How Nevada Deeds of Trust Work
The first part of this slide show gives you background about deeds of trust
If a borrower needs $10,000 to buy land from a seller
If a borrower needs $10,000 to buy land from a seller
Buyer Borrower
(needs $10k)
LandSeller
If a borrower needs $10,000 to buy land from a seller, and a lender has $10,000
Buyer Borrower
(needs $10k)
BankLender(lender has $10k)
LandSeller
If a borrower needs $10,000 to buy land from a seller, and a lender has $10,000
Buyer Borrower
(needs $10k)
BankLender(lender has $10k)
LandSeller
$10k
If a borrower needs $10,000 to buy land from a seller, and a lender has $10,000
Buyer Borrower
(needs $10k)
BankLender(lender has $10k)
LandSeller
$10k
The lender gives the $10,000 to the borrower to buy the land
If a borrower needs $10,000 to buy land from a seller, and a lender has $10,000
Buyer Borrower
(needs $10k)
BankLender(lender has $10k)
LandSeller
$10k
The lender gives the $10,000 to the borrower to buy the land
The borrower gives a $10,000 promissory note to the lender
If a borrower needs $10,000 to buy land from a seller, and a lender has $10,000
Buyer Borrower
(needs $10k)
BankLender(lender has $10k)
LandSeller
$10k
The lender gives the $10,000 to the borrower to buy the land
The borrower gives a $10,000 promissory note to the lender
Promissory Note (IOU)
If a borrower needs $10,000 to buy land from a seller, and a lender has $10,000
Buyer Borrower
(needs $10k)
BankLender(lender has $10k)
LandSeller
$10k
The lender gives the $10,000 to the borrower to buy the land
The borrower gives a $10,000 promissory note to the lender
Promissory Note (IOU)
The buyer gives $10,000 to the seller & seller conveys land to the buyer/borrower
If a borrower needs $10,000 to buy land from a seller, and a lender has $10,000
Buyer Borrower
(needs $10k)
BankLender(lender has $10k)
LandSeller
$10k
The lender gives the $10,000 to the borrower to buy the land
The borrower gives a $10,000 promissory note to the lender
Promissory Note (IOU)
The buyer gives $10,000 to the seller & seller conveys land to the buyer/borrower
LandSeller
$
Promissory Note (IOU)
$10kBuyer
Borrower(needs $10k)
BankLender(lender has $10k)
If the borrower doesn’t pay the note, the lender must sue to get a judgment for $10k against the borrower, then find assets to seize.
LandSeller
$
Promissory Note (IOU)
$10kBuyer
Borrower(needs $10k)
BankLender(lender has $10k)
If the borrower doesn’t pay the note, the lender must sue to get a judgment for $10k against the borrower, then find assets to seize.
If the lender gets a deed of trust against the property as security for the note, the lender can foreclose on the deed of trust, get fully paid or get the property and apply its fair market value against the $10,000 that is owed.
LandSeller
$
Promissory Note (IOU)
$10kBuyer
Borrower(needs $10k)
BankLender(lender has $10k)
If the borrower doesn’t pay the note, the lender must sue to get a judgment for $10k against the borrower, then find assets to seize.
If the lender gets a deed of trust against the property as security for the note, the lender can foreclose on the deed of trust, get fully paid or get the property and apply its fair market value against the $10,000 that is owed.
LandSeller
$
The balance of the slide show demonstrates how deeds of trust work
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Trust Deed
Land
Trustee
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Trust Deed
Land
Trustee
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
The trustee is a third party, usually a title company, who is obligated to follow the terms of the trust deed.
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Trust Deed
Land
Trustee
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
The trustee is a third party, usually a title company, who is obligated to follow the terms of the trust deed.
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
The lender is the beneficiary of the TD.
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Trust Deed
Land
Trustee
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
The trustee is a third party, usually a title company, who is obligated to follow the terms of the trust deed.
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
The lender is the beneficiary of the TD.
Beneficiary of TD
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Trust Deed
Land
Trustee
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
Beneficiary of TD
The trustee’s obligations under the trust deed are:
The trustee is a third party, usually a title company, who is obligated to follow the terms of the trust deed.
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
The lender is the beneficiary of the TD.
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Trust Deed
Land
Trustee
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
Beneficiary of TD
The trustee’s obligations under the trust deed are:
The trustee is a third party, usually a title company, who is obligated to follow the terms of the trust deed.
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
The lender is the beneficiary of the TD.
-If borrower pays, reconvey title to borrower
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Trust Deed
Land
Trustee
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
Beneficiary of TD
The trustee’s obligations under the trust deed are:
The trustee is a third party, usually a title company, who is obligated to follow the terms of the trust deed.
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
The lender is the beneficiary of the TD.
-If borrower pays, reconvey title to borrower
Reconvey
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Trust Deed
Land
Trustee
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
Beneficiary of TD
The trustee’s obligations under the trust deed are:
The trustee is a third party, usually a title company, who is obligated to follow the terms of the trust deed.
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
The lender is the beneficiary of the TD.
