Thanks to Incline Jim for this doozy… a chart and graph lover’s dream! This informative slideshow presents a compelling case for the we’ve got a long way to go baby argument. Honestly, my head is spinning and I think I may be turning into, gasp, a pessimist. (Say it isn’t so!) Highlights include the salient point that consumer borrowing power is anywhere from 39-41% less than it was just nine months ago, and a sea of questionable loans are still scheduled to reset later this year. These sorts of numbers want to make me downgrade my latest, ever-changing, possible-but not-so-sure local, bottom prediction from 2009 to 2011… What do you guys think?
One new client today was telling me about his experiences with foreclosures and mayhem in the early 90’s in Houston. To him, our current local troubles were mild in comparison thanks to continuing economic growth. He told me the story of a new house that originally sold for $120,000 (a lot at the time in Houston), then sold again to an investor for $80K, then again to another investor for $40K, then again at auction to his landlord for $21K. (When the lumber is worth more than the house, I guess it’s time to buy.) Though neither of us think it will play out that dramatically here, a small part of me says, who knows? Two years ago I was blowing off all the bubble talk as an unimaginative metaphor.
I do watch our numbers with a very close eye. The only positives in our market I see so far are increased pendings, which are suspicious because I wonder how many are useless, fake, short sale escrows that will ultimately fall through as banks take back the houses. I’ve also noticed more builders utilizing the MLS, which means their pendings stay on for months on end as the houses are built, because no builder seems to be building on spec these days. And then of course, it is spring, which always brings a seasonal bump in activity.
The other bright spot is Cyan, the only new home builder I know of doing brisk sales and actually reinvoking the lottery system. With this development, Centex seems to have hit the right price point, the right location, the right value for the dollar, which of course translates into to pending contracts and hopefully closed escrows. I am glad to see that somebody is doing well in this market. It gives me hope. I need some hope.
Reno Ignoramus
Welcome, Diane, to membership in the club of hostile pessimists. It took you a while, but I knew you would get there.
Diane Cohn
LOL, stop… I’m melting, like, in a really bad witchy way! 😛
SkrapGuy
Diane, how appropriate that you post this on the day that the Fed bails out the collapse of Bear Stearns.
In actuality, there is little here that is really new to this blog. RI and Lindie (where is Lindie?)and Bantering Bear have been saying this for well over a year. Yes, they did not say it so eloquently and with such nice charts and graphs. But can anybody say that RI and his constant reference to Voodoo loans and Loans to the Walking Dead and the inevitable unwinding of the Ponzi Scheme are in substance any different than this link?
It is a fabulous credit to this blog that this is really old news to anybody paying attention here. Assuming they were willing to see the truth.
And so, I now await the delusional optimists to post and tell us how it’s really different here, and how this just isn’t going to impact Reno, because Reno is special, and the laws of economics don’t apply to Reno, and even though only 6% of listings are selling, and 42% of listings are vacant, and there are multi-years of inventory, and there are hundreds of millions of dollars in builder defaults, and REO is amassing daily, that really things are looking up, because there is “activity” being reported in the realtor offices.
bondstevenbond
Count me in to the pessimists’ club. First I thought I’d buy my first house in Reno from a private seller, then I thought I’d buy it from a builder, then I thought I’d buy one from a Bank. Sadly, now I think I’ll just wait for Uncle Sam to knock on my door in December 2010 and I’ll buy it from him.
MKchick
As a buyer, I need to disagree with you regarding CYAN’s location as a “perk.” It is terrible behind Double Diamond and a looooong drive away from 395, with that industrial park across the street. Their lot plan is also terrible; very few cul de sacs if any, and the lower priced models (townhomes and smaller) border the open space, not the bigger ones.
I still feel they are overpriced at around $115 sq/ft, and the outside of the homes are really plain compared to similar priced new home builders. Their options are also priced slightly higher than the other builders, so that is where they are making up the “haircut” on the base.
All that in mind, I like 2 models. I’m looking for something around 2500 sq ft in South Reno, so I did and continue to do a lot of digging and tracking of the builders there.
CYAN’s main competition for SFR detached is KB Home, Lennar, R&B, Bailey Dutton, and Toll Brothers (although I wouldn’t really put them in the same price category except for comparison in the 3000+ sq ft models, and CYAN’s pricing is definitely better). DiLoretto, DR Horton, and Toll (kinda) are their competitors for attached.
