A court case currently going on in Nevada could have an impact on housing markets across the United States. The case, which involves Bank of America Corp., deals with the issue of liens put on properties by homeowners associations to which the property owner stops paying dues. Homeowners associations, of course, use dues to fund repairs and maintain common areas of the neighborhood.
While homeowners associations do have the ability to foreclose on a delinquent homeowner, it doesn’t happen very often since lenders usually foreclose first. In addition, over half of states give first mortgage lenders priority over homeowners associations. Nevada and about 20 others give homeowners associations priority.