Nevada’s AB 284 and AB 273 Signed Into Law In Nevada
Question of Who Can Serve As A Trustee Was At Stake

Robin Prema Wright, Esq.

By Robin Prema Wright, Esq., Wright, Finlay & Zak

On May 20, 2011, Nevada’s Governor Brian Sandoval signed Assembly Bill 284 into law.
In a matter of days, AB 284 went from the Bill that could not be defeated, to one that the Governor was considering vetoing, to being signed into law.

While there will be a lot of internal and industry discussion over AB 284’s requirements, here is a brief recap of the most important provisions of AB 284 that the trustees need to know:

1. Only Nevada attorneys, title insurance companies, trust companies, or banks regulated by a federal agency can be foreclosure trustees in Nevada. The trustee and the beneficiary cannot be the same entity.  And, a party that is authorized to conduct foreclosures in the state must not ‘lend its name” to an entity that is not a foreclosure trustee in the state.  
   
   However, due to an agreement brokered by UTA, the legislation was immediately amended through AB 273 which was signed into law by the Governor on June 10th. The scope of who can be a trustee was expanded  to include, among other exemptions, a Nevada licensed debt collector, escrow company and any one holding a current Nevada business license. Since many trustees have already applied to become licensed debt collectors or have obtained Nevada business licenses, this amendment should provide relief. 
   
   
2. All Assignments of Deeds of Trust must be recorded before the trustee “exercises the power of sale” under the Deed of Trust.  This provision makes recording the Assignments mandatory.  The point in time in which the trustee is to have “exercised the power of sale” is not defined. This section of the Act shall apply to assignments that occur on or after July 1, 1011.
   
   
3. An Affidavit must be executed, with “personal knowledge”, under penalty of perjury and recorded along with the Notice of Default (starting with NODs recorded after July 1, 2011) that states:
   
   
   1. The name and address of the trustee, the current holder of the note, the current beneficiary of record and the servicers of the obligation;
      
      
   2. The full name and last known address of every prior “known” beneficiary of the deed of trust;
      
      
   3. That the beneficiary or the trustee is in “actual or constructive possession of the Note”;
      
      
   4. That the trustee has authority to exercise the power of sale pursuant to instruction from the beneficiary of record and current note holder;
      
      
   5. The amount of the default, the principal balance, and an estimate of foreclosure fees and costs;
      
      
   6. The date, and document number of each assignment.
      
      
4. AB 284 imposes sanctions of $5,000 or treble actual damages (i.e., punitive damages) and attorney fees against the lender and/or trustee in favor of the borrower for non compliance with NRS 107.080 (2), (3) and (4).  In addition, the court may impose an injunction upon any further foreclosure proceedings until the law is complied with.
   
   
5. AB 284 makes it a felony to record an instrument which claims an interest in real property that the perpetrator either knows, or has reason to know, that the instrument is forged, groundless or contains a material misrepresentation of fact. 
   
   
6. AB 284 also raises the penalty for failing to record a reconveyance with 21 days of the loan pay off from $500 to $1,000.  (Of course, the Bill also prevents the beneficiary from subbing itself in as trustee to record the rescission, making it even harder to timely record the reconveyance.)
   
   
7. AB 284’s effective date is currently July 1, 2011.  However, the UTA orchestrated amendment (AB 273) will extend the effective date to October 1, 2011.

AB 284 leaves for more unanswered questions than answers to questions.  With that in mind, we suggest that you contact your in-house or outside counsel to discuss compliance issues.