The only thing Lennar has left in S. Reno is the smaller model, still overpriced Derby Run in Curti (more south than Damonte Ranch, and zoned for Brown vs. Double Diamond elementary). They still have standing inventory they haven’t sold off. However, they are still readying the land next to RC Wiley (south of Double Diamond) for a new development. This to be named area is of interest to me, and if we haven’t purchased a home by the end of this year, we’ll be looking at whatever they are building there.
R&B is in a terrible location next to Damonte Ranch HS. We looked at their models a year ago, and I do keep up researching their pricing. But the location alone pretty much nixed them from our search, and their overpriced base contributed to that. I heard they sold off or trying to sell off a patch of the land originally planned for this community.
Bailey Dutton is in a good location, has some standing inventory left, but they are still too overpriced, although they are now including central A/C and granite tile countertops in their base. It always irked me that the A/C wasn’t included. One floor plan around our target sq ft, and I really didn’t like the flow of it.
So that leaves KB Home, and besides CYAN, this is one builder that we are seriously looking at. The fit and finish of CYAN is better, but KB Home’s floor plans and location is better. Ravenna (the smaller development) is almost sold out. They have a few lots next to the models (back facing Veterans) and one cul de sac left to sell/build. There is one foreclosure in this development. Calabria has a ways to go, but the current lots they are offering cannot accommodate the larger 3000 sq ft plans they used to offer.
I don’t know if this is of any interest to anyone, but here is a copy of my base price tracking of KB using a 2566 sq ft plan:
Date Price Change
06/30/07 346,900 N/A
12/15/07 299,900 -47,000
02/15/08 301,900 +2,000
03/01/08 301,900 N/C
03/15/08 304,400 +2,500
Their smallest plan at 1840 sq ft:
Date Price Change
06/30/07 299,900 N/A
12/15/07 244,900 -55,000
02/15/08 261,900 +17,000
03/01/08 261,900 N/C
03/15/08 265,400 +3,500
Their largest currently available plan at 2786 sq ft:
Date Price Change
06/30/07 373,900 N/A
12/15/07 306,900 -67,000
02/15/08 321,900 +15,000
03/01/08 321,900 N/C
03/15/08 325,400 +3,500
The sweet spot where they got a bunch of their current contracts appears to be the Dec/Jan firesale, which was accompanied by low interest rates. Since then, they appear to be testing the market on pricing by raising pricing on popular plans in small increments. They don’t have any standing inventory, and probably won’t until August, assuming a 6 month build time frame.
Anyway, my gut says to wait until Dec/Jan of this year for better pricing because people were contracting during that timeframe and I think contracts are falling off with the increase in base price, or maybe waiting for the fall for inventory.
If they slashed their pricing back to the Dec/Jan lows, I’d probably buy given the current 30 yr fixed rates. I’m kind of kicking myself for not contracting back then, as it delays our buying by about a year. They’d have to give price drop rebates to anyone who contracted after 2/15, but that only applies to closing date. So it appears they can’t lower prices until August unless they really haven’t sold much after 2/15 and the reward is greater than the risk.
inclinejj
So many people where laughing at me saying..buy now buy now at the top of the market..They where laughing at a few of the older guys me included..we too old we no buy
All of these geniuses are either way negative now..under water or wishing they had waited..
It is going to be a bumpy 4 years
NAS
Diane-good thread.
What are the odds of mandating a seller to read the above link (as to current state of housing) the night before an offer is presented? A brief quiz at the end to verify that
they “get it.” If they fail, then a complementary visit to the Five Minute University with
Guido Sarducci. If this doesn’t work, then they are banned to a isolated outpost with
only Alan Greenspan to talk with….
Bob
New developments are lame and cookie cutter.
Why don’t you buy a house with some personality?
MKchick
“Personality” is not worth paying an extra $200k+ for — unless you are volunteering to do all the renovations and pay my mortgage? 😉
S. Reno buyer
MKchick,
KB will SCREW you on the options. Been there, done that, walked away quickly… Plus KB homes have a less than stellar reputation.
DERRICK
Hey if you can’t decide on a house let me know!.. You could always rent my casoleil condo from me!! /That is.. After the current 6 month lease I have in place for the current renters is up.
DERRICK
Hey if you can’t decide on a house let me know!.. You could always rent my casoleil condo from me!! /That is.. After the 6 month lease I have in place with the current tenants is up.
MKchick
What did KB “screw” you on? I’m not defending them by a long shot (and I know about the Texas litigation). But they are one of two builders building in South Reno with somewhat decent pricing at the moment.
