Tenants' Rights in Foreclosure in Nevada
One in every 84 Nevada households went through a foreclosure in 2009. This state holds the unenviable position of leading the nation in foreclosures. While no cities in Nevada operate under rent control -- which provides the strongest protections for tenants at foreclosure -- tenants in this state do benefit from both state and federal protections that aim to lessen the bruising impacts attendant to foreclosures.
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The Strongest Protection
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The strongest protection to a Nevada tenant living in a foreclosed building is a fixed-term lease. Whereas before 2009 a lease became invalid at foreclosure, the federal Protecting Tenants at Foreclosure Act (PTAF) of 2009 forces foreclosing lenders to honor existing leases. This law also requires lenders to send tenants a notice at least 90 days before filing for an eviction. Unfortunately, nearly every lender's initial action post-foreclosure is eviction. PTAF is slated to expire at the end of 2012.
Nevada AB 140
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Before 2009, Nevada tenants often didn't learn about a foreclosure until they received an eviction notice. State Assembly Bill 140, which went into effect in October of 2009, requires the foreclosing lender to apprise the tenant about the foreclosure no later than three days after the notice of the sale is made. It requires the new owner to maintain the property or be subject to up to a $1,000 a day penalty and requires landlords to disclose an impending foreclosure to tenants. The law also requires 60 days' notice prior to eviction; however, that regulation has been superseded by the more restrictive notice requirement of the PTAF Act.
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Other Protections
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A foreclosure often begins with the filing of a notice on the property title at the county recorder's office. Nevada tenants who are concerned about a possible foreclosure and want more notice than the state and federal laws provide can record their leases on the property title as well. This requires the lender to notify the tenants if it files a notice of default on the property -- the first step in a foreclosure process in Nevada.
Money for the Move
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The federal and state protections seek to provide the tenants living in property that will be or has been foreclosed upon. Inevitably, the tenants will have to move unless they become the buyers themselves. But before leaving, tenants can negotiate a cash incentive to move out voluntarily. Lenders prefer these settlements to court evictions, which are more costly and more time consuming. Multimedia news website Reuters reports examples of "cash for keys" offers paying occupants $4,000 to move.
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References
- CNBC.com: States With the Highest Foreclosure Rates
- NMHC: Rent Control Laws by State
- Board of Governors of the Federal Reserve: Protecting Tenants at Foreclosure
- Safeguard Properties: Summary of NV AB 140
- Nevada Foreclosure Help: Foreclosure and Renters
- Reuters; "Cash for Keys" Aids Home Borrowers, Investors; Al Yoon; March 2010
- Photo Credit las vegas from above image by Olegs Mareida from Fotolia.com
