Litigation


 

Darren Welsh (c)

2014 DC Emancipation Day

Did I say it was over March 31, 2012? This is America, it’s never over ‘till it’s over.’

One more shot to claim your Kitec money.

Please go to http://www.plumbingdefect.com/ to read about the limited extension.

“On February 26, 2014, the Court extended all deadlines for owners of Clark County homes that contain Kitec plumbing systems to file claims requesting the available settlement relief. The Court extended the deadlines by three (3) years or until the limited funds are exhausted. The Court also opened up the settlement relief program to individuals who were previously barred either because they failed to act before the applicable deadline, their home was not included in the original Kitec fittings litigation, or they previously opted out of this class action.”

§ PREVIOUS POSTS §

Kitec Claims Deadline Expires March 31, 2012.

Kitec Claims Deadline – March 31, 2012 – Jan 24, 2012

TGIF Legal Tip:  Kitec Litigation Update – July 2, 2010

TGIF Legal Tip: Litigation Affecting Real Estate – June 8, 2007

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ImageThe Nevada Seller’s Real Property Disclosure Form (SRPD) has changed effective March 8, 2013.  The changes clarify the section warning “purchaser may not waive the requirement to provide this form and a seller may not require a purchaser to waive this form,” per N.R.S. 113.130(3) removing the former citation of the Senate Bill 34(3)/Senate Bill 314. It kept the “type of seller” can be selected from a Bank, an Asset Management Company, Owner-occupier or Other.”

I want to take this time to address waiver of rights in a Nevada residential real estate transaction. Specifically the Buyer’s Remedy Waiver Of NRS 113.150 Rights.

The issue is that even though a seller may not require a purchaser to waive the receipt of the SRPD per N.R.S. 113.130(3), a buyer may waive any of her rights as to remedies under NRS 113.150.  The section 150 is where the Buyer finds their remedies for a non-disclosure.

Although the law says the Seller cannot force a Buyer to waive the right to receipt, if the Seller does not provide the SRPD, the transaction may still close. More importantly a Seller can simply avoid the subject of not providing the form and focus on getting the Buyer to waive the remedies of the non-performance by a Seller.

As described in the form Buyer’s Remedy Waiver Of NRS 113.150 Rights:  The Buyer may waive their right to:

  1. rescind the purchase pursuant to NRS 113.150(1)
    This means – that although the buyer cannot be forced to waive the right to receive the SRPD form, they can waive their right to cancel the transaction because they did not receive the form. This waiver is the least potentially damaging to a buyer. If a seller is “demanding” as a contingency that this form be signed, number 1 is the safest for a buyer to check.  The reason is that a buyer can still conduct their own inspection, find a defect and cancel the transaction per NRS 113.150(2), subject to the terms of the purchase agreement.
  2. rescind the purchase agreement pursuant to NRS 113.150(2)(a)
    This means – that although the buyer cannot be forced to waive the right to receive the SRPD form, they can waive their right to cancel the transaction even if they are informed of a new defect during escrow.  Remember NRS 113.150(2) is when…before the conveyance of the property to the purchaser a seller informs the purchaser of a defect in the property of which the cost of repair or replacement was not limited by provisions in the agreement to purchase the property… This is potentially more damaging to a Buyer.  As described above, checking number 1 on the Waiver Of Rights form still allows the Buyer the chance to cancel if they are informed of a new defect.  By waiving this right in #2, the Buyer is potentially not able to cancel the transaction without penalty even if the Seller discloses a new material defect during escrow.
  3. recover from the Seller three times the amount necessary to repair or replace any defect per NRS 113.150(4).
    This means – that although the buyer cannot be forced to waive the right to receive the SRPD form, they can waive their right to collect treble damages.  This waiver is powerful.  It eliminates the Buyer’s ability to pursue treble damages as described in my March 2012 entry, Disclosure In Real Estate Sales, As Is, NRS 113, Treble Damages, basically nullifying the clarification the Nevada Supreme Court describes in Webb v. Shull.  If a seller is “demanding” as a contingency that this form be signed, number 1 is the safest for a buyer, number 2 the next safest, number 3 is highly suspect.  Arguably a seller could not disclose, perhaps even intentionally, and not be held liable.
  4. All of my legal rights under NRS 113.150.
    This means – that although the buyer cannot be forced to waive the right to receive the SRPD form, they can waive their right to cancel the transaction because they did not receive the form; they can waive their right to cancel the transaction even if they are informed of a new defect during escrow and they can waive their right to collect treble damages.