CYAN’s and KB’s *structural* option pricing is relatively the same. I have both builders’ 30 page option price lists in front of me. The only difference between them is the location.
We’re looking for something at the price point we can afford; if I can save $30k going to CYAN, then we’ll buy there because I can live with the lesser location if I’m getting more peace of mind that I won’t be underwater a few years from now. But I don’t see the two builders being that off on base pricing from one another, and both builders have a ways to go on cutting their base pricing.
Anyone who thinks they are getting a discount or “less headache” on cosmetic options from a builder like upgraded carpet or granite countertops really needs a good talking to. You would pay the builder at least a $20k premium over hiring a subcontractor to rip the standard stuff out (or do it yourself) and replace with what you want.
The point is, that is STILL cheaper by a large margin than a resale in the same area. My only other alternative is to buy a foreclosure where the prior owner decided to take out his/her revenge on the place and the bank refuses to budge on pricing.
Sorry DERRICK, I’m content to continue to rent the SFR where I am at below market rate until this stabilizes somewhat. Our LL knows he’ll have a hard time renting the place when our lease is up, so he is doing what he can to keep us here as long as possible. But thank you for the offer. 🙂
S. Reno buyer
I was looking at the same 2 developments you were looking at. I walked away from the deal after the design center meeting. Their pricing is great…until you start adding up all the options and upgrades.
Example… we opted for the extra 5k to convert “open to below” to a loft. However, they dont tell you that the 5k doesnt include carpet. At your design center meeting, they inform you that you need another 1k worth of carpet. You cant get it without carpet, so why not just be up front and say that the upgrade is $6k?
They pulled the same stunt when we converted a 1/2 bath to a full bath for $2k. They said it added extra flooring (the large closet was replaced by a tub – how could it add flooring??) and they were going to charge us $500 for a few square feet of linoleum!!!
Now, when we added a huge island to the kitchen, I asked if they would deduct the square footage of flooring that would not be needed and the lady laughed in my face.
Another example: We wanted granite counters. They were going to charge $12-15k for bottom line granite. We took measurements, diagrams, etc. and went and got a few quotes. It would cost us $6-7k to get the same thing through someone else.
The upgrade from drywall to actual stair rails was VERY expensive as well. The nicest was wrought iron and this was approx a $15k upgrade.
Add this on to the fact that there is no overhead lighting included (approx $400 per room option), standard flooring is linoleum – not tile, carpet flooring in the master bath is standard.. I could go on and on. The price of your house goes up dramatically!!!
Keep in mind that we had approx $200k to put down and each have about an 800 credit score. So we were essentially the perfect buyers. The house that started out at $395k (plus an additional 3% discount for being a state employee) ended up at $475k and it wasnt even close to having what we wanted in upgrades. This was approx 1 yr ago. We walked away from the deal before the 30 day period was up.
MKchick
Yes, but that is the same thing Centex does. ALL builders — unless they are an “everything is included” builder, which puts the base price up another $40-60k — do the same thing. My parents bought new construction in the early 70s, and the builder did the same to them, charging $15 per additional electrical outlet. 😛
All we care about is structural and wiring; we’re ripping everything out and doing all the upgrades ourselves and with subs. If we did all the upgrades through the builder, it would add another $60k. We’d rather save at least $30k and do it ourselves. That is why the base price is so important to us.
I’d have to do the same for a resale or a foreclosure (at least the demo is already done on the foreclosure ha ha), and looking at the current listings for the sq footage we want in the same area –even assuming 80% of list — we’d still pay at least $20-100k more than new construction.
So to answer Diane’s question, we aren’t anywhere near a bottom, and we’ll probably sit on our cash for some time until something forces our hands.
inclinejj
Bottom somewhere in 2010..slight rebound in 2011
chewgumm
I think the “bottom” is closer than everyone thinks. It is probably really close in the stock market, and not far bnehind in housing. Once mortgage interest rates drop a little, people willl start buying again.
The “bottom” is going to come and go like a thief in the night. Then everyone will look back and say “that was the bottom”.
Don’t despair it is almost over.
MikeZ
Once mortgage interest rates drop a little, people will start buying again.
Unlikely. With the demise of ninja finance, you need $75K in documented income and $25K down for a $250K home. Without the ninja options, you’ve lost half to two-thirds of your potential buyers in the $250K market, and it’s even worse in the higher price ranges.
chewgumm
Well, I agree that I do not think that you will ever have the wild buying that we have seen. However, the market will rebound somewhat.
Maybe I am too optimistic, but I do not think so. Things change quickly and in ways that most do not see or could not fathome.
