Nevada Foreclosure Laws
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Nevada is called a title theory state wherein the title of the property stays as guaranty till the borrower does not pay off the loan in full. Foreclosure through this theory is a non-judicial recourse. A deed of trust is the document which is used to secure the title of the property. Mortgages in Nevada are permitted to act as liens on property for judicial foreclosures to take place through courts. The provision of a power of sale clause within the trust deeds makes this a faster process to bring into effect the foreclosure, and bearing in mind that redemption rights do not exist, this is the most widely used process for foreclosures. There is a statutory requirement in Nevada that the clause be included within all the trust deeds as per the Nevada Revised statutes Chapter 107.030.
Nevada primarily follows the non-judicial foreclosure process to foreclose on properties. No court-action is required in this process but a foreclosure by advertisement notice is required. At the initial signing of the trust deed, a power of sale clause is usually included in the document, through which a property can sold by a trustee in case the borrower defaults on the loan, thereby allowing the unpaid loan to be taken care of. The trustee works as the lender’s representative and gets into effect the auction, which is the usual way for the property to be sold. Being a non-judicial procedure, some very austere requirements for notices exist, and a power of sale clause has to be part of the legal loan documents for this process to be followed.
Before a lender initiates foreclosure proceedings, a notice of default must be served to the borrower, where 35 days must be given to the borrower to cure the default. This needs to be sent through certified-mail, and once the borrower receives the notice, the default can be cured 15 days before the day of the sale. If, during this time period, the Public Trustees Office receives a filing for an intent to cure, the foreclosure stops.
A notice of foreclosure sale needs to be made at least 21 days before the sale date and at the place, time and manner as mentioned within the notice of default. The sale would need to occur in the way an execution-sale would within a judicial foreclosure.
Lenders in Nevada can opt to follow a judicial foreclosure procedure through a court, wherein the court announces the final decision. If the power of sale clause is absent from the deed of trust, judicial foreclosure can be followed by the lender. The property then sells at a publicly notified sale. The court requires the filing of a complaint in combination with a lis pendens (a document that is recorded to provide notice to the public about the foreclosure on the property).
In commercial transactions, the document is called a security agreement, and it is otherwise called a deed of trust. At times, they are both merged together. The filing of a mortgage can also be made to validate the debt in question and its payment terms, which are included in the note.
It generally takes about 120 days to bring into effect a non-judicial foreclosure that is not contested; this does depend on the time required for different notices. If the action is contested by the borrower in court and if a postponement or an adjournment of the sale is sought; or if bankruptcy is filed for by the borrower, the process can be stalled.
A statutory right of redemption, wherein a borrower pays the amount left on the loan and the costs, and then lays claim on the foreclosed property, does not exist in Nevada. However, if a judicial procedure has been used to foreclose, a one year redemption period exists.
If a foreclosure property sells for lesser than the amount secured by the mortgage at the public sale, a lender can obtain a deficiency judgment. A 90 day period is given to bring about a deficiency action.
Foreclosures in Nevada involving deeds of trust are governed by laws that are part of Nevada Revised Statutes – Chapter 107. Mortgage foreclosures are governed by laws that are part of Nevada Revised Statutes – Chapter 106.
