Foreclosure is still a hot issue in Nevada, and people who have underwater mortgages and are behind on their payments often wonder how the foreclosure system works. One point in particular that they might be concerned about is whether Nevada is a “Judicial” or a “Non-Judicial” foreclosure state. The distinction is important because many of the problems with robo-signed foreclosures first arose in judicial foreclosure states because homeowners’ lawyers were able to detect the problems and bring them to judges’ attentions. So is Nevada a judicial or non-judicial foreclosure state? The answer: Both are allowed. Here are the differences.
- If the homeowner’s mortgage or deed of trust lacks a “power of sale clause,” then the lender’s only option is a judicial foreclosure. However, the borrower has one year to redeem the property after the foreclosure sale.
- If there is a “power of sale clause,” then the lender can skip the judicial foreclosure process. The power of sale clause is a line in the mortgage or deed of trust that gives the lender permission to sell the property if the borrower defaults.
- In some mortgages and deeds of trust, the power of sale clause contains the procedures that the lender must follow to execute the non-judicial foreclosure sale. If no such procedures exist in the clause, then the lender must use the established legal rules.
- The law requires the lender to:
- Send a “notice of default” to the borrower’s last known address by certified mail, return receipt requested.
- The borrower then has between 15 and 35 days to cure the default.
- Otherwise the owner can halt the foreclosure sale by filing an “intent to cure” at least 15 days before the foreclosure sale.
- After the sale, the law only gives lenders three months to file a deficiency notice.
- Unlike a judicial foreclosure, borrowers have no right of redemption after the foreclosure sale.
Ultimately, the type of foreclosure boils down to what’s in the borrower’s mortgage or deed of sale. Once the process has begun, though, it’s difficult to stop. One way of doing so is by filing bankruptcy because doing so creates an “automatic stay” against any foreclosure processes. It’s an important reason to consult with a Las Vegas bankruptcy lawyer before the foreclosure process is underway.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.