I have faith.
Sully
chewgumm – I agree that the bottom in stock market is relatively close but for housing, it’s just beginning its correction. Housing and stock market are not the same, you can’t sell a house in 3 minutes and get the cash in 3 days! Here is an interesting article you may want to read. I hope the link works.
http://www.investopedia.com/articles/07/housing_bubble.asp
inclinejj
I agree with Sully..Lots of bad loans and foreclosures and REO’s to work thru the system. Does anyone remember the Savings & Loan crisis of the 80’s. Go back and read up..
We had markets go up 100% in the last 4-5 years..
Just like during the S&L mess the gov’t came in too late and spent 165 billion to clean that mess up..2 days last week they pumped 200 billion into the banking system
Bear Stearns got taken down in this mess..We wiped an industry off the map the Savings & Loan, now the subprime lenders and alt a lenders are all gone..More Bond companies and Wall Street companies are going down also..
Wamu might not make it thru this without a merger..
Some east coast bank would love to the have the west coast branches.
MIke Van H
http://www.lvrj.com/business/16724811.html Things are getting a little intense in Las Vegas for renters as well, not just homeowners. Look at some of those foreclosure numbers by zip code in that story, that’s nuts! The scam of someone breaking the locks of a home, putting up for rent signs, and renting it out to renters for months without being caught is particularly unnerving. I’m sure we can expect some of that up here as more and more bank-owned homes make it back onto the MLS. I know I know, we’ve touched on the subject of renter’s rights during the foreclosure/auction process a million times, but it’s still unfair to make renters vacate within 5 days or even less sometimes. Especially if they have been there for years. If I am not mistaken, a homeowner can stay in his home through the entire foreclosure process and not pay a dime, ‘ride it out’. Then, the renter finds out only after the home is auctioned and they have 5 days or sometimes less to move. At least the bank gives them 30 days to move if it isn’t auctioned. I’d like to see some laws put into place that force homeowners to legally inform renting tenants when the home slips into foreclosure.
smarten
Mike, renters DO get more than 5 days notice of a pending foreclosure.
I can’t tell you for absolute certain in Nevada, but I think it’s very similar to California.
The first step is recordation of a notice of default [“NOD”]. Delivery to/posting upon the mortgaged property is one of the notice provisions that must take place.
The next step [at least 90/more days after recordation of a NOD] is recordation of a notice of sale. That too must be delivered to/posted upon the mortgaged property.
So a tenant in possession, if he’s/she’s observant, should have at least 4 months’ advance notice of any foreclosure sale.
My question would be why a tenant would continue paying rent to his/her landlord after being informed of foreclosure proceedings against his/her rental? I know what you’re going to answer but deeds of trust usually have provisions that permit the mortgagee to collect rental income from a mortgaged property once it is in default.
Me being a renter, if I saw a NOD posted to my rental home I’d initiate contact with the mortgagee and cut some sort of deal whereby I could remain in the property, even after a foreclosure sale, in consideration of my cooperating with the mortgagee by making my rental payments to he/she/it rather than my landlord [presumably, the mortgagor].
Reno Ignoramus
There is no requirement under Nevada law that either the Notice of Default or the subsequent Notice of Sale be posted upon the subject property.
The NOD must be recorded with the County Recorder and then mailed, by certified or registered mail, to the grantor at his address. If his adresss is not known, then the NOD must be mailed to the property. So, as long as the whereabouts of the non-occupant defaulting owner are known, there is no obligation to send notice to the address of the property.
The NOS must be delivered to the grantor by either personal service or certified mail. Plus, it must be posted in 3 public places in the county, but there is no requirment that it be posted on the subject property. Plus, the NOS must be published in an appropriate newspaper.
It is, therefore, entirely possible that a tenant living in the premises could never receive any actual notice of the default and sale. There is a way a sophisticated tenant can position himself as a ‘person with an interest’ in the property and thus be entiltled to all notices. But that requires a knowlege and sohistication that is well beyond the reach of your typical residential tenant.
It seems that every time we get into any discussion about the law here, somebody wants to argue about it. So, in order to head off 10 more posts about what, exactly, Nevada law requires, I refer all to the source. It is NRS 107.080. Everybody can go check it out.
Allen Murray
Its also not a good idea to assume that California laws are similar to Nevada laws. Nothing makes a lifelong Nevadan more irritated than hearing a California transplant tell us how they do it in California. I know for a fact that landlord tenant laws are vastly different.
