A Busy Period for the Nevada Supreme Court
Business professionals often complain that the lack of case law in Nevada creates a climate of uncertainty for business decision-making. The Nevada Supreme Court has been working to change that and, in recent months, the Court was particularly productive, issuing numerous published opinions that affect Nevada’s businesses and the real estate market. Following are a few brief highlights.
Real Estate The fall-out from the 2008 housing bubble burst continues to play out in Nevada’s courts. Four noteworthy cases regarding security interests and foreclosures were recently decided by the Supreme Court. Hefetz v. Beavor dealt with a waiver of the one-action rule found in NRS 40.430. The statute generally requires a creditor seeking to recover the debt secured by real property to proceed first against the security prior to seeking recovery from the debtor personally. With limited exceptions set forth by statute, a guarantor, surety or debtor can waive the one-action rule. The Hefetz case held that to avoid waiver, a party must timely assert the one-action rule as an affirmative defense in the party’s responsive pleadings.
The Court was also active in the area of homeowner association law, particularly with regard to what is referred to as the “superpriority lien” found in NRS 116.3116. This “superpriority” gives a homeowner association’s (HOA) lien on real property for unpaid dues priority over other security interests. In 2014, the Court decided the SFR Investments case, which concluded that an HOA’s foreclosure of its lien extinguished the first deed of trust on the property. In other words, the HOA could end up owning property worth hundreds of thousands of dollars by simply trying to recover a few hundred dollars in assessments.
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