Nevada's Loan Foreclosure Laws
Foreclosures in the United States are undertaken in one of two ways: by judicial foreclosure or nonjudicial foreclosure. Some states mandate which of the two processes must be used within the state. In Nevada, foreclosing creditors can use either process. Most choose the nonjudicial process because it is more affordable and quicker.
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Notice of Default
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In Nevada, the nonjudicial foreclosure process starts with a notice of default. This is a notice the creditor records on the property title. It serves the purpose of notifying the owner and any other creditors that the borrower has defaulted on his loan obligation. As of April 2011, the owner or any other creditor (such as a second mortgage holder) has 35 days to pay the outstanding debt and stop the process.
Trustee Sale
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A deed of trust is an agreement between borrower, creditor and trustee used in the states in which nonjudicial foreclosure are permitted. The trustee is essentially a third party to which the borrower conveys the right of property ownership until the loan is repaid. If the borrower defaults on the loan, the trustee has the right to sell the property and give the proceeds to the lender. The lender or trustee must post notice of the foreclosure sale in three public places and publish it in a local newspaper once a week for three weeks. Three or more months after the lender records the notice of default, the trustee sells the property at a public sale. If the property is worth less than the outstanding loan, the lender is often the winning bidder at the sale and takes title.
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Redemption
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Redemption is a period of time after the sale during which the borrower may "redeem" or buy back his property. In Nevada, there is no right to redemption after a trustee sale. If the lender used a judicial foreclosure process, the redemption period is one year after sale. If a borrower redeems his property he must repay the buyer all of the costs associated with the foreclosure purchase along with costs incurred since the sale.
Deficiency Judgment
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A deficiency judgment is a court judgment against the borrower for the difference between the property's value or price at foreclosure sale and the outstanding loan amount. In some states, a lender can go to court to seek a deficiency judgment against any owner in instances in which the foreclosure sale does not fully repay the loan. In Nevada, lenders cannot file for deficiency judgments against borrowers on owner-occupied single-family homes in which the loan was used to purchase the home. A lender can seek a deficiency judgment against a borrower for any loan for any other property type and in cases in which the loan was acquired in a refinance or property.
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References
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