In Nevada it is very important that you know if you have only a First or if you have more Deeds against your home, such as a HELOC.  If the first deed of trust is not paid they have 2 choices, either sue or foreclose.  NRS 40.430 (See*Below) tells us that, “there may be but one action for the recovery of any debt.”    Normally they foreclose.

foreclosure.jpgNevada is a ‘one action’ state where the bank can pursue only one action to recover a debt secured by a mortgage or lien on real property.  Meaning the bank can take the property by foreclosure or sue for the debt.  But remember there are ALSO 2nd lien holders and maybe 3rd or 4th lien holders!  If the 1st forecloses, the remaining lien holders known as a “sold-out juniorlien holder(s)” and they have the right to sue.  And unlike a “deficiency judgment” as described below the 2nd Deed has SIX (6) YEARS to file suit.

So remember that, if a 2nd or 3rd etc. note holder is not paid, they can sue the home owner later for ‘breach of contract’ and the contract is the ‘non payment of the promissory note.’  The 2nd or 3rd etc. note holder is not obligated to take less than what they are owed on a short sale and they can ‘1099’ your client for the monies they are not paid, they can also ‘remove the lien’ to allow the transfer of title and demand that your client continue to pay the note after the close of escrow. 

If you would like to learn about ‘deficiency judgments’ see my blog next Friday on FORECLOSURE / DEFICIENCY.  Bankruptcy (See**Below) complicates all law suits and foreclosures and in some instances eliminates debt.

Want to read more?  Here’s a 2005 Nevada Supreme Court Case on one action and foreclosures.(See***Below)


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(*) NRS 40.430  Action for recovery of debt secured by mortgage or other lien; “action” defined.

1.  Except in cases where a person proceeds under subsection 2 of NRS 40.495 or subsection 1 of NRS 40.512, there may be but one action for the recovery of any debt, or for the enforcement of any right secured by a mortgage or other lien upon real estate. That action must be in accordance with the provisions of this section and NRS 40.433 to 40.459, inclusive. In that action, the judgment must be rendered for the amount found due the plaintiff, and the court, by its decree or judgment, may direct a sale of the encumbered property, or such part thereof as is necessary, and apply the proceeds of the sale as provided in NRS 40.462.


(**) Due to the complexity of bankruptcy law, and the difficulty of determining which form of bankruptcy will apply to any given situation, most people will benefit from consulting with a qualified bankruptcy lawyer before filing for bankruptcy.  The Prudential, Americana Group, REALTORS® legal department has a list of recommended bankruptcy attorneys at


(Note: If you do not have a FindLaw account, you may create a free account after clicking on this link.  It will then direct you to the case cited here.)