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The Nevada Supreme Court has ruled in:

LAND BARON INVESTMENTS, INC. vs. BONNIE SPRINGS 131 Nev., Advance Opinion 69

The holding confirms a 1993 case, Mackintosh v. Jack Matthews & Co., 109 Nev. 628, 633, 855 P.2d 549, 552 (1993). -“Nondisclosure arises where a seller is aware of materially adverse facts that “could not be discovered by the buyer” after diligent inquiry” – IN OTHER WORDS, if buyer is able to discover a material fact on its own, a seller does not have a duty to disclose it. In this case specifically the allegation was that a seller was a aware of a defect, that the buyer discovered during escrow.  The Court’s take on this was “..even if the Seller had known about these facts and not disclosed them, there would still be no viable nondisclosure claim because the facts were discoverable and the Buyer had an equal opportunity to discover those facts before closing.”

IMAG1702NRS 40 Does Not Limit Lenders’ Right to Sue Homeowners Even When the Note was Discounted on the Secondary Market.

In 2011 the Nevada Legislature passed A.B. 273.  One of the hot topics was how much a lender could sue a borrower for; if that lender purchased the note from a previous lender at a discounted price.  The discussion of the day (back in the summer of ’11) was that the current lender (who bought the note from a prior lender), pursuing the borrower was capped at the amount the suing bank paid to take over the loan. This seemed to be a protection for borrowers. There were numerous cases in the Nevada District System (Trial Level) that ruled in this way, in favor of the borrower, enforcing a cap. Basically the borrower was held to only be liable for what the current lender paid to buy the discounted note, which could be pennies on the dollar.

On December 24, 2014 the Nevada Supreme Court ruled that the language, ‘limited to the amount of the consideration paid by the bank,’ does not speak to the amount a bank or investor pays to buy the note, removing the cap. So, if bank 1 lends $400,000 and sells the note for pennies, say for $10,000 to bank 2, bank 2 can recoup the entire value of money lent or $400,000.  Many District Court cases were ruling that the deficiency was capped at the amount bank 2 paid to take over the loan.  No more.

The Supreme Court of Nevada stated:

“We therefore hold that NRS 40.451 does not in and of itself set an assignor-assignee, consideration-based limit on FFB’s recovery against respondents.”  First Fin. Bank v. Lane  339 P.3d 1289, 1294 (Nev.,2014) 

OTHER POSTS ON DEBT

Income Taxes & Foreclosure/Short Sales 2014 Update (12.17.2014)

Ten Facts about Mortgage Debt Forgiveness

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

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

OTHER SHORT SALE POSTS

7 Tips for Short Sale

Addendum to Short Sale Listing 1.26.2010

Advance Fees Continued and the FTC 1.6.2011

Advance Fees – Short Sales – FTC II 5.4.2011

Charging for negotiating short sales/Negotiators 10.1.2010

Deficiency Judgments Nevada 4.27.2007

Foreclosure and the One Action Rule in Nevada 4.10.2007

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales 12.21.2007

IRS PUBLICATIONS shortsales/foreclosures:

Ten Facts about Mortgage Debt Forgiveness

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

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

Judicial Foreclosures (Short sales are looking more attractive..) 3.23.2012

Lender Short Sale Approval Addendum

Nevada Home Owner’s Bill of Rights (Foreclosure/Short Sale/Judicial Foreclosure)

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 4.20.2007

Short Sale Advanced Fees

Short Sale Addendum to Purchase Agreement October 2010

Short Sales and Bankruptcy and Waiting Periods 10.5.2012

Short Sale – “Dual Tracking” and the Homeowner’s Bill of Rights in Nevada May 2013

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

Short Sale Wallet Size Answer Sheet

Questions? email me darren@dwelshlaw.com

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There are now Four (4) Elements to Constructive Eviction in Nevada for Commercial Leases.

First, the landlord must either act or fail to act. Yee v. Weiss, 110 Nev. 657, 660, 877 P.2d 510, 512 (1994).
Second, the landlord’s action or inaction must render “the whole or a substantial part of the premises unfit for occupancy for the purpose for which it was leased.” Id.
Third, the tenant must actually vacate the premises within a reasonable time. Schultz v. Provenzano, 69 Nev. 324, 328, 251 P.2d 294, 296 (1952).
Fourth, a commercial tenant alleging that it was constructively evicted must show, in addition to the three elements stated in Yee and Schultz, that it provided the landlord notice of and a reasonable opportunity to cure the defect. See, e.g., Home Rentals Corp., 602 N.E.2d at 863.

Supreme Court of Nevada.

