Fair-market-value cap on a deficiency judgment
Nev. Rev. Stat. § 40.459(2)
In plain words
After a foreclosure sale, a court may not award a deficiency larger than the debt minus the home’s fair market value at the time of sale (or the debt minus the sale price, whichever is smaller). Some purchase-money home loans cannot have a deficiency at all.
Who is protected
Nevada borrowers and guarantors facing a deficiency claim.
When it applies
- Only in Nevada.
- Only after the foreclosure sale.
What you can do
Prepare value evidence for the hearing
Bring appraisals or comparable sales to the deficiency hearing.
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Honest limits
- The lender has six months after the sale to seek a deficiency; a deficiency can still be owed.
- This is general education, not legal advice. Laws change and details matter — check the current official text or talk to a legal aid lawyer or HUD-approved housing counselor.
The law
- State lawLimits on deficiency judgment
Nev. Rev. Stat. § 40.459(2)
Exact part: (2)
What it says: A deficiency cannot exceed the debt minus fair market value, or the debt minus the sale price.
Read the official texthttps://www.leg.state.nv.us/NRS/NRS-040.html#NRS040Sec459
Court cases
- Homeowner lostSame topicMartins v. BAC Home Loans Servicing, L.P.
Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249 (5th Cir. 2013)
a mortgage servicer acting for a properly assigned mortgagee may foreclose in Texas without possessing the original note, and an oral promise to modify a large loan is not enforceable
- Homeowner lostSame topicMilton v. U.S. Bank National Ass'n
Milton v. U.S. Bank Nat'l Ass'n, 508 F. App'x 326 (5th Cir. 2013) (per curiam) (unpublished)
an agreement to delay a Texas foreclosure falls within the statute of frauds and must be in writing to be enforced
- Homeowner lostSame topicBFP v. Resolution Trust Corp.
BFP v. Resol. Tr. Corp., 511 U.S. 531 (1994)
the price received at a non-collusive foreclosure sale that complied with state law is reasonably equivalent value under the Bankruptcy Code
Related rights
Right to 35 days to cure and at least 3 months before a trustee sale
Nev. Rev. Stat. § 107.080(2)(a), (2)(d)
A Nevada trustee cannot sell until a notice of default and election to sell has been recorded and mailed, you have had 35 days to make good the missed payments (15 days in some older loans), and at least 3 months have passed since the notice was recorded. A notice of sale then follows before the auction.
Read this rightThe government cannot keep your home equity beyond the tax debt
U.S. Const. amend. VTakings Clause
If your home is taken or sold to pay property taxes, the government may collect what you owe, but it may not keep the extra value. Keeping the surplus is a "taking" of your property without just compensation, which the Fifth Amendment forbids (Tyler v. Hennepin County, 2023). You may be able to claim the surplus, but you usually must follow your state's claim process and deadlines.
Read this rightAfter a discharge, creditors cannot collect the wiped-out debt from you
11 U.S.C. § 524(a)(2)
A bankruptcy discharge wipes out your personal liability for most debts in the case. After that, the law forbids creditors from suing, calling or otherwise trying to collect a discharged debt from you personally. A court can hold a creditor in contempt if there was no fair doubt that its conduct was barred.
Read this rightRenters get at least 90 days' notice after a foreclosure
12 U.S.C. § 5220 note(Pub. L. 111-22, div. A, § 702(a)–(b))
If you rent a home that goes through foreclosure, the new owner must give you a notice to move at least 90 days before you have to leave. If you have a real (bona fide) lease signed before the foreclosure notice, you can usually stay until the lease ends. The exception is when the new owner will live in the home; even then you still get the 90 days' notice.
Read this right