One of the enjoyable parts of representing commercial landlords is that the eviction remedies available in NRS 40.253 and 40.300 actually work to quickly achieve the results that are desired by landlords. That is not the case in too many other areas of civil litigation. Unfortunately, however, the landlord-tenant provisions of NRS Chapter 40 contain somewhat archaic terminology that can be confusing. That confusion can lead to procedural defenses that slow down the eviction process and lead to frustrated and disappointed clients. The purpose of this article is to clarify some of the commonly confused commercial landlord-tenant issues. (Residential landlord-tenant issues are mainly covered in NRS Chapter 118A and will not be discussed in this article).

The two most common types of notices
NRS Chapter 40 provides several different types of notices that are utilized based upon the nature of the particular lease default or dispute. However, the majority of commercial landlord-tenant matters are either defaults in the payment of rent (NRS 40.2512) or failures to perform conditions of the lease (NRS 40.2516).

Distinction between monetary defaults and defaults in the payment of rent
Not every monetary default is a failure to pay rent. For example, the monetary default may be for failure to pay common area maintenance charges or taxes. Such items may constitute rent only if the underlying lease provides that such charges and costs are additional rental. Friedman on Leases § 5:1.1, (2006)(internal citation omitted). This is an important distinction because the summary eviction remedy is not available where default is a monetary default that would not constitute the failure to pay "rent." See 118.090 (defines "rent") and NRS 40.253(9) (distinguishes rent from "collection fees, attorney’s fees or other costs other than rent. . . ). If the monetary default is not a failure to pay rent, the appropriate remedy is the unlawful detainer remedy specified in NRS 40.300.

Claims for contract damages for post-eviction rent
NRS 40.253, the statute providing the supplemental remedy of summary eviction, does not discuss whether an order for summary eviction releases the tenant from claims for contract damages for post-eviction rent. Nevertheless, some attorneys argue that an eviction does release a tenant from liability for such damages. They argue that their position is supported by the Supreme Court of Nevada’s dicta statement in Lynn v. Ingalls, 100 Nev. 115, 676 P.2d 797 (1984), that a landlord may "elect to declare the lease terminated and seek an unlawful detainer action to oust the defaulting tenant. See NRS 40.253." They also point to NRS 40.360(1), which provides that a judgment for unlawful detainer "shall also declare the forfeiture of such lease or ageement."

Unfortunately, the Supreme Court of Nevada has not determined whether a landlord that obtains a summary eviction pursuant to NRS 40.253 or a judgment for restitution pursuant to NRS 40.360(1) loses its claim against the tenant for contract damages for post-eviction rent. Courts are now less unfriendly to the idea of enforcing savings clauses that reserve the rights of a landlord to contract damages for post-eviction rent. See Friedman on Leases, § 16:3.3 (2006); Hi Kai Investment, Ltd. v. Aloha Futons, Beds & Waterbeds, Inc., 929 P.2d 88 (Haw.1996); and Circuit City Stores, Inc. v. Rockville Pike Joint Venture Limited Partnership, 829 A.2d 976 (Md.2003). Therefore, if there is a well-drafted savings clause in the lease, the landlord has a strong argument that it is entitled to contract damages for post-eviction rent. Nevertheless, the landlord should understand this issue prior to utilizing the NRS Chapter 40 eviction remedies.

Five-day notice to pay rent or quit jurisdiction
If the default is a default in the payment of rent, the notice must conform to the requirements of NRS 40.253(3). A link to a good sample Five-Day Notice to Pay Rent or Quit may be found on the Las Vegas Township Justice Court website, http://www.clarkcountycourts.us/lvjc/court-forms.html. NRS 4.370(1)(g) provides that the jurisdiction of the justice courts is limited to those landlord-tenant matters where the damages claimed are less than $10,000.00. Therefore, if the amount of delinquent rent is in excess of $10,000.00, the district court would have jurisdiction. Keep in mind, however, that most commercial landlord-tenant matters will exceed $10,000.00 and, therefore, will be within the jurisdiction of the district court.

