Belvedere Liens

Disclaimer: I am neither an attorney nor a real estate professional. The information contained in this post is believed to be accurate, but should not be relied upon in reaching a decision to purchase a unit at the Belvedere. Consult a competent real estate attorney if you can find one.

A 2 bedroom, 2 bath 863 SF renovated unit at the Belvedere for $21,900? For real? Over the past few weeks, I have been contacted by several potential buyers and real estate professionals asking for my opinion on this question. Here’s what I’ve been telling them:

First, a recap on lien positions in a condo. In a normal situating, Property Tax liens are in first position, followed by Special Assessment liens, HOA association liens (though the power to actually foreclose is limited by NRS), then the 1st / 2nd bank Deeds of Trust, followed by Mechanic’s Liens. For a bank to foreclose on their 1st loan, they must pay off the lien holders senior to their position. Liens junior to their position are wiped out.

The Belvedere is slightly but importantly different. Belvedere recorded their subdivision map prior to construction, which is rare. The construction and consultant contracts were prorated to the individual units from the start,rather to the project as a whole. After signing the construction and consultant contracts, the Belvedere refinanced and increased their construction funding, but failed to rewrite these contracts. The effect of this was to place Mechanic’s Liens IN FRONT of the construction financing, though still junior to Property Tax liens.

When the Belvedere defaulted on paying their general contractor (and thereby the subcontractors) and consultants, at least 20 filed Mechanic’s Liens. Because of the way the contracts were structured and prorated to the individual units, each party filing a lien filed on each individual unit. I have heard that the total is about $84,000 per unit, and does not vary depending on unit size.

Statutory and Mechanic’s Lien law is established in NRS Chapter 108. Liens are easy to file (you usually get unrecorded Preliminary Notice of Lien by all the subcontractors before they start work), but keeping them in force can get arcanely detailed. The first lien filing is good for a maximum of 6 months, but can be extended for an additional 6 months without too much hassle. Legal proceedings need to be initiated with one year of the original lien filing. Remember, filing a $30,000,000 lien against a project costs exactly the same as filing a $3000 lien against an individual unit. I suspect that some of the parties to the Mechanic’s Liens realized that their rights were too expensive to defend and have let their rights lapse.

So, with the cloud of $84,000 in Mechanic’s Liens looming over your head per one of the listing agents, do you buy a unit in the Belvedere? 2 people have taken that risk this year. Unit 4-N-10,a 352 SF studio originally sold for $269,000, was purchase for $19,000 in January 2011 as an REO. 8-N-10, a virtual twin, was sold for $20,990 in July.

If you want to see your title company weep, tell them you are looking at the Belvedere. At this time, you cannot receive title insurance for a unit there. The best they will give you is a “Conditional Title Report”, excluding the Mechanic’s Liens which is why you want the policy in the first place. Unless clear title is established at a later date, these exclusions will pass to anyone you try to resell your unit to.

The units sold and listed at the Belvedere are all REOs from foreclosures on the original buyers. Property tax and special assessment liens have been paid off, but the Mechanic’s Liens may (or may not – more later) be in force. The completed units that US Bank inherited in the foreclosure of the project have not been listed on the MLS to date.

Going back to the order of lien issue. Washoe County held a Delinquent Tax Assessment Sale in June on about 200 unit, which I believe are actually the US Bank units. A buyer at these sales pays the delinquent taxes and penalties, then must wait 6 months for the actual transfer of title to be completed and a Certificate issued. During this cure period, the original owner can repay the tax sale amount plus 12% per annum interest, and reclaim the unit. It is sort of getting “dibs” with a good return if it doesn’t work out. Remember, a tax lien is senior to a Mechanic’s Lien – they would be wiped out if the Certificate is issued. None of the parties with Mechanic’s Liens bid on the units. Instead, virtually all of them were “purchased” by Secured Assets Belvedere Tower LLC, which the RGJ reported is a front for the original developers attorney. Something is afoot.

If I were looking at buying a Belvedere unit, I would buy the biggest unit I could. The price spread between studios and 2 bedrooms is quite minimal, and the liens are just about equal. I would be prepared to lose my entire investment. That said, there are holders who have to figure out who is in the 1st position to foreclose on you. They don’t want to go through the expense and find out they are STILL in junior position. And if one of the lien holders tried to foreclose, it would take a good deal of time and money. If you look at your buy in purchase price, versus what it would cost you to rent a unit, your net exposure reduces rather quickly. I don’t think anyone but Metcalf Builders, the general contractor, has enough invested in each unit to risk the cost to foreclose on you, and most of their exposure is bourne by their subcontractors. Again, the lien per unit situation may work in favor of the buyer.