-If borrower pays, reconvey title to borrower
Reconvey
-If Borrower defaults, give notice, advertise and sell the property
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Trust Deed
Land
Trustee
Grantor Trustor
BankLender(lender has $10k)
LandSeller
$
Beneficiary of TD
The trustee’s obligations under the trust deed are:
The trustee is a third party, usually a title company, who is obligated to follow the terms of the trust deed.
The borrower (also know as a grantor or trustor) transfers the property to a trustee with a special deed called a deed of trust (also know as trust deed or TD). The borrower still owns the property, but has given the power to sell it at a foreclosure to the trustee.
The lender is the beneficiary of the TD.
-If borrower pays, reconvey title to borrower
Reconvey
-If Borrower defaults, give notice, advertise and sell the property
The next slides show the foreclosure time frames
Reconvey
Trust Deed
Land
Trustee
Grantor Trustor
Foreclosure time frame
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Beneficiary of TD
BankLender(lender has $10k)
-If borrower defaults, give notice, advertise and sell the property
-If borrower pays, reconvey title to borrower
LandSeller
$
Reconvey
Trust Deed
Land
Trustee
Grantor Trustor
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
-If borrower defaults, give notice, advertise and sell the property
-If borrower pays, reconvey title to borrower
Reconvey
Trust Deed
Land
Trustee
Grantor Trustor
35days
Right to cure (pay all expenses + back pymts)
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
-If borrower defaults, give notice, advertise and sell the property
-If borrower pays, reconvey title to borrower
Reconvey
Trust Deed
Land
Trustee
Grantor Trustor
55days
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
35days
Right to cure (pay all expenses + back pymts)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
-If borrower defaults, give notice, advertise and sell the property
-If borrower pays, reconvey title to borrower
Reconvey
Trust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
35days
Right to cure (pay all expenses + back pymts)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
-If borrower defaults, give notice, advertise and sell the property
-If borrower pays, reconvey title to borrower
Reconvey
Trust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
The land is sold on this date by the trustee—Who will be the buyer?
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
Trust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Credit bid(decrease sthe amount owed)
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
The lender/beneficiary?
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
Trust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Credit bid(decrease sthe amount owed)
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
The lender/beneficiary?
Or a 3rd party buyer? 3P
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
Trust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Credit bid(decrease sthe amount owed)
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
The lender/beneficiary?
Or a 3rd party buyer? 3P
If the lender wants to sue the borrower for a deficiency, the lender must sue within 6 months of the foreclosure
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
3PTrust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks 6 months
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Last day to sue for deficiencyNRS 40.455
Credit bid(decrease sthe amount owed)
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
If the lender wants to sue the borrower for a deficiency, the lender must sue within 6 months of the foreclosure
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
3PTrust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks 6 months
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Last day to sue for deficiencyNRS 40.455
How is the deficiency calculated?
Credit bid(decrease sthe amount owed)
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10k
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
3PTrust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks 6 months
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Last day to sue for deficiencyNRS 40.455
How is the deficiency calculated?
Credit bid(decrease sthe amount owed)
Foreclosure time frame
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10kLesser of A or B (per NRS 40.459)
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
3PTrust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks 6 months
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Last day to sue for deficiencyNRS 40.455
How is the deficiency calculated?
Credit bid(decrease sthe amount owed)
Foreclosure time frame
$0
A Amt Owed $10,000 -FMV $15,000
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10kLesser of A or B (per NRS 40.459)
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
3PTrust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks 6 months
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Last day to sue for deficiencyNRS 40.455
How is the deficiency calculated?
Credit bid(decrease sthe amount owed)
Foreclosure time frame
$0
A Amt Owed $10,000 -FMV $15,000
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10kLesser of A or B (per NRS 40.459)
B Amt Owed $10k-Amt sold $ 1k
$9k
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
3PTrust Deed
Land
Trustee
Grantor Trustor
55days
3 weeks 6 months
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Last day to sue for deficiencyNRS 40.455
How is the deficiency calculated?
Credit bid(decrease sthe amount owed)
Foreclosure time frame
$0
A Amt Owed $10,000 -FMV $15,000
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10kLesser of A or B (per NRS 40.459)
B Amt Owed $10k-Amt sold $ 1k
$9k
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$
Reconvey
3P
Land
Trustee
Grantor Trustor
55days
3 weeks 6 months
Notice of Sale published 3 months (not 90 days) from recording of the Notice of Breach
Last day to sue for deficiencyNRS 40.455
How is the deficiency calculated?
Credit bid(decrease sthe amount owed)
Foreclosure time frame
$0
A Amt Owed $10,000 -FMV $15,000
Record &ServeNotice of BreachDefault
Promissory Note (IOU)
Buyer Borrower
(needs $10k)
$10kLesser of A or B (per NRS 40.459)
B Amt Owed $10k-Amt sold $ 1k
$9kTrust DeedLesser is $0, thus no deficiency
35days
Right to cure (pay all expenses + back pymts)
Advertise once a week for 3 weeks then hold Foreclosure Sale (suction)
Beneficiary of TD
BankLender(lender has $10k)
LandSeller
$