Foreclosures

The real estate profession has become increasingly based in legalities. While a handshake can signify an agreement, the contract is the foundation of the real estate transaction today.

With the increased focus on legal issues, NVAR provides members services in the legal arena. Various articles on current and hot legal topics are provided through the weekly NVAR Online News. In addition, the Legal Information Line is available to members.

There are many real estate related questions that arise often. These FAQs (Frequently Asked Questions) by topic are provided to assist you in finding quick answers.

Foreclosures

Q:  What is a non-judicial foreclosure?

A:  In Nevada a lender who lends money on real property usually has the buyer sign a Deed of Trust on the real property to use as collateral for the loan. The Deed of Trust contains a power-of-sale clause which gives the lender the right to sell the real property if the borrower defaults on the loan. The Deed of Trust also contains a long list of promises made by the borrower including the promise to make regular payments on the debt. The Deed of Trust says that if the borrower breaches any of the promises, the lender can take the real property from the borrower by using a “non-judicial” foreclosure procedure. Non-judicial means the lender does not have to take the borrower to court to take the property.

Q:  What is a judicial foreclosure?

A:  A judicial foreclosure is an action commenced in a court of law by filing a complaint as in any other civil litigation.

Q:  When would a judicial foreclosure be necessary?

A:  A judicial foreclosure may be necessary to resolve disputes about priority of deeds of trust. A judicial foreclosure provides for the appointment of a receiver. A lender may need to use judicial foreclosure if the security instrument does not contain a power-of-sale clause.

Q:  What is the timeline for a deed of trust, for investor, non-judicial, foreclosure?

A:  The non-owner occupied timeline is contained in NRS 107.080. It takes 3 months plus 21 days minimum. The trustee for the lender must record a Notice of Default (NOD) and allow 3 months to pass before publishing and recording a Notice of Sale (NOS). The NOS must be published in a local newspaper for 21 days before the Trustee’s sale can occur. When the Trustee’s Sale is held, the property is sold to the highest bidder. A Trustee’s deed is given to the buyer.

Q:  Is the timeline different for owner-occupied housing?

A:  Yes. The owner-occupied foreclosure process is contained in NRS 107.087. The timeline differs because the Trustee (lender) is required to offer the owner/borrower the chance to go to mediation with the lender. The mediation process takes several months because the Trustee (lender) must first give notice to the owner and the Mediation Administrator. The owner then has 30 days to decide whether to mediate or not. If the owner/borrower chooses to mediate, the process of getting the mediation scheduled and having the mediation takes several months.

Q:  Can a Trustee (lender) sue the borrower for a deficiency in the amount of the loan minus the price the lender gets at the Trustee’s Foreclosure sale?

A:  Yes and no. Yes, pursuant to NRS 40.455 the Trustee (lender) has 6 months to sue for a deficiency if the property is not owner occupied. However, (also pursuant to NRS 40.455) the Trustee (lender) many not be able to sue for a deficiency if the foreclosed property was owner-occupied depending on when the owner/borrower borrowed the money from the lender.