Once again Robert Nogglelawbook, attorney with Black Lobello law firm has written another outstanding easily understood clarification on the new Nevada Deficiency Law that takes effect on October 1, 2009. 

 

CHANGE TO NEVADA LAW PROHIBITS DEFICIENCY JUDGMENTS FOR LOANS MADE STARTING OCTOBER 1 TO PURCHASE PRIMARY RESIDENCES

 

Nevada currently provides for the right of a foreclosing lender on real estate to pursue a deficiency judgment against the borrower on any type of property including a primary residence. Nevada is known as a full recourse state.  The law provides for a six month period following the trustee’s sale in which the lender may file an action against the borrower to recover amounts owing.

 

Nevada becomes a nonrecourse state for new loans made starting October 1 for the purchase of residential property that is owner occupied.  Thus the lender may no longer pursue a deficiency judgment against the borrower on such property.  Although some may consider this the equivalent of sending life boats and vests to the Titanic days after the sinking, it is a significant development in Nevada real estate law.

 

For the new law to apply the following requirements must be met:

 

  1. The real property is a single-family residence;
  2. The loan was used to buy the property;
  3. The borrower continuously occupied the property as a principal residence after the loan was made;
  4. The original loan was not refinanced;
  5. The loan was made by a financial institution.