This is a series of Disclosure Entries see also:

Disclosure In Real Estate Sales, As Is, NRS 113, 

Treble Damages

Nevada Disclosure In Residential Sales

Private Transfer Fee (Seller’s Real Property Disclosure Form)

An Updated All Inclusive & Belt Way Disclosure

The New, Improved All Inclusive Disclosure

Nevada Condominium Hotel Disclosure

Nevada S.R.P.D. New Clarification of Real Estate Disclosure Laws in Nevada

questions …  email me darren@dwelshlaw.com

Nevada Case Confirms Tail Periods Are Valid.

Easton Business Opportunities, Inc. v. Town Executive Suites-Eastern Marketplace, LLC

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What is a tail period?  In an exclusive right-to-sell brokerage agreement the tail period is a certain amount of time after the final termination of the listing period.  During this “tail” or extension period if the property is sold to anyone with whom the listing broker has had negotiations or to whom the property was shown prior to the final termination, a commission is owed.  The duty to pay a commission ends typically if the seller enters into a valid brokerage listing Agreement with another licensed real estate broker after the final termination of listing agreement.

The dispute in Easton Business Opportunities was a commission claimed under an exclusive right-to-sell brokerage agreement.  The purchaser viewed the property during the listing period and purchased the property directly from the seller during the tail period.  The Seller refused to pay the commission.

TRIAL – BROKER LOSES

The case went to trial in the Eighth Judicial District Court of Nevada, County of Clark.  The District Court ruled in favor of the seller and against the broker.  The District Court declared that the broker failed to give the seller a list of the people to whom the broker had shown the property at the end of the listing period.  Therefore no commission was owed.

APPEAL – BROKER WINS

On the May 6, 2010 in Easton Business Opportunities, Inc. v. Town Executive Suites-Eastern Marketplace, LLC the Nevada Supreme Court reversed and held in favor of the broker and against the seller.  The Nevada Supreme Court said, “ we are loath to impose such an obligation.”  So there is not an obligation for a broker to give a ‘list’ to a seller in Nevada at the term of the listing agreement of potential purchasers.  The Nevada Supreme Court placed liability on the seller for the commission if the seller sold during the extension period to a buyer to whom the broker had shown the property or negotiated with-in other words, it allocated the risk of being wrong about the buyer being commission-free to the seller.

The Nevada Supreme Court said, “we disagree with the district court’s reading of the brokerage agreement as a matter of law …  The agreement, as written, supports the opposite result and should have been upheld.”

The oral arguments can heard by clicking here.

Questions? darren@dwelshlaw.com

Short sales are looking more attractive.

Foreclosure changes in the state of Nevada are making short sales more attractive.  Recently a number of lenders have commenced foreclosure through the judicial foreclosure process.  A judicial foreclosure is governed by NRS 40.  These are different from what the public is used to, the non-judicial process, governed by NRS 107.  The judicial foreclosure is a lawsuit filed in court, just like any breach of contract case.

