Bourne Valley Court Trust v. Wells Fargo Bank, N.A.

Case Updates

The U.S. Chamber filed an amicus brief urging the Supreme Court to grant review and affirm the Ninth Circuit’s decision holding that Nevada’s statute violates mortgage lenders’ due process right to notice before deprivation of their property.

In nearly half of the states, when a homeowner living in a common-interest community falls behind on her association dues, the homeowners association (“HOA”) acquires a special statutory lien on her property. Such liens had long been understood to provide only a payment preference, allowing HOAs to recover a capped amount of unpaid fees through foreclosure before other lienholders are paid, but without otherwise impairing other lienholders’ rights. But a number of jurisdictions, including Nevada here, have recently interpreted their statutes to provide super-priority liens. Such liens not only allow HOAs to collect before other lienholders but also extinguish all other liens—including first mortgage liens. And in Nevada, this deprivation of mortgagees’ property could take place without direct notice to the mortgage lienholders.

The Chamber’s brief urges the Supreme Court to grant review to resolve a conflict between the Ninth Circuit and Nevada Supreme Court as to whether Nevada’s super-priority regime constitutes a form of state action subject to the notice requirements of the Due Process Clause. The brief argues that super-priority statutes contravene bedrock principles of property law and threaten to destabilize the real-estate finance system, resulting in less credit for homebuyers.

This brief was filed jointly with the Mortgage Bankers Association and American Bankers Association.

Joseph R. Palmore, Donald C. Lampe, and Bryan J. Leitch of Morrison & Foerster LLP served as counsel for the U.S. Chamber of Commerce on behalf of the U.S. Chamber Litigation Center.