member defaults on dues, the HOA obtains "an extraordinary lien against the member's property," according to the court filing. This lien includes a superpriority component that "extinguishes all other encumbrances, including senior deeds of trust, upon foreclosure."
The statute creates a unique situation where HOA liens can supersede even first mortgages, potentially wiping out lenders' security interests entirely. However, Nevada law provides a mechanism for prior deedholders to preserve their interests by "tendering the superpriority amount of the lien or by showing 'that the party entitled to payment had a known policy of rejecting such payments,'" the court noted, citing the Nevada Supreme Court's 2020 decision in *7510 Perla Del Mar Ave Tr. v. Bank of Am., N.A.*
The underlying facts involve Anthony Spradlin, who in 2009 financed the purchase of a Las Vegas residence with a loan secured by a first deed of trust. The deed of trust was later assigned to Bank of America, N.A. When Spradlin failed to pay his HOA dues to the Silverado Place Homeowners' Association, the association retained a law firm to pursue collection.
Carrington Mortgage Services, LLC served as the appellant in the case, challenging the lower court's ruling. The company argued against the enforcement of the HOA's superpriority lien powers, while Saticoy Bay LLC, Series 10384 Midseason Mist served as the appellee defending the HOA lien structure.
The Ninth Circuit heard oral arguments in the case on Nov. 20, 2025, in Phoenix, Arizona. The three-judge panel consisted of Circuit Judges Hawkins, Hurwitz, and Collins. The court's memorandum decision, filed Jan. 12, 2026, is marked as "not for publication" and "is not precedent except as provided by Ninth Circuit Rule 36-3."
Nevada's HOA superpriority lien statute has generated considerable litigation since its enactment. The law creates tension between state property law and federal mortgage regulations, as it allows HOA liens to take precedence over federally-backed mortgages in certain circumstances.
The statute requires HOAs to follow specific procedures when exercising their superpriority powers. Before foreclosing on a superpriority lien, the association must provide notice to all interested parties, including mortgage holders. Lenders then have an opportunity to protect their interests by paying the outstanding HOA dues and assessments.
Mortgage servicers like Carrington frequently find themselves caught between their obligations to investors and borrowers and Nevada's unique lien priority structure. When homeowners default on both mortgage payments and HOA dues, servicers must decide whether to pay HOA assessments to protect the mortgage lien or risk having their security interest extinguished.
The case reflects broader tensions in residential mortgage servicing, particularly regarding communication between mortgage servicers and homeowners' associations. Many servicers have implemented policies requiring HOAs to provide notice of delinquent assessments, while some HOAs have adopted policies regarding acceptance of payments from third parties.
For homeowners facing financial difficulties, Nevada's law creates additional complexity. A homeowner current on mortgage payments but delinquent on HOA dues could potentially lose their home through HOA foreclosure, even if the mortgage lender would prefer to work out a payment arrangement.
The Ninth Circuit's decision in this case will likely influence how courts interpret Nevada's HOA superpriority statute in future disputes. While the memorandum decision is not precedential, it provides guidance on how federal courts view the interaction between state HOA lien laws and federal mortgage regulations.
Real estate attorneys and mortgage industry professionals will closely analyze the ruling for insights into best practices for protecting lender interests under Nevada law. The decision may also influence legislative discussions about reforming HOA lien statutes in other states considering similar legislation.
The outcome affects thousands of homeowners in Nevada communities governed by HOAs, as well as mortgage lenders and servicers operating in the state. The case underscores the importance of clear communication between all parties when homeowners face financial distress affecting both mortgage and HOA obligations.