Why the allocation was not the association's to make

The first ground of reversal rests on the court's 2024 decision in Swaggerty. Quoting it, the court restated the rule:

“[I]n the absence of express allocation by the debtor, the HOA may not direct payments in a way that preserves the HOA's superpriority lien to the detriment of the homeowner and bank” — and any such unauthorized allocation is “invalid” as a matter of law.

The court also carried forward Swaggerty's presumption, which is the sentence collection agents should have pinned above the desk:

“Regardless of the homeowner's silence on the payments' application, ‘principles of justice and equity…presume that the superpriority lien is paid first, unless the court has a compelling reason to conclude otherwise.’”

Collegium's answer was timing: the district court decided this case before Swaggerty, which it said “changed the law.” The court did not need to resolve that, because a new appellate rule applies to cases still on review. It cited the general principle that judicial decisions “are applied retroactively to all civil matters that have not reached final judgment.” If your Nevada HOA sale is still in litigation, Swaggerty reaches it.

The second HOA problem, and what Southern Highlands does not say

The district court had an alternative ground. Two HOA liens have equal priority under what is now NRS 116.3116(8). Under Southern Highlands Community Association v. San Florentine Avenue Trust (2016), when one equal-priority lienholder forecloses, the other equal-priority liens are extinguished and all share in the proceeds. From that the district court derived a rule that “the foreclosure of one [HOA lien] is the foreclosure of all” — so both superpriority pieces had to be paid off before the sale could become a subpriority sale.

The Supreme Court called that an erroneous ascription, and the correction turns on a distinction worth memorising:

“Extinguishing a lien is not the same thing as foreclosing it and does not mean that where, as here, two HOAs have recorded superpriority liens against a property, the homeowner or the holder of the first deed of trust must pay off the superpriority portions of both liens to convert a noticed sale to a subpriority lien foreclosure sale.”

The mechanism the court described is the part practitioners will use. Once the foreclosing HOA's superpriority piece is paid, that association is left holding only a subpriority lien. At that moment the two associations' liens are no longer of equal priority — so Southern Highlands simply does not apply. The non-foreclosing HOA's superpriority lien keeps its status and, along with the first deed of trust, survives the sale, because both are senior to the junior lien actually being foreclosed.

The court closed the point on practical grounds: any other reading would “in effect, double the payment required to convert the sale to a subpriority lien foreclosure sale by adding a non-foreclosing HOA's superpriority lien to the mix.”

What this changes, by audience

• Buyers at Nevada HOA foreclosure auctions. The existence of a superpriority lien in the recorded notice no longer tells you the first deed of trust is gone. What matters is whether the homeowner paid anything before the sale and how much. A $550 payment against a $238 superpriority piece is the difference between owning a house and owning a house with a mortgage on it.
• Associations and their collection agents. Payment application is now a legal act with consequences you do not control. Absent express direction from the owner, the presumption is oldest-first, and an allocation that preserves the superpriority lien is invalid. A ledger that silently applies payments “to the account” is producing the exact fact pattern that lost this case.
• Owners. A partial payment is not merely a partial payment. Enough to cover the superpriority months, made before the sale, protects the first deed of trust — and courts will presume that is where the money went.
• Title insurers and lenders. Two-association properties no longer carry the double-tender risk the district court's reading implied.

The limits of the decision

Two caveats, both from the opinion itself. The foreclosure was governed by the pre-2015 version of NRS chapter 116, so the court cites NRS 116.3116(2) (2013), now codified at NRS 116.3116(3)(b). And the court noted that a superpriority lien can also include maintenance or nuisance-abatement charges, but that the record did not show Aliante's lien included any — so the nine-months-of-assessments computation was the whole of it here.

Neither caveat touches the two rules the case establishes. Those are about allocation and about what “equal priority” means once one of the two liens has been paid down.