I’m not going to even speculate on the stability of the HOA and on the possibility of them going BK and special assessments being assigned. You get that at any condo these days. Yes, all Belvedere sales are going to have to be cash, same as Montage and even Riverwalk now that their HOA is once again in litigation with the developer.

It’s a game of chicken that I have a sneaking suspicion that anyone brave enough to buy at the Belvedere will ultimately win.

Now what if the risk of the $84,000 per unit in liens went away? Go the Washoe County Recorder’s site, and enter Belvedere in the Grantee field. It appears that many of the liens are being settled and/or expunged. The realtors don’t know it yet. The REO banks don’t know it yet (though they may be figuring it out – the MLS listings for 450 N Arlington are mysteriously disappearing).

Or maybe the listing agents for the banks do know now. Units originally listed for $14K were bumper to $21K after receiving multiple bids, and overbids on the upped listing prices were rejected. The listings have disappeared from the MLS, so it is too early to know if the units sold or were withdrawn.

So what is a lien free Belvedere unit worth in today’s market? Look to the Riverside for guidance – it isn’t as much as you think, but well above current asking prices. Gold mine? Just maybe, but the window may be closing as news of the lien settlements leaks out.

A 2/2 for $21,000 at the Belvedere? I’d seriously consider it. At $40,000, I’d have misgivings on the risk of a HOA collapse. Any thoughts?

And for fun, a cached copy of the old Sundowner site is here. $20 internet room rate. $2.99 western omelet. Ah, the good old days.


  1. Matthew

    I’ll cross-post my comment from REReno:

    You correctly note that the mechanic’s liens are disappearing. However, the association is planning assessments to fulfill their own payables as well as property maintenance.

    On the 18th of this month there will be a meeting to discuss an assessment for all units. 2/2?s are likely to be assessed about $11k.

    According to the HOA, without additional funding it is possible (though I don’t know how likely!) that the elevators will be removed from the building for failure to pay.

    I wouldn’t go so far as to say these are not a buy, even at $30k. If the assessment passes and the HOA collects it will probably be a good thing, bringing at least a bit of financial solvency… but the banks are hesitant to accept liability for HOA liens; and I suspect some will try to unload after the assessment is made. Yesterday I was cash-in-hand with my agent to buy; today I think it’s best to wait until end-of-month just to get the assessment on the books. There is no shortage of REOs wanting to escape the burden of HOA assessments.

  2. oldjohnny

    I love the phrase “Consult a competent real estate attorney if you can find one.”

  3. Sliced Rye

    I too chuckled when I read that. Is there some inference there, Mike, that a competent real estate attorney is hard to come by?

  4. Martin

    I think a competent real estate lawyer would advise that buying a condo at the Belvedere at this point in time is not much different than going into a casino and putting your money on the pass line at the craps table. You might double your money. You might lose it all.

  5. Mike McGonagle

    Hee Hee! My first draft read something like “… a competent real estate attorney that doesn’t have a conflict of interest in the Belvedere due to all the law suits, if you can find one.” It read really clunky. Maybe my edit was a bit Freudian?

    Matthew, your comment is EXACTLY why I post on RRB, and I have to thank you for your new intelligence on the Belvedere situation, as do all the potential buyers. Together, we know a lot.

  6. Phil

    I agree with Martin. Buying a condo at the Belvedere now is really just gambling. Maybe you will win, maybe you will lose. The real challenge is to calculate what the odds are. On a double zero roulette table you get paid 36 to 1 on a straight up bet, but the odds are 38 to 1 against you. How do you calculate the odds at the Belevedere?
    Maybe this is appropriate for a place that used to be a hotel/casino.

  7. Matthew

    According to the HOA rep, the fees will be due November 1st.
    Additionally, the monthly membership dues for the 2/2 will be $379-ish (up from the $250 currently showing on the listing)
    This was on a particular unit I was investigating but I don’t believe different 2/2’s will have different fees.

  8. GreenNV

    Secured Assets Belvedere Tower LLC continues to pick up units at Trustee’s Sales, 5 or 6 so far. One unit hit the steps today (15 November) with an initial price of $14,000 and sold for $14,001. We’ll see in a week or so if they were the buyer. 5 more units hit the steps Wednesday 16 November at 11 AM. Could get interesting if other parties get into the act now that the mechanics liens have settled out, and Secured Assets maximum bids get smoked out.

  9. David

    Does anyone have an update on the Belvedere?

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