Nevada Supreme Court Clarifies the Litigation Waiver of the One-Action Rule

By Bob L. Olson 

Nevada has a one-action rule which, with limited exceptions, requires a creditor seeking to recover a debt secured by real property to proceed against the security first prior to seeking recovery from the debtor personally. In the event that a law suit is filed in violation of the one-action rule, final judgment may be entered in favor of the creditor but that judgment “releases and discharges the mortgage or other lien.”  NRS 40.455(3).  Nevada law further provides that, with the exception of certain guaranties, any provision in an agreement relating to the sale of real property which contains a waiver of Nevada’s anti-deficiency laws may not be enforced by a court because doing so violates Nevada’s public policy. … Read More »

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Green Energy Can Complicate Real Estate Foreclosures

Bob L. Olson

A quick drive through almost any newer residential community in the Southwest will show that a lot of residents are embracing “Green Energy” or renewable energy by placing solar panels on their properties. While most people would agree that increasing the use of alternative energy is socially responsible, there are a number of real estate investors that may view it as an opportunity to make additional profits by purchasing distressed properties with solar panels and then reselling those properties for more than they would be worth without solar panels. The theory is relatively straight forward as many believe that foreclosure of a deed of trust that was recorded before the solar panels were installed would extinguish any liens in favor of the vendor that sold or financed the sale of the solar panels. … Read More »

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Nevada Supreme Court Holds that Foreclosure Of HOA Lien Extinguishes Equal Priority HOA Lien.

By: Bob L. Olson

In Nevada’s master-planned communities it is common for one home to be in multiple homeowners’ associations.  In such cases there is generally a master association for the master-planned community and then sub-associations for specific developments within the master-planned community.  The liens of the master association and the sub-association have equal priority unless their declarations provide otherwise. See NRS 116.3116(8) (formerly NRS 116.3116(4)).  Earlier this year in Southern Highlands Community Association v. San Florentine Avenue Trust, 132 Nev. Adv. Op. 3 (Jan. 14, 2016), the Nevada Supreme Court (the “Court”) had the opportunity to discuss the effect of the foreclosure by one association on the other association’s lien of equal priority.… Read More »

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Nevada Supreme Court holds that Voluntary Payment Doctrine Prohibits a Party from Recovering Amounts Wrongly Paid to Homeowner’s Association in Order to Prevent Foreclosure

By:          Bob L. Olson

On September 30,2014, we posted “Lenders Beware: the Nevada Supreme Court Holds that Foreclosures of Homeowner’s Association Liens May Extinguish First Priority Deeds of Trust” which discussed the recent decision of SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. Adv. Op. 75 (Sept. 18, 2014) (“SFR”).   At the risk of oversimplification, the SFR Court held that:

  1. NRS 116.3116 (the “Statute”) splits the lien of a homeowner’s association (“HOA”) into a “superpriority piece” and a “subpriority piece.”
  2. The superpriority piece of the HOA’s lien consists of the “last nine months of unpaid HOA dues and maintenance and nuisance-abatement charges” and is prior to the first priority lien.
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If Receiver’s Sales Aren’t Foreclosures, What Are They?

By:  Ben Reeves & Bob Olson

When no statute specifically authorizes a court-appointed receiver to sell real property, what type of sale is it?  The Supreme Court of Nevada recently addressed this question, holding that “a receiver sale of real property that secures a loan is a form of judicial foreclosure.”  U.S. Bank v. Palmilla Dev. Co., 131 Nev. Adv. Op. 9 (2015).

Facts

In U.S. Bank v. Palmilla, U.S. Bank made a $20.15 million loan to Palmilla Development Company secured by a development of townhomes.  Palmilla defaulted, and U.S. Bank applied for, and obtained, the appointment of a receiver over its real property collateral.… Read More »

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Nevada Supreme Court adds New Elements to Constructive Eviction Claims.

By Bob L. Olson

Nevada, like many jurisdictions, has recognized the ability of a tenant to vacate property if it becomes unfit for occupancy for the purpose for which it was leased.  This is commonly known as a “constructive eviction.”  Traditionally, to establish a claim for or defense of constructive eviction, the tenant had to prove the following three elements:

1.         The landlord either acted or failed to act;

2.         The landlord’s action or inaction rendered the whole or a substantial part of the premises unfit of occupancy for the purpose for which it was leased; and

3.         The tenant must actually vacate the property within a reasonable time.… Read More »

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Guarantors Score Two Victories Before the Nevada Supreme Court.

By:  Bob Olson and Nathan Kanute

On May 29, 2013, the Nevada Supreme Court issued two decisions that all real estate lenders need to be aware of because they have the potential to eliminate the ability of a lender to recover a deficiency judgment from a guarantor.

In Nevada it is common for lenders to commence foreclosure proceedings and, at the same time, sue all guarantors that have waived the benefit of Nevada’s one-action rule for the full amount of the debt they guaranteed.  Often the foreclosure sale will occur before lender obtains a judgment against the guarantor.  In Lavi v.Read More »

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Nevada Supreme Court and District Court Issue Decisions Regarding Nevada’s Limitations on Deficiency Judgments.

By:  Bob Olson and Nathan Kanute

In 2011 the Nevada Legislature enacted Assembly Bill 273 (“AB 273”) which amended NRS 40.459 by limiting deficiency judgments to the difference between the amount the lender paid to acquire the loan or obligation and the larger of the market value of the property or the amount paid for the property at a foreclosure sale.  As one can imagine, a large number of borrowers and guarantors have tried to take advantage of this recent law to limit or in some cases eliminate their liability for deficiencies.  Creditors, on the other hand, have cried foul by arguing that, among other things, the law cannot be applied retroactively, it impairs the value of their pre-enactment paper and violates the Contracts Clauses of both the United States and Nevada Constitutions. … Read More »

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