“Water as an Assessment”: The Supreme Court of Nevada Recognizes Utility Charges as Lien-Triggering Assessments under NRS 116.3116

Introduction

Maxwell Trust v. Saticoy Bay LLC Series 3414 Big Sur, 141 Nev. Adv. Op. ___ (Aug. 14 2025), is a landmark decision from the Supreme Court of Nevada that clarifies whether a homeowners’ association (HOA) may treat individually metered water-usage fees as “assessments” capable of supporting a super-priority lien under NRS 116.3116.

The appellants, Marilyn Lois Maxwell Trust (title owner) and Kathy Hoover (resident), challenged an HOA foreclosure by arguing that (1) Bank of America’s pre-sale tender fully satisfied the lien because water charges could not legally be part of it, and (2) the eventual foreclosure sale, which netted only one-third of market value, was unreasonably low. The Supreme Court rejected both contentions, affirming judgment for respondents Saticoy Bay LLC (purchaser) and the Desert Inn Mobile Family Estate Owners Association (the HOA).

Summary of the Judgment

• Water-usage fees = “assessments”. The Court held that when an HOA is the direct customer of the water district, passes the cost to owners pursuant to recorded CC&Rs, and possesses statutory authority to lien for non-payment, unpaid water charges fall within the term “assessment” in NRS 116.3116(1).
• Tender insufficient. Because Bank of America’s $2,662.05 payment did not cover the water portion, the lien was not fully discharged; foreclosure was therefore authorized.
• Fairness of sale. A 33 % price alone does not void a sale absent “fraud, unfairness, or oppression” (Shadow Canyon). Appellants offered no such evidence; the sale stands.
• Disposition. District court judgment quieting title in favor of Saticoy Bay and denying equitable relief to Maxwell Trust/Hoover is affirmed.

Analytical Commentary

I. Precedents and Authorities Cited

1. Protective Ins. Co. v. Commissioner of Ins., 141 Nev., Adv. Op. 3, 562 P.3d 215 (2025) – reiterates the de novo standard for statutory interpretation and the ambiguous/ unambiguous dichotomy.
2. South Highlands Community Ass’n v. San Florentine Avenue Trust, 132 Nev. 24 (2016) – first discussed NRS 116’s non-definition of “assessment,” framing it as a generic term for HOA-levied charges.
3. Nationstar Mortg., LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 133 Nev. 740 (2017) – establishes that inadequate price alone is not enough to invalidate an HOA sale; requires “fraud, unfairness, or oppression.”
4. Statutes: NRS 116.3102(1) (HOA powers), NRS 116.3115 (budgets & common-expense assessments), NRS 116.3116 (HOA lien), NRS 116.345 (utility shut-off limitations).

The Court interwove these authorities to show legislative endorsement of utility cost-sharing and to cabin equitable challenges to foreclosure sales.

II. Dissecting the Court’s Legal Reasoning

A. Plain-Meaning/Contextual Statutory Construction

1. Absence of explicit definition. Because NRS 116 does not define “assessment,” the Court looked to surrounding provisions for context.
2. Legislative mosaic. NRS 116.3102(1)(j) permits HOAs to impose “charges for services”; NRS 116.345(4) references “utility service” charges an association may interrupt; NRS 116.3115(4)(c) instructs that “costs of utilities must be assessed in proportion to usage.” These strands collectively indicate that the Legislature contemplated utilities as assessable charges.

“Construing a utility service such as water to fall within the term ‘assessment’ works in harmony with the statutory scheme.” – Majority Opinion

B. Contractual Overlay: CC&Rs

Article IV § 1(m) of the Desert Inn CC&Rs authorizes the HOA to procure water service and lien homes for non-payment. Because CC&Rs possess statutory force under NRS 116.3102 and 116.345, they amplify the statutory reading that water fees are assessments.

C. Tender Doctrine Application

Consistent with earlier tender cases (Bank of Am. v. SFR line), a lien is extinguished only if the tender covers the super-priority portion in full. Here, the unpaid water charges kept the balance alive, invalidating Maxwell Trust’s argument that foreclosure lacked a basis.

D. Evaluation of Sale Fairness

Invoking Shadow Canyon, the Court required proof of procedural defects or oppression beyond low price. The appellants’ suggestion that the HOA should have merely shut off water was policy based, not evidence of misconduct. Thus, no equitable grounds existed.

III. Likely Impact of the Decision

• State-wide precedent. Nevada HOAs that act as utility intermediaries now have explicit Supreme Court backing that unpaid utility allocations constitute assessments and lien components.
• Lending and tender practices. Mortgage servicers must account for utility arrears when calculating super-priority tenders; partial payments risk leaving the lien intact.
• Litigation posture. Borrowers can no longer rely on the “individual consumption ≠ common expense” argument; challenges must focus on notice, accounting errors, or classic fraud/unfairness factors.
• Policy ramifications. The decision may incentivize HOAs to pursue liens/foreclosure rather than service shut-offs, knowing courts deem utility charges lien-worthy.

IV. Complex Concepts Simplified

Assessment

A charge levied by an HOA on individual unit owners to cover community expenses. This case clarifies that utility costs can be included.

Super-priority lien

The portion of an HOA lien that, under Nevada law, is senior even to first deeds of trust for nine (or now six) months of assessments plus certain collection costs.

Tender

A payment offered to satisfy a debt. In HOA contexts, banks often tender the super-priority amount to preserve their deed of trust.

Fraud, Unfairness, or Oppression

Equitable defects recognized by Nevada courts that can set aside a foreclosure sale; mere inadequacy of price is insufficient without one of these.

Conclusion

Maxwell Trust v. Saticoy Bay LLC cements a crucial principle: utility fees, when funneled through and collected by an HOA, are statutorily equivalent to any other assessment that can ripen into a super-priority lien under NRS 116.3116. The Court harmonized multiple statutory provisions and reinforced long-standing foreclosure jurisprudence, ultimately providing clearer guidance to HOAs, lenders, and homeowners alike. Going forward, litigation will likely pivot from definitional battles over “assessments” to more fact-intensive disputes regarding notice, accounting accuracy, or inequitable conduct in the foreclosure process.