Legal Alert - Nevada Supreme Court Determines That Guarantor Cannot Waive Right to Receive a Notice of Default, but Substantial Compliance With Notice Requirements Will Suffice


By Bob L. Olson and Nathan G. Kanute

Schleining v. Cap One, Inc., 130 Nev. Adv. Op. 36 (May 29, 2014), arises out of a loan to purchase an undeveloped piece of property, which was guaranteed by the principal of the borrower. After the borrower defaulted, the lender commenced foreclosure proceedings and sent the notice of default to the borrower, but not the guarantor. The guarantor, as principal of borrower, testified at trial that he knew of the foreclosure sale prior to its commencement. The District Court held that the guarantor could not waive his right to notice of the foreclosure proceedings under NRS 40.453, a provision in Nevada’s anti-deficiency statutes that generally prohibits borrowers and guarantors from “waiv[ing] any right secured to th[at] person by the laws of this state.” The District Court further held that the lender had substantially complied with the notice requirements of NRS 107.095 because the guarantor had actual notice of the default and foreclosure proceedings and was not prejudiced by the lack of formal notice. The District Court awarded the lender a deficiency judgment against the guarantor.

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