Sully
Allen, calm down grasshopper! Our legal system is based on English common law, which makes the system similar throughout the U.S. (similar not always the same).
California, with its full time legislature that has nothing better to do then create more and more “nanny laws” to show why they should be re-elected, has fine tuned the law to a point that is totally overdone.
BTW, many of us transplants left for that very reason. Nevada being a bit less restrictive (maybe a LOT less) was a logical choice. I would not like to see Nevada become a clone of California, although it seems Las Vegas IS a suburb of Los Angeles.
Also, I agree you should be a little annoyed, so remember that next time an out of stater runs for a political office. Look what happened to Calif when Gray Davis got elected, anyway this is for a different post.
Allen Murray
Sully, my response was very calm, you should have heard what I was really thinking. You are correct in that a lot of you move here to get away from the socialistic thinking of California, but some have a hard time leaving that mentality behind. Vegas has always been considered eastern California in my opinion, but Reno is not far behind. Maybe I should move to Elko??=)
smarten
Hey Allen and RI –
You guys are right, I am wrong. Sorry.
RI is correct that if you’re a renter and want some protection from your landlord’s secured lender’s foreclosure, the answer is to record a formal request for notice of default. But only the most sophisticated of renters would ever think of being so proactive.
John Newell
Hi all! I have been watching this blog for a while now but never commented before. However, the issue of rights of tenants is one that is of interest to me. As a legal aid attorney in Reno, nearly 50% of my work is representing tenants in eviction actions.
As discussed above, NV law does not require notice to a tenant if the owner if in default. Unfortunately, the first notice the tenant receives is usually a 3-day notice to quit pursuant to NRS 40.255. The notice period may be longer, at the discretion of the new owner, but 3 days is the minimum.
There is a “positive” side, so to speak, in that the new owner cannot use the summary eviction procedures provided for in NRS 40.254 to obtain a quickie eviction. Rather, the new owner must pursue a formal eviction action by filing a complaint and serving the tenant with the complaint and a summons. Regardless of whether the tenant files an answer to the complaint, a hearing to show cause for a writ of restitution must be held before the court will issue such a writ (the eviction order). Depending on the township, this may take 30 days to 6 months after the complaint is served on the tenant. Since banks are reluctant to endure the time and expense of pursing a formal eviction action, they instead may offer the tenant cash to vacate within an agreed upon time frame (a variety of “cash for keys”). We have had clients who have received nearly $3000 to “encourage” them to vacate within 30 days.
Of course, as with most things in life, the above is only accurate in so far as the new owner follows the law. We have also seen cases where an individual who has purchased a home at the trustee’s sale tries to intimidate tenants to leave by serving improper notices and/or falsifying affidavits to the court. One problem with Nevada’s summary (quickie) eviction statutes (NRS 40.253 and 40.254) is that a lockout order (eviction) will be granted by the court unless the tenant objects by filing a timely affidavit. So, even if the new owner gives an incorrect notice and files a fraudulent (or at least erroneous) affidavit, then the court may still grant the order if the tenant does not act. And while we have had a modicum of success in having such problematic orders vacated, we only see a fraction of the tenants evicted in Washoe County.
Finally, a comment was made above about the common law. While certainly the common law does apply to landlord/tenant matters in Nevada, Nevada landlord/tenant statutes have many provisions that are contrary to the common law, and the common law leasehold principles should only be applied where Nevada law is silent. For example, at common law a lease typically runs with the land. However, Nevada statutory law provides that a new owner may terminate the tenancy of an existing tenant in most circumstances so long as a tenancy for life has not been established. Yes, it is possible that a new owner may, by agreement, take subject to an existing leasehold, but this is a contractual matter and is the exception, not the rule.
Allen Murray
Good info John. As I understand it, any new property owner whether it be bank or individual has to abide by the terms of any preexisting lease agreement. If the lease term has expired and they are holding over, or if they are on a month to month lease, a 30 day “no cause” eviction can be filed. Do I understand this correctly?
John Newell
Allen,
At common law the purchaser of real property took the property subject to any existing leaseholds. However, many states, including Nevada, have passed laws contrary to this principle. Specifically, NRS 40.255 provides:
1. …in any of the following cases, a person who holds over and continues in possession of real property or a mobile home after a 3-day written notice to quit has been served upon him, and also upon any subtenant in actual occupation of the premises, pursuant to NRS 40.280, may be removed as prescribed in NRS 40.290 to 40.420, inclusive:
(a) Where the property or mobile home has been sold under an execution against him or a person under whom he claims, and the title under the sale has been perfected;
(b) Where the property or mobile home has been sold upon the foreclosure of a mortgage, or under an express power of sale contained therein, executed by him or a person under whom he claims, and the title under the sale has been perfected;
(c) Where the property or mobile home has been sold under a power of sale granted by NRS 107.080 to the trustee of a deed of trust executed by such person or a person under whom he claims, and the title under such sale has been perfected; or
(d) Where the property or mobile home has been sold by him or a person under whom he claims, and the title under the sale has been perfected.
