The Nevada Supreme Court recently interpreted a statute that governs the manner in which a foreclosing trustee can postpone a trustee’s sale. At issue was whether a trustee must record a new notice of sale upon orally postponing a trustee’s sale for a third time. The court held the trustee does not have to record a new notice of sale under such circumstances. The opinion in JED Property, LLC v. Coastline RE Holdings NV Corp., issued on March 5, 2015, is of importance for both commercial and residential lenders with loans in Nevada.

Chapter 107 of the Nevada Revised Statutes (NRS) governs nonjudicial foreclosure sales under deeds of trust in Nevada. Under this statute, the trustee begins nonjudicial foreclosure by recording a notice of default with the county recorder. The trustee must also send the notice of default to the borrower and the title owner of the property. If the default is not cured within three months of recording the notice of default, the trustee may issue a notice of sale setting a time and place for a trustee’s sale. Among other things, the trustee must generally record the notice of sale with the county recorder, send it to the borrower, post it in a public place for 20 successive days, and publish it in a general circulation newspaper once per week for three consecutive weeks. Additional requirements apply for “residential foreclosures” and foreclosures against “owner-occupied housing.”

At the date, time, and location specified in the notice of sale, the trustee may proceed with the sale or may orally postpone the sale to a later date at the same location and time. NRS 107.082(2) provides that “[i]f such a sale has been postponed by oral proclamation three times, any new sale information must be provided by notice as provided in NRS 107.080.” The trustee in JED Property, relying on this statute, orally postponed its sale three times and then sold the subject property at the location, date, and time specified by the third oral postponement. The borrower argued that NRS 107.082(2) required that the trustee provide the new sale information resulting from the third oral postponement through the recording, mailing, posting, and publication processes set out in NRS 107.080.

The Nevada Supreme Court, however, held that the statute’s plain language did not require the trustee to record a new notice of sale under these circumstances. The court reasoned that where a sale “has been” orally postponed for a third time, any “new sale information” has already been provided through that postponement itself. As long as the date, time, and location of the sale remain the same after the third oral postponement, there is no “new sale information” to provide that would require a new notice of sale under NRS 107.082(2).

This decision reinforces the common interpretation of NRS 107.080, which is that a trustee may orally postpone a sale up to three times without recording a new notice of sale. However, if the trustee wishes to postpone the sale a fourth time, the trustee should record, mail, post, and publish a new notice of sale listing the updated date, time, and location.

The court also suggested in dicta that where NRS 107.082(2) does apply—i.e., where a trustee has postponed a sale for a fourth time—the trustee only must record a new notice of sale. That is, the trustee does not have to record a new notice of default, as some Nevada borrowers have argued. Requiring a trustee to record a new notice of default after a fourth postponement would essentially restart the entire nonjudicial foreclosure process.

Despite this case, several questions remain unanswered about the oral postponement process in nonjudicial foreclosure. Neither the relevant statutes nor Nevada case law clarify if there is a limit on how long a single oral postponement can last or whether there is a deadline by which the renoticing required by NRS 107.082(2) must occur.

Attorneys at Ballard Spahr regularly advise lenders and trustees in all aspects of Nevada foreclosure requirements and have been involved in the workout, restructuring, and foreclosure of more than $3 billion in loans secured by Nevada properties.