Deficiency Judgments In Nevada

Award to judgment creditor or beneficiary of deed of trust; exceptions

1. Except as otherwise provided in subsection 3, upon application of the judgment creditor or the beneficiary of the deed of trust within 6 months after the date of the foreclosure sale or the trustee’s sale held pursuant to NRS 107.080, respectively, and after the required hearing, the court shall award a deficiency judgment to the judgment creditor or the beneficiary of the deed of trust if it appears from the sheriff’s return or the recital of consideration in the trustee’s deed that there is a deficiency of the proceeds of the sale and a balance remaining due to the judgment creditor or the beneficiary of the deed of trust, respectively.

2. If the indebtedness is secured by more than one parcel of real property, more than one interest in the real property or more than one mortgage or deed of trust, the 6-month period begins to run after the date of the foreclosure sale or trustee’s sale of the last parcel or other interest in the real property securing the indebtedness, but in no event may the application be filed more than 2 years after the initial foreclosure sale or trustee’s sale.

3. If the judgment creditor or the beneficiary of the deed of trust is a financial institution, the court may not award a deficiency judgment to the judgment creditor or the beneficiary of the deed of trust, even if there is a deficiency of the proceeds of the sale and a balance remaining due the judgment creditor or beneficiary of the deed of trust, if:

(a) The real property is a single-family dwelling and the debtor or grantor was the owner of the real property at the time of the foreclosure sale or trustee’s sale;

(b) The debtor or grantor used the amount for which the real property was secured by the mortgage or deed of trust to purchase the real property;

(c) The debtor or grantor continuously occupied the real property as the debtor’s or grantor’s principal residence after securing the mortgage or deed of trust; and

(d) The debtor or grantor did not refinance the mortgage or deed of trust after securing it.

4. As used in this section, “financial institution” has the meaning ascribed to it in NRS 363A.050.

Nevada’s one-action rule, set forth in NRS 40.430, says that “there may be but one action for the recovery of any debt, or for the enforcement of any right secured by a mortgage or other lien upon real estate” the Lender/Beneficiary can only complete one of two remedies, not both. That action must be in accordance with the provisions of NRS 40.430 to 40.459, inclusive the lender generally must complete the foreclosure process, or “exhaust the security before recovering from the debtor personally,” before pursuing the borrower for the payment of the debt. Bonicamp v. Vazquez, 120 Nev. 377, 91 P.3d 584, 586 (2004).

I have heard different positions on this if the lender agrees to the voluntary short sale than he may not pursue the debtor without violating Nevada’s one-action rule. I have been on the lookout for any new case law regarding changes and new decisions, but have not come across yet.