Deficiency Judgments.  The potential issue with a judicial foreclosure is a deficiency judgment.  In a normal foreclosure, there is potential liability to be pursued for the difference between what the property sells for at the trustee sale and the outstanding debt.  Nevada is a recourse state.  If you do not pay back your loan, you can be sued.  (There have been some recent rules enacted to alleviate this issue (see the legislative memo —->here, but the Nevada Supreme Court is poised to limit these applications,  Volkes v. BAC Home Loans Servicing, No. 57304, 2012 WL 642673 (Nev. Feb. 24, 2012)).  Typically, in the last few years, foreclosure did not usually lead to the filing of a lawsuit by the lender for a “deficiency judgment.”  In Nevada this lawsuit to seek this debt has to be filed within 6 months of the trustee sale date.  See my post on this here.  These lawsuits were simply not being filed, for the most part, by the large institutional lenders, only typically by the local, regional lenders.  That has changed.  Lenders are beginning to seek foreclosure via the judicial foreclosure process. (WHY? See the short history below.)  Now, remember, the judicial foreclosure is a lawsuit.  So, instead of the previous scenario where the lender had to decide after foreclosure, if they wanted to hire a Nevada attorney and pursue the homeowner; the lender is already in court.  The judicial foreclosures showing up on line (search the filings here at the —->Eighth Judicial District Court) are demanding two causes of action: 1.) Judicial Foreclosure and 2.) Request For A Deficiency Judgment.  The lender is already engaged with a Nevada attorney, so the lender does not have to make the decision to pursue the homeowner, they simply go to the next step and ask for a judgment immediately after the sheriff’s sale.  Hundreds of these lawsuits have been filed in the Eighth Judicial District Court in Clark County in only the past 90 days.

Short Sales.  Thus, a successful short sale, coupled with the lender releasing the seller of future deficiency liability (see my post on release language –> HERE) is an attractive option for a seller in Nevada.

Short History.  Back in the summer of 2011 the Nevada Legislature passed Assembly Bill 284.  AB 284 changed Nevada Foreclosure Law by adding stricter requirements for the foreclosure process.  It’s complicated.  You can read the Nevada Attorney General’s comments about it here.  You can read the whole bill here.  The NRS statute is 107.080.  In summary – it required lenders/trustee to sign documents prior to foreclosing, which, if done improperly triggers potential civil and criminal penalties.  This effectively slowed the number of trustee sales, notice of defaults, etc. There has been much discussion on this.  Such as the Nevada Attorney General issuing a statement.  Even the legislators that sponsored the bill wrote a memo about this subject recently.  This is rare.  And here we are, judicial foreclosures have commenced.

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This is part of my short sale series listed below in alphabetical order:

7 Tips for Short Sale

Addendum to Short Sale Listing

Advance Fees Continued and the FTC

Advance Fees – Short Sales – FTC II

Charging for negotiating short sales/Negotiators

Deficiency Judgments Nevada

Foreclosure and the One Action Rule in Nevada

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales

Lender Short Sale Approval Addendum

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale

Short Sale Advanced Fees

Short Sale Addendum to Purchase Agreement October 2010

Short Sale Junior Lien/Senior Liens Rights To Sue & Other Changes

Short Sale Wallet Size Answer Sheet

IRS PUBLICATIONS shortsales/foreclosures:

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Ten Facts about Mortgage Debt Forgiveness

Questions? Call me. Darren Welsh, Esq. 702 245 1787 email me darren@dwelshlaw.com or drop me a TPS by filling out this form

 

Introducing the new and improved NRS 113, mixed with the Nelson Case, topped some Webb v. Shull.

There is a new ruling (March 2012) on disclosure laws and the penalty associated with non-disclosure.  A seller in Nevada is required to disclose a “condition that materially affects the value or use of residential property in an adverse manner.”  This is known as a material defect.  We know from the Nelson Case in Nevada that a material defect is only one that the Seller is “aware;” if the Seller does not realize, perceive, or have knowledge of that defect or condition, then there is not a defect.

Now, in Webb v. Shull we have a ruling discussing the mental state of the Seller as to non-disclosure.  Does the Seller have to intentionally not disclosure?  Or can they merely be mistaken?  The Supreme Court in Webb instructs that holding a Seller liable for treble damages, “does not expressly or implicitly require a heighted level of mental culpability.”  In other words, the standard is low to find liability.  If the seller is aware of a defect, they must disclose or face treble damages, even if they did not “intend” to not disclose.

