Nevada Federal Court Holds Exclusion 3(d) of Title Insurance Policy Bars Coverage for HOA Lien

The United States District Court for the District of Nevada recently held that an insured lender was not covered under a title insurance policy for an HOA lien because the lien was recorded after the policy date, regardless of when the HOA recorded its Declarations of Covenants, Conditions and Restrictions.  See HSBC Bank USA, N.A. as Tr. for Registered Holders of Nomura Home Equity Loan, Inc., Asset-Backed Certificates, Series 2006-HE2 v. Fid. Nat’l Title Ins. Co., 2020 WL 886940 (D. Nev. Feb. 20, 2020).  The borrower purchased a property in 2005 and signed a deed of trust on the property.  The deed of trust was eventually assigned to plaintiff.  In connection with the purchase and the deed of trust, defendant issued a title insurance policy.  In 2008, the HOA recorded a lien on the property for delinquent assessments, and the property reverted back to the HOA through a non-judicial foreclosure sale in 2013.  The HOA later sold the property to a third party.  Plaintiff then filed a claim with defendant based on the fact that the third party was claiming an interest in the property superior to plaintiff’s deed of trust, but defendant denied the claim.  Plaintiff filed this action, and defendant filed a motion to dismiss.

The Court granted the motion to dismiss.  Exclusion 3(d) of the policy bars coverage for any “loss or damage, costs, attorneys' fees or expenses which arise by reason of . . . [d]efects, liens, encumbrances, adverse claims or other matters . . . attaching or created subsequent to Date of Policy.”  In this case, the HOA recorded its lien in 2008, three years after the date of the policy.  Accordingly, plaintiff could not be covered for this lien under the policy.  In making this decision, the Court rejected plaintiff’s argument that the HOA’s 2002 recording of the Declarations of Covenants, Conditions and Restrictions, which allowed it to later record the lien, meant that the lien was of record before the policy date.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, or Anthony Lombardo at