By T. Robert Finlay, Esq., Wright, Finlay & Zak, LLP
The Nevada Legislature is only in session every other year and unfortunately, this is one of their “on” years. With COVID and its impact on mortgages and rents high on their radar, the Legislature is actively trying to “fix” the potential eviction and foreclosure “problem”. Below is a brief summary of the proposed bills.
SB 159, which is likely to pass, seeks to accomplish two things. First, while not a big issue for most lenders, the bill prevents the bundling of properties for the purposes of sale at a foreclosure auction and requires that each property be bid on separately. Second, the bill creates a post-foreclosure bidding process with the goal to push properties into prospective owner-occupants and away from investors. Currently, a non-judicial foreclosure sale is final as of the sale date. SB 159 creates a scheme that allows tenants or other eligible bidders to submit a bid to purchase the property up to 45 days after the foreclosure sale. Like California, in the rare situation where the purchaser at the sale is a qualified owner-occupant, the sale will be final as of the day of the auction. Otherwise, eligible tenants or eligible bidders (defined as a tenant, prospective owner-occupant, non-profit organization, or community land trust) can submit bids up to 45 days after the foreclosure sale. The highest bid wins. The bill also puts a series of additional requirements on foreclosure trustees related to the post-foreclosure auction process, essentially a copy-cat of CA SB 1079.
If the bill passes and Nevada’s experience is similar to what California has experienced so far, lenders and servicers can expect a significant delay in acquiring REOs, as tenants and borrowers have every incentive (and very little consequence) to submit a non-binding Notice of Intent to Bid, which will instantly guaranty them an extra 45 days in the property after the foreclosure sale. In addition, expect “nonprofit” companies to pop up left and right to take advantage of the new post-foreclosure auction process.
Currently, there are no hearings scheduled for the bill. If you object to SB 159 and live in Nevada or have offices there, express your opinion to your local representatives. Meanwhile, we will continue to monitor for any updates or changes to the bill. We are already planning to reach out to the author to advise of the problems we have already encountered with the process in California and to offer our suggested revisions as outlined in our CA “fix-it” bill.
AB 141 changes the notice to quit periods for certain tenancies. Current law allows for most tenancies to be terminated upon 5-days notice (for tenancies at will); 7-days notice (for week-to-week tenancies) or 30-day notice (for periodic tenancies). This bill changes the timeframe for all tenancies lasting one year or more, but less than three years, to 60 days. And for tenancies of three years or more, the notice timeframe is increased to 90 days. AB 141 will impact post-foreclosure evictions as well as standard landlord/tenant evictions. The bill is set for hearing on March 4th. We will monitor the hearing and provide you with any updates or amendments to the bill.