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Berezovsky v. Moniz

United States Court of Appeals for the Ninth Circuit

February 17, 2017, Argued and Submitted, San Francisco, California; August 25, 2017, Filed

No. 16-15066


 [*925]  MUELLER, District Judge:

If a homeowners association member in Nevada misses property payments for six months, Nevada law equips the association with the ability to foreclose on a "superpriority lien," quashing all other property liens or interests recorded after the recordation of the Covenants, Conditions, and Restrictions attached to the title. On its face, this superpriority lien [**4]  has the potential to trump certain federal property interests, despite Congress's passage of a provision known as the Federal Foreclosure Bar, which prohibits nonconsensual foreclosure of Federal Housing Finance Agency ("Agency") assets. This clash of state and federal law has spawned considerable litigation in Nevada. This decision resolves the clash in favor of the Federal Foreclosure Bar.

Appellant Alex Berezovsky purchased a home at a homeowners association foreclosure sale in 2013. He argues the Nevada superpriority lien provision empowered the association to sell the home to him free of  [*926]  any other liens or interests, priority status aside. The Federal Home Loan Mortgage Corporation ("Freddie Mac") claims it has a priority interest in the home Berezovsky purchased. Freddie Mac is under Agency conservatorship, meaning the Agency temporarily owns and controls Freddie Mac's assets. The Federal Foreclosure Bar's prohibition on nonconsensual foreclosure gives teeth to the Agency's statutory mandate to guard its conservatorship assets.

Berezovsky sued to quiet title in Nevada state court. Armed with the Federal Foreclosure Bar, Freddie Mac intervened and counterclaimed for the property's [**5]  title, removed the case to federal district court, and moved for summary judgment. The Agency joined Freddie Mac's counterclaim. Together the federal entities argued that Berezovsky did not acquire "clean title" in the home because the Federal Foreclosure Bar preempts Nevada law, invalidating any purported extinguishment of Freddie Mac's interest through the association foreclosure sale. In resolving the parties' cross-motions, the district court agreed with the federal entities.

On appeal, Berezovsky disputes the Federal Foreclosure Bar's applicability and contends Freddie Mac lacks an enforceable property interest. We are unpersuaded and affirm the district court's holding.

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869 F.3d 923 *; 2017 U.S. App. LEXIS 16272 **; 2017 WL 3648519

ALEX BEREZOVSKY, Plaintiff-Counter-Defendant-Appellant, v. GREGORY MONIZ; IDELL MONIZ; RED ROCK FINANCIAL SERVICES, LLC, WELLS FARGO BANK, N.A.; GARDEN TERRACE HOMEOWNERS ASSOCIATION, Defendants, and BANK OF AMERICA, N.A., Defendant-Appellee, FEDERAL HOME LOAN MORTGAGE CORPORATION; FEDERAL HOUSING FINANCE AGENCY, as Conservator for the Federal Home Loan Mortgage Corporation, Defendants-Counter-Claimants-Appellees.

Prior History:  [**1] Appeal from the United States District Court for the District of Nevada. D.C. No. 2:15-cv-01186-GMN-GWF. Gloria M. Navarro, Chief District Judge, Presiding.

Berezovsky v. Moniz, 2015 U.S. Dist. LEXIS 167565 (D. Nev., Dec. 15, 2015)

Disposition: AFFIRMED.


Foreclosure, exemption, deed, superpriority, taxation, preemption, homeowners, conservatorship, manifest, foreclose

Banking Law, Banking & Finance, Regulators, US Federal Housing Finance Agency, Real Property Law, Financing, Federal Regulations, Constitutional Law, Supremacy Clause, Federal Preemption, Foreclosures, Common Interest Communities, Homeowners Associations, Commercial Law (UCC), Perfection & Priority, Perfection, Methods of Perfection, Secured Transactions (Article 9), Third Party Rights