MASON–MCDUFFIE REAL ESTATE, INC., A Nevada Corporation d/b/a Prudential Nevada Realty, Appellant, v. VILLA FIORE DEVELOPMENT, LLC, A Nevada Limited Liability Company, Respondent.

No. 61233.

Decided: October 2, 2014

– See more at: http://caselaw.findlaw.com/nv-supreme-court/1679919.html#sthash.GFdjLDVk.dpuf

Happy Birthday Webster The Nevada Supreme Court issued a ruling concerning MERS on Thursday September 27, 2012. Edelstein v. Bank Of New York Mellon, the Las Vegas Review Journal reported it was a “win” for the banks in foreclosure?

What does it mean?  The banks that relied on MERS are allowed to foreclose.  What is MERS?  See below.

  SHORT ANSWER  – MERS (Mortgage Electronic Registration System, Inc.), was confirmed as a proper player in the foreclosure process, and the assignments to and from MERS were upheld. The Court clarified however that the holder of the note and the holder of the deed must be the same. So, to say it is a win for the banks?  I guess you could look at it that way.  Mostly it clarified that at the time of foreclosure, the note holder (lender) and the deed holder (usually MERS) must be the same.  So MERS must assign the deed to the note holder (lender) for foreclosure to proceed.  In this case the note and deed were held by the foreclosing bank, so the Court allowed the foreclosure.

LONG ANSWER – It is obviously more complicated than that, Bank of New York Mellon’s trustee ReconTrust, BNY Mellon’s trustee, physically possessed the note a the time of the Nevada Supreme Court Mediation and used their servicer Bank of America as their representative in the Nevada Supreme Court Mediation Program.  But at the end of the day, the note and deed were held by the same bank and that bank was allowed to foreclose. So, a win for the banks? Not really, another way to look at it is that the banks must, yet again, clean up their paper work and hold both the note and deed at the time of foreclosure. This is not going to cause a landslide of foreclosures. It was not the impediment per se. It will make some mediations in the Nevada Supreme Court program perhaps go smoother.

What is this MERS you speak of centurion? MERS is often the holder of a deed of trust, and it is shown to that effect on the deed.  However, often the rights to the deed are transferred but not recorded at the county recorder. The Court explained MERS in a pretty succinct manner,

Typically, when a loan is originated, MERS is designated in the deed of trust as a nominee for the lender and the lender’s ‘successors and assigns,’ and as the deed’s ‘beneficiary’ which holds legal title to the security interest conveyed. If the lender sells or [transfers] the … [note] to another MERS member, the change is recorded only in the MERS database, not in county records, because MERS continues to [be the beneficiary of record] on the new lender’s behalf. So long as the sale of the note involves a MERS Member, … [t]he seller of the note does not and need not assign the [deed of trust] because under the terms of that security instrument, MERS remains the holder of title to the [deed of trust], that is, the mortgagee, as the nominee for the purchaser of the note, who is then the lender’s successor and/or assign. According to MERS, this system ‘saves lenders time and money, and reduces paperwork, by eliminating the need to prepare and record assignments when trading loans.

In Nevada to perform a non-judicial foreclosure on an owner-occupied residential property …(in other words not a judicial foreclosure NRS 40.430 nor a non-owner occupied foreclosure) the lender must meet certain requirements…

The Court confirmed that to enforce a foreclosure the deed and note must be held together by the same person/entity.  In this case MERS held the deed and note was held by a number of different lenders.  At the time of foreclosure MERS transferred the deed to the current note holder. The Court concluded, that the temporary separation (when one group held the deed and another held the note) was not irreparable or fatal to either the promissory note or the deed of trust. However, if they are not brought together, it prevents enforcement of the deed of trust through foreclosure. The two documents must ultimately be held by the same party.

The Court concluded that when MERS is the named beneficiary and a different entity holds the promissory note, the note and the deed of trust are split, making nonjudicial foreclosure by either improper. However, any split is cured when the promissory note and deed of trust are reunified. Because the foreclosing bank in this case became both the holder of the promissory note and the beneficiary of the deed of trust, proceeding to foreclosure was proper.

More importantly were the three cases before the Nevada Supreme Court this morning, addressing, statute of limitations on short sales, and junior liens and the right to sue borrowers as passed by the Nevada Legislature in 2011.

 Sandpointe Apartments., LLC vs. Dist. Ct. (CML-NV Sandpointe, LLC) Docket No. 59507

Nielsen vs. Dist. Ct. (Branch Banking and Trust Co.) Docket No. 59823

Lavi vs. Dist. Ct. (Branch Banking) Docket No. 58968.