How does the Buyer’s Remedy Waiver Of Nrs 113.150 Rights form interact with this with all of this?  Remember from my 9.30.2012 reporting Nevada Disclosure In Residential Sales, effective October 1, 2011 the Seller’s Real Property Disclosure Form, also known as the S.R.P.D. can no longer be waived. This form must be provided in just about every residential transaction in Nevada. There are some exceptions.

Nevada law says you cannot waive your right to receive an SRPD.  It does not say you cannot waive rights as to an As Is purchase.  Thus the waiver of rights form, Buyer’s Remedy Waiver Of Nrs 113.150 Rights, which is provided in addition to the SRPD, means you are buying the property As Is, however, the Seller must ALSO disclose what they, as the Seller, know is wrong with the property.  The Seller must still disclose known  “defects.”  It’s fair if you think about it, the basic point is….“As a Seller this is what I understand is wrong with the property, and as to what I, as the Seller, do not know what is wrong, you as the Buyer, are taking the property As Is.”

This is a series of Disclosure Entries see also:

Nevada Disclosure In Residential Sales

Private Transfer Fee (Seller’s Real Property Disclosure Form)

An Updated All Inclusive & Belt Way Disclosure

The New, Improved All Inclusive Disclosure

Nevada Condominium Hotel Disclosure

Nevada S.R.P.D. New Clarification of Real Estate Disclosure Laws in Nevada

Any questions, you can call me Darren Welsh 702 245 1787. darren@dwelshlaw.com

This is a follow up to my July 2, 2o10 and June 8, 2007 reports on Kitec Plumbing.

PRESS RELEASE

FOR IMMEDIATE RELEASE

Contact: William L. Coulthard, Esq. or Michael J. Gayan, Esq.

Telephone: (702) 385-6000

Re: In Re Kitec Fitting Litigation; Clark County District Court Case No.: A493302

COURT EXTENDS DEADLINE FOR THOUSANDS OF CLARK COUNTY HOMEOWNERS TO CLAIM FREE REPAIRS OF DEFECTIVE KITEC PLUMBING SYSTEMS

At a hearing held on September 14, 2011, the Honorable Timothy C. Williams extended the deadline by three months for thousands of Clark County homeowners to claim free replumbs of the defective brass Kitec plumbing systems. The eligible homeowners now have until March 31, 2012, to claim the free replumbs made possible through settlements reached in the In re Kitec Fitting Litigation class action, including the $90 million settlement with the fitting manufacturer, Ipex, Inc. and Ipex USA, LLC. The homeowners must act now or they will forfeit any right to claim relief from the class action settlements and will have no rights to pursue Kitec-related claims against the manufacturer or the Home Builders or Plumbers responsible for installing the Kitec plumbing systems. Class Counsel, Michael Gayan of Kemp, Jones & Coulthard, LLP, explained that “[I]n extending this deadline, Judge Timothy Williams recognized the importance of class homeowners having a full and fair opportunity to claim their repair under this class action settlement.”

The deadline extension impacts more than 6,000 Clark County homes built by Del Webb, KB Homes, Richmond American, Avante Homes, Signature Homes, Astoria Homes, Pulte, Nigro, D.R. Horton, LBM Development, Wexford Homes, American Premiere, Concordia, Desert Wind, H&H, Pageantry, Platis, RL Homes, SBA Development, and Westmark Homes. A complete list of the developments involved is found on the Court-appointed claims administrator’s informational website, www.TotalClassSolutions.com/Settlements.

The class action lawsuit, which involves more than 32,000 Clark County homes, alleges that as soon as Kitec fittings are exposed to water, the brass in the fittings begins to deteriorate and corrode, which inevitably leads to reduced water flow, leaks, and breaks. There have been hundreds of reported leaks with resulting flood damage to homes. Kitec fittings not only cause substantial damage after they leak and burst, but also impair the ability of a home’s plumbing system to effectively provide water to appliances and plumbing fixtures.