In the situations enumerated above in 1(a) through 1(d), a lease terminates upon the sale and perfection of title of the real property. Based on our interpretation of NRS 40.255 and on our court room experiences, it does not matter if the lease is within a fixed term or if is month-to-month. When a new owner perfects title, an existing lease terminates. Tenants’ rights groups and legal aid organizations have lobbied the legislature to change this, but without success. However, if enough tenants with term leases are evicted due to foreclosure, maybe the 2009 session will be more receptive.
Allen Murray
Very interesting……..so this being true, in what situation would a new property owner in Nevada pay an existing tenant to leave? I would assume to speed up the eviction process and save on attorney fees? Thanks for the info, this I did not know and I didn’t even have to pay you $150/hr=).
Sullly
Allen, if you were in Calif you would have saved $300 an hour.
John Newell
Allen,
The banks pay mainly to avoid the time of the formal eviction process, which in Washoe county is at least two months and often more like three months (assuming the tenant can be served quickly) from the time the complaint is filed to the time the order is issued. That time may increase as more foreclosure based eviction actions are brought since the formal process must be used if the new owner proceeds under a 3-day notice.
Attorney fees are often not an issue, however, because the prevailing party can ask for the losing party to pay reasonable attorney’s fees, and it is unlikely the tenant will prevail.
Finally, just as a foreclosed on owner who is evicted may trash a house, so may a tenant being evicted by a new owner. By paying the tenant to leave, the new owner likely will not seem like a “bad guy” and the tenant won’t trash the property (at least that is the theory).
And I am glad to provide information on landlord/tenant issues. Of course, the foregoing is only legal information, not advice, and if anyone is faced with a legal problem, that person should seek legal counsel. Can’t be a lawyer without a disclaimer, you know. 😉
smarten
Now I have a question Allen.
I understand Nevada law is different than in California but you mention that the prevailing party in a Nevada unlawful detainer proceeding can secure attorney’s fees against the unsuccessful party. In California [in fact in the vast majority of states] unless there’s a statute that expressly provides therefore; or parties have expressly agreed by means of contract; attorney’s fees are ordinarily NOT recoverable by either party in a legal proceeding [“the American Rule”].
So my question is in Nevada, is there a statute that expressly provides for attorney’s fees to the prevailing party in an unlawful detainer proceeding? If the answer’s no, then how can the successor owner of property [after foreclosure] subject to his/her predecessor’s lease [which presumably contains an attorney’s fee clause] recover attorney’s fees against his/her predecessor’s tenant, when the successor is not a party to his/her predecessor’s lease and is repudiating his/her predecessor’s lease?
Thanks.
New to Reno
I recently moved to the Reno area in the past 6 months with a relocation package. I have been following the the gov’t actions and the local market through this blog. For the past 6 months I have been renting and I am now going to rent again for a year now. The prices continue to drop and inventory continues to grow and with the uneasy feeling I am getting as to what a house is actually worth I believe I am making the right decision. My biggest fear is that I buy a house now and in 2 years I am transfered and the price of the house is worth less then that what I bought it for today. I am extremely frustrated right now by all of the gov’t intervention on subprime loans. It sounds as if I should have bought a house that I could not afford right away and I would have been bailed out for my poor decision. I have never missed a payment on a house in the past ten years and now I am being punished for being of good credit by the simple fact that I can not get a loan unless I have at least 10% down and my borrowing amounts have been limited due to this mess. I actually sold my house in another state 5 months ago for $11,000 less that what I paid for it 2 years ago. My current equity was not great but I have made investments to try to build this up to get to a 10% down payment on a $350,000 house. My current realtor is telling me I need to buy now and the market is getting better. Obviously this is not a true statement. So in closing I really appreciate what this blog has to offer (Renter rights from above is great) and will continue to monitor the situation.
