Deutsche Bank National v. Saihat Corp.
DEC 8, 2021 | REPUBLISHED BY LIT: DEC 9, 2021
* Pursuant to 5th Circuit Rule 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Circuit Rule 47.5.4.
I.
Bryan Daniel purchased a property in 1998. Daniel financed his purchase with a loan and executed a deed of trust and a purchase money deed of trust in favor of Equity Secured Investments, Inc. initial loan was paid off with a home equity loan in 2004 and the associated liens were released.
The home equity loan was secured by a first lien security interest that was subsequently assigned to its current holder, Deutsche Bank.
The property is located within a homeowners’ association in LaPorte, Texas. The HOA’s governing document requires homeowners to pay assessment fees and to reserve a vendor’s lien in favor of the HOA with the right to enforce through foreclosure.
The HOA’s governing document also states that the HOA’s lien is “secondary, subordinate, and inferior to all liens, present and future given, granted and created by or at the instance and request of the Declarant and the Owner of any such lot ”
The governing document requires the HOA provide first mortgage lien holders with sixty days’ written notice of a foreclosure action.
The Daniels later defaulted on their HOA fees and the HOA filed a foreclosure action in state court. Deutsche Bank was not a party to the state court action.1 Saihat bought the property at a constable’s sale following the foreclosure.
Deutsche Bank then sued Saihat and the HOA. Deutsche Bank argued that its lien was senior to the HOA’s lien and therefore its lien survived the HOA’s foreclosure sale, making Saihat’s interest junior to Deutsche Bank’s lien.
1 See Fairmont Park E. Homeowners Ass’n v. Martha Daniel, No. 201702032 (157th Dist. Ct. Harris County, Tex. Jan. 1, 2017).
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