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In Nevada, [a]n action may be brought by any person against another who claims an estate or interest in real property, adverse to him, for the purpose of determining such adverse claim.”
NRS § 40.010.
Such an action [of quiet title] requests a judicial determination of all adverse claims to disputed property. Clay v. Scheeline Banking & Trust Co., 40 Nev. 9, 159 P. 1081, 1082-83 (1916).
Del Webb Conservation Holding Corp. v. Tolman, 44 F.Supp.2d 1105, 1109-10 (D. Nev. 1999).
In a quiet title action, the burden of proof rests with the plaintiff to prove good title in himself. See, e.g., Ernie v. Trinity Lutheran Church, 51 Cal.2d 702, 336 P.2d 525 (1959); Olsen v. Park Daughters Investment Company, 29 Utah 2d 421, 511 P.2d 145, 146 (1973). Moreover, there is a presumption in favor of the record titleholder. Cf. Biasi v. Leavitt, 101 Nev. 86, 89-90, 692 P.2d 1301, 1304 (1985) .
Homeowners associations (HOAs) in Nevada have been foreclosing on their liens for delinquent assessments. In a number of situations, third parties have bought residential properties out of these HOA foreclosure sales for a small fraction of the properties' worth. These third-party purchasers then purport to own the property outright—free and clear of the lender's first mortgage. Subsequently, they file suit to quiet title to the property in their name, in an attempt to wipe out the mortgage and certain other liens on the property.
The purchasers rely on an ambiguity in Nevada’s HOA lien statutes that contradicts the mortgagee protection clause generally included in an HOA’s controlling documents. Success by a purchaser in such a quiet title action will result in the extinguishment of a lender’s mortgage. Even if the purchaser is unsuccessful, the quiet title action may still prevent the lender from foreclosing during the course of the litigation.
Before a recent uptick in quiet title lawsuits, lenders often disregarded HOA foreclosure sales as not affecting their first lien mortgages, relying on a customary—as opposed to a literal—reading of statutes. Most lenders’ interpretation of Nevada HOA lien law differs strikingly from the arguments being advanced by the current purchasers. In addition, lenders relied on “mortgagee protection” clauses included in an HOA’s controlling documents, which generally protect the rights of first lien mortgage holders in the event of an HOA foreclosure.
The federal and state district courts in Nevada are now considering this issue, with new cases being filed regularly and judges ruling on both sides. Until the Nevada Supreme Court clarifies the status of the law, it is unknown how each individual quiet title action will be decided by the courts. Here is a sample one I found online:
SUMMONS - CIVIL
Case [insert Case Number *****]
Dept. [insert Department letter here]]
[Insert your full name here (or full name of your company) ], Plaintiff
[Insert the full name of the Defendant or Defendant's company here], Defendant.
SUMMONS - CIVIL
NOTICE! YOU HAVE BEEN SUED. THE COURT MAY DECIDE AGAINST YOU WITHOUT YOUR BEING HEARD UNLESS YOU RESPOND WITHIN 20 DAYS. READ THE INFORMATION BELOW.
TO THE DEFENDANT: A civil Complaint has been filed by the Plaintiff against you for the relief set forth in the Complaint.
This action is being brought forth to seek quiet title of real property.
1. If you intend to defend this lawsuit, within 20 days after this Summons is served on you, exclusive of the day of service, you must do the following:
(a) File with the Clerk of this Court, whose address is shown below, a formal written response to the Complaint in accordance with the rules of the Court, with appropriate filing fee.
(b) Serve a copy of your response upon the attorney/Plaintiff whose name and address is shown below.
2. Unless you respond, your default will be entered upon application of the Plaintiff and failure to so respond will result in a judgment by default against you for the relief demanded in the Complaint, which could result in the taking of money or property or other relief requested in the Complaint.
3. If you intend to seek the advice of an attorney in this matter, you should do so promptly so that your response may be filed on time.
4. The State of Nevada, its political subdivisions, agencies, officers, employees, board members, commission members and legislators, each have 45 days after service of this Summons within which to file an Answer or other responsive pleading to the Complaint.
[Insert your full name here (or full name of your company) ]
[Insert your mailing address here]
[Insert your mailing city, state, zip here]
[Insert the Name of the Clerk of the Court here], Clerk of Court
By: [Insert the Name of the Deputy Clerk here], Deputy Clerk
Date: [Insert date here]
Clark County Courthouse
200 South Third Street
Las Vegas, NV 89155
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