These upcoming decisions will affect thousands of Nevadans that have been foreclosed upon or sold via a short sale.  I will let you know when I hear more.

Questions:  darren@dwelshlaw.com

Please also see my June 10, 2009 Update on CIC Packages.

There are recent changes as to how you handle Common Interest Community (“CIC”) documents/disclosures in a real estate transaction in Nevada.  The CIC Addendum to the purchase agreement, crafted from the requirements of the NRS 116.4109 (which addresses the need for the delivery of the “the re-sale package”), is no longer required.  This addendum to the purchase agreement has been absorbed into the GLVAR Real Property Purchase Agreement. 

 In a time of mergers, the powerful NRS 116.4109 has joined forces with the Greater Las Vegas Association of REALTORS®.  It seems only yesterday that the statute’s modification in 1997 – and it’s implementation in the summer of 1998 – caused the now famous Re-Sale Package and the Addendum to Listing and Addendum to Purchase Agreements.  Some will remember when you used to have to provide “minutes,” oh the stories we could tell….

Now with the fine work of the Forms Committee of the Board (with three (3) members from Prudential®, Americana Group, REALTORS®) and its General Counsel Deanne Rymarowicz, Esq. we have Section 10 on Page 4 of 11, printed here for you just to savor the moment.

What you do still need in connection with the Re-Sale Package: 

Listing:  Where the property is in a CIC you must still have the Addendum to the Listing for CIC executed.

http://americenter.americanagrp.com/info/AmeriHelp/Net%20Forms/AddendumToListingAgreementForCommonInterestCommunityProperties.htm.

This is a helpful form that gets your Seller started on gaining the Re-Sale Package in preparation for the delivery to Buyer.  It also reminds the Seller of the NRS 40 and construction defect litigation must be disclosed by the Seller’s association. 

Sale:  The “Disclosure” also known as the “BEFORE YOU PURCHASE PROPERTY IN A COMMON-INTEREST COMMUNITY DID YOU KNOW . . .” is still required under NRS 116. 41095.

http://americenter.americanagrp.com/info/AmeriHelp/Net%20Forms/BeforeYou%20PurchasePropertyInACommonInterestCommunityDidYouKnow.htm

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This is a multi part blog on FHA loans.  I will be adding to this over the next few weeks.

What to know about FHA – Anti Flipping.

Unlike most conventional loans, FHA has unique requirements that prohibit the seller from having owned the home less than 90 days.  Attached is the  U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT MORTGAGEE LETTER 2006 -14

Property Flipping Prohibition Amendment

I suggest you read it and become familiar with it.  It describes that when writing an FHA loan as selling agent you should contact the listing agent and ensure the home has been owned by the same owner over the last 90 days.  If you are the listing agent, your seller will not be able to accept an FHA funded purchase if your seller has not owned the property for at least 90 days prior to contact date.

What is flipping:  Property flipping is a practice whereby a property is resold a short period of time after it is purchased by the seller for a considerable profit with an artificially inflated value, often abetted by a lender’s collusion with the appraiser. FHA’s policy prohibiting property flipping eliminates the most egregious examples of predatory flips of properties within the FHA mortgage insurance programs.

What is the sale date:  It is NOT close of escrow.  The resale date is the date of execution of the sales contract by the buyer that will result in a mortgage to be insured by FHA.  (See Mortgagee Letter 2006 -14 above Pg. 2)

Owner of Record:  The seller must also be the owner of record. Therefore you cannot “clean up the title” at close of escrow.  The seller must be on title at time of contract. (See Mortgagee Letter 2006 -14 above Pg. 2)

New Construction:  This rule does NOT apply.  Your buyer may use FHA funding on new construction.

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Exceptions?  Of course, this is real estate:  The rule does NOT apply to:

1.      Sales by HUD of its Real Estate Owned

2.      Sales by other United States Government agencies of single family properties pursuant to programs operated by these agencies.

3.      Sales of properties by nonprofits approved to purchase HUD-owned single-family properties at a discount with resale restrictions.

4.      Sales of properties that are acquired by the sellers by inheritance.

5.      Sales of properties purchased by employers or relocation agencies in connection with relocations of employees.

6.      Sales of properties by state and federally charted financial institutions and Government Sponsored Enterprises.

7.      Sales of properties by local and state government agencies.

8.      Upon FHA’s announcement of eligibility in a notice (i.e., ML), sales of properties located in areas designated by the President as federal disaster areas, will be exempt from the restrictions of the property-flipping rule.  The notice will specify how long the exception will be in effect and the specific disaster area affected.