Does anyone know if its common in Nevada for banks to file deficiency judgments after a property has been sold in auction? And how soon do they?

Asked by Jim Fong, Las Vegas, NV Thu May 19, 2011

foreclosure, modifications, short sales, buying, selling

Help the community by answering this question:

+ web reference
Web reference:


Penny O'Brien, Agent, Las Vegas, NV
Thu May 19, 2011
Hello Jim,

Every sale is different, depending if the seller recieved a clear letter of deficiency from their lenders. Whether that includes one lender or multiple lenders.

It's always good to get the deficiency written off but make sure you get it in writing.

Penny O'Brien with Simply Veags
1 vote
Suzie Marqua…, Agent, Las Vegas, NV
Thu May 19, 2011
Mr. Fong.
It is always best to seek legal counsel on these type of questions. I can give you numbers to several attorneys that I know are knowledgable on the subject and deal with these type of issues. I myself have not seen the banks rushing to file deficiency judgements on owner occupied properties that went to foreclosure. That does not mean they won't. The Bank/Lender who has the 1st mortgage has 6 Months to file for a deficiency judgement. The 2nd lenders are the most likely to retain their rights to collect. Also the type of loan will add to the probability of collection activity. Home Equity Line of Credit (HELOC's) loans are most likely to pursue a homeowner or may sell the loan to a collection agency. We have some new legislation moving through the legislative process currently. I am hoping that with the passage of the new laws we will all know where we stand.
Thank You
Suzie Marquardt
1 vote
Sandy Van, Agent, Las Vegas, NV
Thu May 19, 2011
Hi Jim,

It is a misnomer that most people think that the banks have only 6 months with which to obtain a Deficiency Judgment. The bank has 6 years to come after a person for foreclosing on their home or short selling their home (This only applies if the Homeowner did not receive a waiver of the deficiency in the short sale approval letter). This is 6 years on the first mortgage, second mortgage or other junior liens.

The analogy that I have is that in a legal complaint there can be several causes of action such as Negligence, Breach of Contract, Intentional Infliction of Emotional Distress, etc. If a person was to be sued by the State for example, for injuring someone, the state would probably make a claim for Battery and Assault. If the state cannot get the person on Battery, they will hopefully get the person on Assault.

Similarly, the bank has the Deficiency Statute ( to sue on, but also can sue under a Breach of Contract theory. The Statute of Limitations for a Breach of Contract is 6 years. Once the Deficiency Judgment or any Judgment is obtained by the bank, it can be renewed indefinitely (forever) until the Homeowner settles the debt or files bankruptcy. This Judgment can be used to garnish the Homeowner’s wages, lien any new property, garnish the Homeowner’s bank accounts and possibly even the spouses’ assets also as Nevada is a Community Property State (Partial list of Exempt Assets…).

This is unchartered territory in Las Vegas as home prices historically have increased prior to the bubble bursting. Since this is unchartered territory, there is no law or case law on point that limits the banks to suing only within the first 6 months of the foreclosure sale. The law firm that I am affiliated with has been obtaining Judgments against Debtors for years prior to the market heading south. So we do have experience with regards to these matters. In addition, we have experience in collections, short sales, bankruptcy, real estate law, foreclosure law, and most other legal matters as we are a full service law firm.

It is generally a better idea to short sale a home rather than foreclose or file bankruptcy (unless the Homeowner has a lot of other debt that will still remain after the short sale such as credit card debt or medical bills) because if the short sale is approved a lot of debt will taken off of the Homeowner’s balance sheet and the Homeowner will get a fresh start. In addition, the Homeowner can negotiate and settle the debt with the banks rather than get unexpectedly sued for a larger amount later on. Furthermore, a person who short sells their home rather than foreclosing can get a home loan sooner.

If you like this answer, please give me a thumbs up!

Sandy Van
Attorney, Broker-Salesman, Realtor
Realty Executives of Nevada
The Van Group
(702) 334-2488
Kung and Brown Law Firm
(702) 382-0883
1 vote
Christopher…, Agent, Henderson, NV
Thu May 19, 2011
Have you spoke to a Real Estate Attorney to see if anyone is filing for deficiency judgment? The banks have six months to file for the first, and six years for the second.
Chris Dowlen
Keller Williams Realty
Web Reference:
1 vote
Jacob Mitro, , Clark County, NV
Thu May 19, 2011
Yes. The 1st has 6 months and the 2nd loan has 6 years to persue the deficiency judgments.
Web Reference:
1 vote
Steven Goldm…, Agent, Henderson, NV
Mon May 23, 2011
Good day Jim,
This is entirely up to the Investor. As I complete short sales, the common investors become very predictable. Work with your Realtor and ask them what is typical for your investor to do.

We have not seen a large amount of this happening. Mostly because the MI company comes in and pays the Investor after the sale. The real Issue is "Will the MI Company go after the Borrower". In Nevada, on a 1st mortgage, the Borrower only has to sweat it out for 6 months. After that, the Borrower cannot be held for the deficiency UNLESS MORTGAGE FRAUD IS SUSPECTED !!!!!

A 2nd has 6 years to file and 20 years to collect.
The 1st also has this option if the mortgage funds were not used to purchase the home as in a refi. There is a lot of fine print to the Deficiency Forgiveness laws. Chat with your CPA for details.

Huh, what did he type??????? If Mortgage Fraud is involved, there is no statute of limitations. What is Mortgage Fraud? Hiding funds so the Mortgagee thinks you cannot make payments, moving the title to another person without permission of the Mortgagee, Buy and Bail before the foreclosure, selling outside of an arm's length transaction, as well as entire host of other reasons.

My crystal ball says we will not see much of it immediately. Just wait until the attorneys have little to do. They will research every foreclosure with a really fine comb to shown some type of fraud. Then it is Borrower beware.

Let's revisit this topic in a few years and see if my crystal ball was correct. I'll give it 4-5 years to allow time for the lawsuits to begin.

That is the reason that it is imperative that a borrower work with a skilled Realtor to negotiate a successful short sale that will close and is complete with no ill future effects and surprises.

Please contact me immediately if you know a person that cannot make their mortgage payments. I will work with them to avoid foreclosure or bankruptcy at no charge or fees to them.

Steven Goldman, CRS
Broker Salesman
Certified Short Sale Professional (CSP)
REO-BPO Certified
Realty One Group
Las Vegas, NV 89135
Direct 702-242-1372
Web Site:
0 votes
David Cooper, Agent, Los Angeles, CA
Thu May 19, 2011
This deficiency judgement is where the short seller needs a really skilled negotiator as an agent. Rememebr the banks gave skilled loan officers working hundreds of short sales and they are trained to get as much as possible fort the benefit of the bank. Every bank is different and what they tell you the policy is today, could change tomoorow.

David Cooper! Las Vegas Real Foreclosure Investor and Buyer's Agent Bank Owned REO with Huge Cash Fkow. For a FREE daily list email: or Call +1-7024997037
0 votes
John Longeway, Agent, Henderson, NV
Thu May 19, 2011
Hi Jim,
I agree with Penny. Always get the deficiency written off by the lender if at all possible. Always get everything in writing!
John J. Longeway
Keller Williams Realty So. Nevada
office: 702-777-0002
cell: 702-325-4833 or 800-547-8464
Web Reference:
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more