Tim Taylor, President and CEO of the Court-appointed claims administrator, Total Class Solutions, LLC, stated that, “[T]hese homeowners have about six months left to claim the free replumbs. After that, Total Class Solutions will have to turn them away without any relief. It would be a real shame for homeowners to miss out on getting the repairs they need. Class Counsel recovered the resources to fix all the homes and it’s our goal to make that happen. Now we just need the homeowners to contact us and ask for the repairs.”

The approved plumbing contractors doing the work for the class are Delta Mechanical, Dynamic Plumbing, Repipe Specialists, Rakeman Plumbing, Hammer Plumbing, and Plumbing Express. If you are contacted by one of these plumbing companies regarding a free replumb, it is because you may be entitled to receive the repair at no cost to you as a result of this class action lawsuit. All of the homeowners are represented by the law firms of Kemp, Jones & Coulthard, LLP and Lynch, Hopper & Salzano, LLP. These firms were appointed as Class Counsel by Judge Williams on October 16, 2006, when the Court certified a class action lawsuit on behalf of all homeowners in Clark County, Nevada, who have brass Kitec plumbing fittings in their homes.

For information on how to claim the Kitec repairs, go to www.TotalClassSolutions.com/Settlements, which has been established by the Court-appointed claims administrator, Total Class Solutions, LLC.  For more information about the class action itself, please go to http://www.PlumbingDefect.com, which has been established by Class Counsel to inform potential class members about this litigation.

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For more information on this topic, please contact William L. Coulthard or Michael J. Gayan at (702) 385-6000.

1992 College Ultimate Trophy, missing 19 years, recently recovered. The search is over.

Is REO title safe?  I contacted Equity Title of Nevada and asked this exact question and here is what I have to report.

Yes.  Provided you have title insurance.

Then why these reports about REO, and foreclosure?  These indictments you hear about from the Attorney General are discussing the ‘procedures’ that some limited persons used in filing foreclosures.  The Attorney General is not representing the consumer in attempting to unwind any sales.  The question really is, will a former owner arrive and demand to be reinstated on title?  Well, since that would come with the debt also, let’s just say, I doubt it.

But if there is a claim about the foreclosure process that affected my home (literally my home is listed as one of those with potential previous foreclosure defects) am I safe?  Yes, again. The odds of there being a claim on your title are very remote.  If there was one, you have title insurance, and you are going to be able to get title insurance in the future.  So it is a non-issue for the normal consumer.

Let’s discuss title insurance.

On residential purchase transactions, there are three primary forms of title insurance that are currently available to buyers.

  • The Homeowners Policy (most recently revised in 2010).
  • The ALTA Residential Policy (1987 form).
  • The ALTA 2006 standard coverage owners policy.

All of these policies provide coverage against loss or damage sustained by reason of title defects which exist as of the date of policy.  Imagine a hypothetical scenario in which, after the date of policy, a former homeowner files a lawsuit which seeks to set aside the prior foreclosure as defective.  If this former owner is successful and ultimately obtains a final, non-appealable court order which rescinds the foreclosure and reinstates his ownership interest then he will have established that the insured’s title was in fact defective as of the date of policy.  Even though the filing of the lawsuit itself was a post-policy matter, the outcome is a court determination of a pre-policy title defect, i.e. an invalid foreclosure.  In this scenario, a title defect or a marketability claim tendered by the insured under any of the above listed owners policy forms would presumably be determined by the underwriter to be a covered matter which must be defended.

There is however, a new law that went into effect on October 1, 2011.  This new law may cause some discussions.  Title companies may not be willing to insure post-foreclosure without a special exception for any claims that are based on an allegation that the foreclosure did not comply with the provisions of AB284.  An REO buyer must simply object to not receiving this coverage.  This is not happening now.  The coverage is being granted.  We need merely watch the field and see if the industry changes.

Equity Title of Nevada recommends to any residential buyer that they consider obtaining the Homeowners Policy. There are many additional benefits to this form of policy which are worth a buyer paying the additional 10% premium.

Any questions, email me darren@dwelshlaw.com or call me 7022451787.

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