Five-day notice to perform covenant or surrender
NRS 40.2516 provides that a tenant is guilty of an unlawful detainer if it remains in possession after it receives and fails for five days after service to comply with a written notice requiring the performance of a condition or covenant of the lease. The statute does not contain a form, but it does specify the required language. In common practice, the NRS 40.2516 notice looks much the same as the NRS 40.2512 Five-Day Notice to Pay Rent or Quit. One important distinction is that the Five-Day Notice to Perform Covenant or Surrender will not specify that the tenant may file a response in the court. There is no need for such a response because the landlord is not entitled to seek a summary eviction under NRS 40.253 when the default is not for the failure to pay rent. Rather, if the tenant does not comply with the notice, the landlord will have to file a verified complaint for unlawful detainer and motion to seek a writ of restitution pursuant to NRS 40.300.

Service of the notice on the tenant, subtenants, and any guarantors
The notice must be served in accordance with NRS 40.280. The notice should include proof of service (see the Five-Day Notice form referenced above) and should be served upon any guarantors of the lease in order to avoid their subsequent procedural defenses.

The tenant’s contesting affidavit
Pursuant to NRS 40.253(3), a tenant may file an affidavit "stating that he has tendered payment or is not in default in the payment of rent" with the court having jurisdiction over the matter. If the tenant files an affidavit contesting the Five-Day Pay or Quit Notice, the court shall, after service of notice upon both parties, hold a hearing "to determine the truthfulness and sufficiency" of the affidavit. If the court determines there is no legal defense, it may issue a summary order for removal of the tenant or an order providing the nonadmittance of the tenant." NRS 40.253(6). If the court does find there is a legal defense, the request for summary eviction will be denied, but the landlord may continue with an action for unlawful detainer. NRS 40.253(6). Affidavit of complaint for summary eviction

If the tenant does not file a contesting affidavit or comply with the Five-Day Pay or Quit Notice, the landlord will then file an Affidavit of Complaint for Summary Eviction. The requirements for the form of affidavit of complaint are set forth in NRS 40.253(5). Generally, the form must set forth specific information such as the term of the lease, the delinquent amount, the length of time the tenant has gone without paying, and the amount of rent claimed. NRS 40.253(5). A sample affidavit of complaint for summary eviction can be found on the Las Vegas Township Justice Court website, http://www.clarkcountycourts.us/lvjc/court-forms.html (but keep in mind the jurisdictional issues discussed above). Also, the landlord will include claims for post-eviction damages.

When they are understood, the eviction remedies contained in NRS 40.253 and 40.300 may be utilized to help landlords quickly achieve desired results. Those quick results will help you enjoy representing commercial landlords.

Con Artists Targeting Homeowners Facing Foreclosure
by Catherine Cortez Masto 

Most of us know someone affected by mortgage foreclosure—a co-worker, a relative, or a neighbor. As a result, we are faced with two related problems in our Nevada communities.

Problems due to foreclosures
The first problem is the foreclosure crisis itself; the very real possibility that homes may be lost. According to an industry study completed by RealtyTrac, Nevada is number one in the nation for its foreclosure rate. The numbers are staggering:

• 3.4 percent of households entered foreclosure in 2007; that’s one in every 519 households.
• 66,316 foreclosure filings in 2007—a 200 percent increase from 2006.

It is a statewide problem, but Las Vegas is the hardest hit area. More than 90 percent of the foreclosures in Nevada are occurring in Clark County. In the first three months of this year, 15,876 defaults were recorded in Clark County. That’s more than double the amount of foreclosures recorded during the first three months of last year. Unfortunately, with a huge wave of hybrid ARMs due to reset this summer, many Nevada homeowners will find their payments ballooning by as much as 50 percent.

The foreclosure rate is an important indicator of the state of the housing market, because there is a direct correlation between foreclosure and mortgage loans that were obtained with fraudulent information. It is important to note that a significant rise in foreclosed homes brings additional problems to the area, such as neighborhood disrepair, lower property values, and increased crime.

Mortgage fraud
The second problem is that mortgage related fraud is an alive and growing industry. Swindlers are preying on people fearful of losing their homes, making a bad situation much worse. Recently, my office, along with State Treasurer Kate Marshall’s office and U.S. Senator Harry Reid’s office, organized and hosted a foreclosure prevention resource event in Las Vegas to support Nevadans facing the threat of losing their homes. It provided an opportunity for those people dealing with financial hardship to meet one-on-one with mortgage lenders, housing counselors, and others able to provide assistance.

