When a property owner defaults on his or her mortgage, the mortgage lender will typically foreclose on the property.
This means, take it away from the property owner and make some attempt to resell it at what is known as a “trustee sale.”
Sometimes, however, the value of the property is worth less than the outstanding balance still owed on the mortgage.
When this happens, the mortgage lender may be tempted to sue the property owner in order to recoup its losses.
Fortunately, there are some protections available to consumers under state “anti-deficiency” laws. An anti-deficiency law is a statute that prohibits or limits the ability of a mortgage lender to sue a property owner for debt owed on a mortgage or deed of trust.
What protections are offered under Las Vegas’s anti-deficiency statutes?
In Las Vegas, anti-deficiency statutes offer some protections to consumers, but the laws are limited in scope.
For a consumer to be protected outright from a deficiency judgment in Las Vegas, he or she must meet all of the following criteria:
→ The foreclosing party is a “financial institution” (i.e. bank, mortgage broker, credit union, etc.).
→ The property being foreclosed is a single-family residence.
→ The debtor is the owner of the property at the time of the foreclosure sale.
→ The debtor used the loan amount (of the mortgage or deed of trust) to purchase the property, and the loan has not been refinanced.
→ The debtor continuously occupied the property as a principal residence after the mortgage was secured.
For all other types of property, the creditor may still seek a deficiency judgment after the foreclosure sale, but the Nevada Revised Statutes regulate and restrict creditors regarding timing and amount.
Source: https://www.lasvegasrealestateattorney.com/anti-deficiency-in-las-vegas
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