Sean
new to reno- if i were you i would choose a new realtor as the one you have is out of sync with the current market.(Diane and Guy come to mind as replacements 🙂 )
John Newell
Smarten,
In Nevada, unlawful detainer matters, both summary and plenary, are usually heard by Justice Court. Pursuant to NRS 69.020 and 69.030, the prevailing party in Justice Court is entitled to costs, and attorney’s fees will be “taxed” as costs.
NRS 69.020 Prevailing party entitled to costs. The prevailing party in justice courts is entitled to costs of the action, and also of any proceedings taken by him in aid of an execution issued upon any judgment recovered therein.
NRS 69.030 Prevailing party allowed attorney’s fee to be taxed as costs in justice court. The prevailing party in any civil action at law in the justice courts of this State shall receive, in addition to the costs of court as now allowed by law, a reasonable attorney fee. The attorney fee shall be fixed by the justice and taxed as costs against the losing party.
Unless a statute or court rule specifically prohibits awarding of costs, then any action heard in a Nevada Justice Court may result in costs being awarded to the prevailing party. This is why creditors and collectors will pursue debts under $10,000 in Nevada (the jurisdictional cutoff for Justice Court) that they will not pursue in most jurisdictions. If they prevail, which they will in the majority of cases, the court will award costs.
It is possible that a plenary unlawful detainer action could have an amount in controversy greater than $10,000 and therefore fall under Nevada District Court Jurisdiction, but that is not a type of case I ever see.
Allen Murray
Smarten, I think you are addressing your question to John as I never said that the prevailing party can recover attorney’s fees. I can tell you that all of my rental agreements have a clause saying that I may recover my attorney’s fees, but like John says, once ownership changes, the preexisting lease doesn’t seem to be enforceable so I’m not sure if my attorney’s fees clause isn’t enforceable in that situation. I have been under the impression that preexisting leases were enforceable, but John is the expert, not me. John, thanks for the information and non advice.
smarten
Thanks for the clarification John [you’re right Allen, I mistakedly addressed the question to you rather than him].
Interesting explanation of attorney’s fees in Nevada and definitely the EXCEPTION rather than the rule throughout this country [but not the U.K.].
Here’s the problem. The spectre of having to pay the other side’s attorney’s fees and costs in addition to your own acts as a prior restraint and has a chilling effect upon one’s decision to participate in the litigation process.
Stated differently, why would a tenant EVER challenge an unlawful detainer action brought against him/her unless he’s/she’s absolutely squeaky clean?
Reno Ignoramus
Keep a few things in mind here. First, the statute that John refers to that provides that the prevailing party is entitled to recover attorney’s fees applies only to actions in the Justice Court. It does not apply to the District Court. Be careful not to generalize and assume that such is the case in all Nevada courts. It is not. The Justice Court is a court of fairly limited jurisdiction and what is true there is not necessarily true in the general jurisdiction District Court.
Second, before the Justice Court will award anything for an attorney’s fee, there has to be an attorney. An owner landlord representing himself in a Justice Court eviction case is not going to get an “attorney’s fee”.
Third, while the statute mandates the award of an attorney’s fee to the prevailing party, the amount of the fee is in the discretion of the Court. The fee is not necessarily whatever the landlord’s attorney asks for. It is what the court decides is reasonable. Perhaps John can share his experience here. My guess is that the large majority of landlords seeking to evict tenants are in court on their own. In such case, the topic of attorney’ fees is interesting, but irrelevant.
Reno Ignoramus
New to Reno:
If your current realtor is telling you that you need to buy now, I suggest that you run, not walk, away as fast as you can.
John Newell
Reno Ignoramus is correct: Nevada District Court is a different animal. However, unlawful detainer actions are almost never filed in District Court. He is also correct that attorney involvement in unlawful detainer actions is not the norm. Most unlawful detainer actions are summary actions (NRS 40.253 and 40.254), and in such actions it is very rare, at least in my experience, for the landlord to use an attorney. The legislature designed the summary eviction statutes so that attorneys would not be necessary. Also, it is all but impossible for a landlord to recover costs in a summary eviction action because the court only has jurisdiction to determine whether a lockout should be issued. If the landlord wants to pursue costs, that usually requires an independent action for damages.
However, if the landlord is forced to pursue a plenary unlawful detainer action (such as after a sale of real property or in mobile home lot evictions) by filing and serving a summons & complaint, then often an attorney is involved because of the more complex process. In such cases, the court will usually award costs, as long as they are reasonable.
