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Foreclosure Archives

More Foreclosure Decisions from the Nevada Supreme Court

In Bank of America, N.A. v. Thomas Jessup, LLC Series VII, Case No. 73785, 135 Nev., Adv. Op. 7 (Mar. 7, 2019), the Nevada Supreme Court held that an offer to pay a superpriority amount in the future is not sufficient to constitute a tender. The Court further held that a formal tender is excused when the party entitled to payment represents that if a tender is made, it will be rejected.

Recent Nevada Supreme Court Foreclosure Decisions

IMG_0431.jpgIn Wells Fargo Bank v. Radecki, Case No. 71405, 134 Nev., Adv. Op. 74 (Sept. 13, 2018), the Nevada Supreme Court held that a foreclosure sale that complied with the relevant provisions of NRS Chapter 116 was not a fraudulent transfer under NRS 112.190(1), even if the purchase price was not "reasonably equivalent" to the property's value.  Id. at *4 - 5.  The third element of an NRS 112.190(1) claim was not met because of the safe harbor provision contained in NRS 112.170(2), which provides in pertinent part: "a person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor upon default under a mortgage, deed of trust or security agreement."  Id. at *5.  HOA foreclosure sales are included in the definition of a "regularly conducted, noncollusive foreclosure sale."  Id. at *6.  Additionally, "[a]lleged inaccuracies in a foreclosure deed do not invalidate the foreclosure sale."  Id.

Restoration of The Protecting Tenants at Foreclosure Act

Rocky View.jpgAnyone who was involved in the post-foreclosure eviction world in the last decade will certainly recall the 2009 Protecting Tenants at Foreclosure Act ("PTFA").  That measure, part of the larger Dodd-Frank reform laws, added significant "protections" for unwitting tenants who were caught up in situations where the home they were leasing or occupying was subject to foreclosure during their tenancy.  Whereas, prior to 2009, many state laws only required relatively short notice periods before the purchaser at the foreclosure sale could file an action for unlawful detainer (eviction), the PTFA granted any "bona fide tenants" a minimum of 90 days notice before an unlawful detainer complaint could be filed.  The PTFA also afforded additional time to bona fide tenants pursuant to a "bona fide lease" entered into prior to a "notice of foreclosure."  Those tenants in possession pursuant to a bona fide lease could remain in the leasehold until their bona fide lease expired.  Those provisions, with their attendant ambiguities, slowed many post foreclosure possession actions and made verification of "bona fides" a constant part of any servicer, purchaser or attorney's work.  They also engendered substantial litigation trying to fill in the contours of those ambiguities.  

In Nevada, Inadequacy of Price is Not Enough to Set Aside a Foreclosure Sale

Rocky View.pngIn Nationstar Mortgage, LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 133 Nev., Adv. Op. 91, Case No. 70382 (Nov. 22, 2017), the Nevada Supreme Court declined to adopt the Restatement (Third) of Property: Mortgages § 8.3 (1997) which states that a court is generally justified in setting aside a foreclosure sale when the sales price is less than 20 percent of the property's fair market value.  First, the Court concluded that U.C.C. Article 9's commercial reasonableness standard is inapplicable to HOA foreclosure sales.  Second, since HOA real property foreclosure sales are not subject to Article 9's commercial reasonableness standard, the Court held that they are governed by the longstanding framework for evaluating any other real property foreclosure sale.  Therefore, Golden v. Tomiyasu, 79 Nev. 503, 514, 387 P.2d 989, 995 (1963) was upheld by the Nevada Supreme Court in regard to foreclosure sales, including HOA foreclosure sales, and continues to remain the law in Nevada.  "Thus, we continue to endorse Golden's approach to evaluating the validity of foreclosure sales: mere inadequacy of price is not in itself sufficient to set aside the foreclosure sale, but it should be considered together with any alleged irregularities in the sales process to determine whether the sale was affected by fraud, unfairness, or oppression.  However, it necessarily follows that if the district court closely scrutinizes the circumstances of the sale and finds no evidence that the sale was affected by fraud, unfairness, or oppression, then the sale cannot be set aside, regardless of the inadequacy of price."  Nationstar, 133 Nev., Adv. Op. 91, at *10 - 11 (citing Golden, 79 Nev. at 515 - 16, 387 P.2d at 995).  The Court then found that the following did not amount to fraud, unfairness, or oppression: (1) the inclusion of fines in the HOA lien; (2) the notice of sale's failure to list the unpaid lien amount on the date of sale; and (3) the person who signed the notice of default was not the person who the HOA president designated to sign the notice.  See id. at *11 - 15.

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