Nevada Laws on Post-Foreclosure Deficiency Judgments

Find out if you are liable for a mortgage deficiency after a foreclosure or short sale in Nevada.

Losing one’s home to foreclosure can be extremely stressful. For some distressed homeowners, however, the sale of their home in a foreclosure auction does not necessarily mean their concerns are over. In some states, homeowners may be liable for deficiency judgments after foreclosure. If you’re facing foreclosure, determining whether your state allows deficiency judgments will help you decide what the best options are for you.

What is a Deficiency Judgment?

If a home is sold at a foreclosure sale for less than the amount owed on the mortgage, the difference is called the deficiency. In some states, the lender may file a lawsuit to collect the deficiency. A deficiency judgment is a money judgment as a result of such a lawsuit, holding a borrower personally liable to repay the deficiency.

Are Deficiency Judgments Allowed in Nevada?

To find out whether deficiency judgments are allowed in Nevada, you should look to Nevada’s laws regarding deficiency judgments, which can be found in Nevada Revised Statutes (Nev. Rev. Stat.), Sections 40.455 through 40.559. A summary of Nevada’s laws governing deficiency judgments can be found below.

Deficiency Judgments Generally Allowed

Generally, a lender has the right to sue a borrower for a deficiency if the suit is brought within six months of the foreclosure sale. Nev. Rev. Stat. § 40.455. The borrower is entitled to a deficiency hearing, and the lender must give the borrower notice of the hearing 15 days prior to the hearing. Nev. Rev. Stat. § 40.457. During the hearing, the court will determine the fair market value of the home at the time of the foreclosure sale and award a deficiency judgment. Nev. Rev. Stat. §§ 40.457, 40.459. The judgment awarded must be the lesser of either:

  • the difference between the outstanding loan amount and the fair market value of the home at the time of the foreclosure sale plus interest, or
  • the difference between the outstanding loan amount and the actual sale price of the home plus interest. Nev. Rev. Stat. § 40.459.

When Deficiency Judgments are Prohibited

For loans made after October 1, 2009, Nevada prohibits lenders from suing for a deficiency after a foreclosure sale if all of the following conditions are met:

  • The lender is a financial institution.
  • The property secured by the mortgage was a single-family home owned by the borrower.
  • The home was continually occupied by the borrower.
  • The mortgage loan was a purchase-money mortgage.
  • The borrower did not refinance the mortgage. Nev. Rev. Stat. § 40.455.

Deficiency judgments are prohibited after a short sale or deed in lieu of foreclosure so long as all of the following conditions are met:

  • The lender is a financial institution.
  • The property secured by the mortgage was a single-family home owned by the borrower.
  • The home was continually occupied by the borrower.
  • The mortgage loan was a purchase-money mortgage.
  • The agreement does not expressly state that the borrower will still owe the lender a particular amount after the transaction or the lender retains the right to recover a deficiency.
  • The agreement contains a conspicuous statement that the lender has waived the right to seek a deficiency. Nev. Rev. Stat. § 40.458.

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