My point above was the costs/fees are usually not the main impetus for a bank to pay for the tenant to leave rather than evicting the tenant, it is the time the process takes, at least in the cases we have seen. The bank may be able to recover some of its costs, but it will not be able to recover the time.
inclinejj
I know In California they post the Notice of Trustee Sale on the front door and and take a digital photo for the file..I have seen this also many times in Nevada also..
The trustee and foreclosure company wants a photo of the house and a photo of the Notice Of Trustee Sale posted on the property..Most of the time the front door..
Tom
John, I would very much like to read a Nevada decision under the above-quoted statutes, as referenced by you, if you or any of you has a citation handy. I am not persuaded that it is necessarily true in all cases that once ownership changes through a foreclosure sale, upon recordation of the trustee’s deed or the court’s order in a judicial foreclosure, that a preexisting lease is automatically extinguished. Suppose a long-term ground lease were in force, that an abstract of lease had been recorded, and hypothetically millions of dollars had been invested in improvements by that lessee. Is it a correct summary of Nevada law that such a lessee may be evicted and a forfeiture of his leasehold would take place, should the record title owner subsequently allow a mortgage to default? What if the defaulted mortgage were junior to the recorded abstract of lease? Seems harsh and unworkable to me. Because if that is the rule, that would seem to make any land unattractive to a ground lease developer, who would always face such risks unless he were prepared to immediately jump in and cure his lessor’s defaults throughout the term of the ground lease. He might end up having to bid against his own improved values at his lessor’s foreclosure sale, or risk becoming a wiped-out lessee. This would be the case even if the fee title owner defaulted on a security instrument, DOT or mortgage, junior to the ground lease, as I read the above summary. Where are the equities here? Thanks for any citation you might have.
Bob
yawn.
smarten
Tom –
You raise some interesting questions; thank you.
My experience has been that in California [I understand Nevada may be different], a purchaser at an involuntary foreclosure or execution sale obtains no greater interest in encumbered property than the trustor, mortgagor or debtor had at the time of sale. Thus if the trustor’s interest was subject to his/her tenant’s leasehold AT THE TIME the trustor mortgaged his/her property, any purchaser at a trustee’s sale founded upon that mortgage takes subject to that leasehold [the opposite of what John suggests (although this would not be the case where the mortgage pre-dates the leasehold)]. It is for this very reason that many commercial leases include subordination clauses whereby the tenant explicitly agrees that his/her/its lease is subordinate to any mortgage to thereafter be placed against the leased property. If this provision were not in place [especially insofar as long term leases are concerned], the property owner would in essence be prevented from [re]financing his/her/its property during the term of long term leases.
As an interesting side note, I had a case where an unrecorded, pre-existing deed of trust was NOT wiped out by a judgment creditor’s execution sale because the purchaser of the mortgaged property at the sale took subject to the debtor’s interest at the time of the sale. Since the debtor’s interest was subject to the unrecorded mortgage, so was the purchaser’s.
But again, this is Nevada [where we’re special].
Tom
I agree, Smarten, that the above is the rule in California, which seems equitable. According to the way I read John’s post, however, Nevada seems to do it differently.
Gene
Credit and foreclosure fall-out examples? Here’s a recent excerpt from The Wall Street Jounal:
“The developer of the Cosmopolitan Resort Casino, a $3.9 billion condo-hotel complex on the Las Vegas Strip, has been notified by its primary lender that it will begin foreclosure proceedings”
John Newell
The statute is a difficult one. As it is in derogation of the common law, it should be construed strictly under the canons of statutory interpretation. However, strict construal leads to a reading that is truly inequitable to lessees for term. And believe it or not, there are no Nevada Supreme Court decisions on point. The Nevada Supreme Court is the only true appellate court in the state judicial system. However, per Article 6, Section 6 of the Nevada Constitution, Nevada District Courts have “final appellate jurisdiction in cases arising in Justices Courts.” The vast majority of unlawful detainer actions in Nevada arise in Justice Court, so the decisions can only be appealed to the Nevada District Courts. As the district courts are not true appellate courts, published opinions out of district courts are rare, and we do not know of any on point regarding NRS 40.255.
As for the scenario you laid out, Tom, I agree with your concerns. I hesitate to comment in detail as such a situation is far removed from the landlord/tenant matters in my practice. I work for a legal services firm. We provide free legal assistance to low income people, so our experience tends to be with less sophisticated lessor/lessee relationships. However, if a lessee could remove an unlawful detainer action to Nevada District Court, then a challenge to the law could be mounted. I am watching the possible foreclosure on a Las Vegas casino with interest as any action to evict the casino operation would be a district court case, but the signs are that a deal is in the works.