Disclaimer: This article is for educational purposes only and does not constitute legal advice.
Detailed Answer
When a property sells at a non-judicial foreclosure (trustee sale) in Nevada, any funds remaining after satisfying the senior mortgage may create a surplus. Other creditors, such as junior lienholders, judgment creditors, or homeowners’ associations, may claim those funds based on lien priority and statutory deadlines.
- Review the Chain of Title: Order a title report from the county recorder to identify all recorded deeds of trust, mortgages, judgment liens, tax liens, and UCC financing statements.
- Determine Lien Priority: Nevada follows “first in time, first in right,” meaning liens recorded earlier have priority over later liens. Certain liens—such as homeowners’ association superpriority liens under NRS 116.31168—may jump ahead of other junior liens.
- Check Statutory Claim Periods: Under NRS 107.080, junior lienholders must submit a written request to the trustee within 30 days after the sale to claim any surplus. Associations generally have 90 days per NRS 116.31168.
- Trustee’s Distribution Duties: The trustee must disburse proceeds in strict order: first to the senior mortgagee, then costs and trustee’s fees, next to junior lienholders with timely claims, and finally to the grantor or any remaining claimants. If claims conflict, the trustee may deposit surplus funds with the court.
- Court Intervention: Any party may petition the district court to determine the proper distribution of disputed surplus funds or file a petition for interpleader under NRS 40.500.
Helpful Hints
- Obtain a comprehensive title search to uncover all recorded liens and judgments.
- Search the county recorder’s office for UCC-1 financing statements and federal tax liens.
- Track claim deadlines closely: 30 days for most junior liens, 90 days for homeowners’ associations.
- Consider retaining a licensed title company or escrow agent to handle surplus distribution.
- If multiple claimants file competing claims, consider filing a petition for interpleader with the district court.
- Keep detailed records of all notices and communications with potential lienholders.