I attended both days of the event and was overwhelmed by the response. Many people came up to me to express their appreciation for caring enough to provide an opportunity for them to be heard and receive assistance. Similar events are planned for Reno and Fernley in the near future. Unfortunately, many more Nevadans than the 1,328 in attendance at the Las Vegas event are threatened by foreclosure or are struggling with this process now.

Many of the homeowners who attended the recent foreclosure prevention event also approached members of my staff to talk with them about foreclosure rescue scams. Several knew of or had become victims of such scams.

Some of the schemes are quite complicated, but most are presented as a way for you to keep your home. The classic foreclosure rescue scam involves a so-called "investor" offering to buy the house from the homeowner, which the "investor" will then lease back to the homeowner. Often this "investor" will promise the homeowner the opportunity to buy it back after the homeowner’s financial situation improves. In the end, the rental costs and any repurchase plan will prove too much, and the homeowner loses the house and any equity that they had built up.

There are also phantom help schemes. A supposed rescuer, offering promises of assistance, will charge very high fees for basic phone calls the homeowner could have made on their own. Perhaps the scammer will promise to represent the homeowner in some way and then not follow through. These same services are available for free through the U.S. Department of Housing and Urban Development (HUD) and the Homeownership Preservation Foundation. These organizations face a heavy workload and are dealing with many requests, so some patience is required.

Scammers can come in all shapes and sizes. Foreclosure rescue scams are often perpetrated by people of a similar ethnic, religious, or age group to the homeowner. Swindlers understand all too well that we tend to trust people who appear to be like us. Even if you are facing a seemingly desperate situation, try to remember the old saying that if something sounds "too good to be true," it probably is.

Mortgage fraud is a broad area that can involve elements of elder exploitation, identity theft and securities fraud, which are all areas the Attorney General’s Office has targeted as priority crimes for prosecution. Mortgage fraud is a particularly egregious crime because it can leave its victims homeless and financially destitute.

Recent legislation
To address these foreclosure scams, Nevada law enforcement agencies have new jurisdiction to go after scammers who commit mortgage foreclosure fraud. State lawmakers passed AB440, which went into affect in October 2007. AB 440, primarily sponsored by Assemblyman Marcus Conklin, enables the State of Nevada to punish those who defraud a participant in a mortgage lending transaction as well as punish those foreclosure rescuers engaging in fraud. Georgia, which previously held the top spot for mortgage fraud in the nation, recently passed similar legislation for mortgage fraud and subsequently dropped from first in the nation to third. AB440 provides criminal penalties as high as a 20-year jail sentence and $50,000 fine for mortgage fraud. It also allows a homeowner to seek to rescind a foreclosure reconveyance if the transaction turns out to be fraudulent.

AB440 also makes it an unfair lending practice for a lender to make a home loan without determining that the borrower will be able to repay the loan. The new legislation also prohibits a foreclosure consultant from collecting any payment for services rendered until the consultant has performed all services promised. It also prohibits a foreclosure consultant from taking any wage assignment, lien on property, assignment of a homeowner’s equity or other interest in a residence in foreclosure, or other security as compensation. In addition, the legislation prohibits a foreclosure consultant from acquiring any interest in a residence in foreclosure of a homeowner for whom the foreclosure consultant has contracted to perform services. These prohibitions are intended to ensure that a foreclosure consultant will act in the best interests of a homeowner who seeks his help.

Finally, you should know that my office is working with federal and local law enforcement to investigate, find, and punish people and organizations responsible for fraudulently inducing homeowners to purchase their properties in the first place. While this holds the perpetrator accountable, it will not return property or re-kindle dreams of the victims. Those facing foreclosure should seek reputable and reliable counseling and, most importantly, avoid "too good to be true" enticements from swindlers in order to prevent a bad situation from becoming worse.

Additional information to assist homeowners is available at my office website, www.ag.state.nv.us, which contains links to important sources of information and counseling. Nonprofit counselors are available from www.995hope.org and www.hud.gov/foreclosure.

Catherine Cortez Masto is Nevada’s Attorney General. A life-long devotee to public service, she has worked as a federal prosecutor, Assistant Clark County Manager and Chief of Staff to former Governor Bob Miller. Attorney General Masto has dedicated the resources of the Attorney General’s Office to defending Nevada’s constitution and state agencies as well as prosecuting criminals who take advantage of Nevada’s children, seniors and consumers.