When purchases are financed or money is lent in Nevada, assets often secure the transaction. The entity holding this security interest is called a lienholder, an important party in these financial arrangements.
Liens can affect property ownership, complicate sales, and cause legal problems if not handled correctly. Understanding Nevada’s lien laws helps ensure smoother transactions.
Legal Classification of Lienholders in Nevada
Nevada law classifies lienholders based on how the debt originated and the type of property secured.
Statutory lienholders get their rights directly from Nevada laws, often without a formal agreement. For example, mechanics’ liens (Nevada Revised Statutes Chapter 108) allow those who improve real property to secure payment by liening that property.1Justia US Law. Nevada Revised Statutes Chapter 108 (2024) – Statutory Liens Similar liens exist for storage services and repairs to personal property.
Consensual lienholders arise from voluntary agreements. Mortgages on real estate and security interests in personal property (like vehicles) are common examples where a borrower grants a lender a lien as loan collateral. The Uniform Commercial Code (UCC) governs many personal property security interests. Real property mortgage liens are recorded with the county recorder.
Judicial lienholders result from court orders. If a debtor fails to pay a money judgment, the creditor can pursue a lien on the debtor’s property, such as by recording an abstract of judgment for real property or using a writ of execution for personal property.
Requirements for Creating a Valid Lien
Creating a valid lien in Nevada requires following specific rules that vary by lien type. For mechanics’ liens (Nevada Revised Statutes Chapter 108), claimants first send a Notice of Right to Lien to the property owner and prime contractor. Residential projects may also require a Notice of Intent to Lien before recording the actual Notice of Lien.2Justia US Law. Nevada Revised Statutes § 108.226 (2024) – Perfection of Lien, Notice Contents, and Intent to Lien Requirements
The Notice of Lien must be recorded with the county recorder within 90 days of finishing work or supplying materials (or 40 days if a Notice of Completion is recorded). This notice must include:
- The lienable amount
- The owner’s name
- The claimant’s employer
- Payment terms
- A description of the property
All information must be verified by oath. A copy must be served to the owner after recording. Proper state licensing is also needed for lien rights if the work requires a license.
Consensual liens on real property, like mortgages, require a written agreement signed by the property owner, which must be recorded. Some residential mortgage loans also require pre-foreclosure notices before starting default proceedings.3Nevada Public Law. NRS 107.500 – Pre-Foreclosure Notice Requirements for Residential Mortgages
For personal property security interests under Nevada’s UCC (Nevada Revised Statutes Chapter 104), a signed security agreement describing the collateral is needed, value must be given, and the debtor must have rights in the collateral. To make the interest effective against others (perfection), a financing statement (UCC-1 form) is filed with the Nevada Secretary of State.4Nevada Secretary of State. UCC Forms This statement must name the debtor and secured party and identify the collateral.
Judicial liens are created through the court system. A creditor with a money judgment can lien a debtor’s real property by recording an abstract of judgment with the county recorder. For personal property, a lien is created by levying on the asset under a writ of execution. Nevada Revised Statutes section 21.075 requires specific notice to the judgment debtor about the execution and possible exemptions.5Justia US Law. Nevada Revised Statutes § 21.075 (2024) – Notice of Writ of Execution: Service, Form, and Contents
Rights and Duties of Lienholders
Once a valid lien is established in Nevada, a lienholder has certain rights and responsibilities. A main right is to secure repayment, by forcing the sale of the property if the debtor defaults. For real estate loans secured by a deed of trust, the lender can direct the trustee to start a non-judicial foreclosure (Nevada Revised Statutes Chapter 107), involving steps like recording a Notice of Default and ending in a public auction.
Holders of security interests in personal property under Nevada’s UCC can take possession of collateral after default (if without breaching the peace) and sell it. Nevada Revised Statutes section 104.9610 governs this disposition.6Justia US Law. Nevada Revised Statutes § 104.9610 (2024) – Disposition of Collateral After Default Statutory lienholders, like those with mechanics’ liens, enforce payment through a court-ordered judicial foreclosure sale. Lienholders also have the right to receive notices about actions affecting their interest, such as senior lien foreclosures or debtor bankruptcies.
Lienholders also have duties. When a secured debt is fully paid, the lienholder must release the lien. For real property, this involves recording a deed of reconveyance for deeds of trust or a satisfaction of mortgage within set timeframes after request and payment. Failure to timely release a satisfied lien can lead to liability for damages and penalties.
When disposing of collateral, especially personal property under the UCC, the sale must be conducted in a commercially reasonable manner. The secured party must also provide reasonable notification of the disposition to the debtor. After selling collateral, proceeds are applied first to sale expenses, then to the secured debt, and any surplus to the debtor or subordinate lienholders as law requires. Providing accurate debt balance information upon request is another duty.
Priority Among Competing Claims
When multiple claims exist against the same Nevada property, their priority (order of satisfaction) is important. Priority follows the first in time, first in right principle: liens rank by their establishment or recording date, though Nevada law has exceptions. For real estate, recording documents like mortgages with the county recorder is a primary factor. Nevada Revised Statutes section 111.325 states that recording provides notice, so a recorded mortgage precedes later liens.7Nevada Public Law. NRS 111.325 – Priority of Recorded Conveyances Over Unrecorded Ones
Purchase money security interests (loans for acquiring the specific property) receive special priority. Judgment liens on real property gain priority from their recording date and are junior to prior recorded mortgages.
Mechanics’ liens are a notable exception. Under Nevada Revised Statutes section 108.225, these liens can relate back to when work began or materials were first supplied.8Justia US Law. Nevada Revised Statutes § 108.225 (2024) – Priority of Liens This means a later-recorded mechanic’s lien can take priority over a mortgage recorded after work commenced but before the lien itself was recorded.
For personal property, priority is governed by Nevada’s UCC, which ranks conflicting perfected security interests by the earlier of filing a financing statement or perfection. Purchase Money Security Interests (PMSIs) in goods can achieve superpriority if perfected when the debtor receives the collateral or shortly thereafter.
Certain statutory liens, like those for unpaid property taxes, have superpriority, taking precedence over most other claims. Parties can also alter priority through subordination agreements, where a senior lienholder voluntarily yields their position to a junior one. These agreements for real property are recorded.
Procedures to Release or Satisfy a Lien
Releasing a lien after full payment is important for a clear property title in Nevada, and procedures vary by lien type. For real property secured by a deed of trust, once payment is made and a written request is submitted, the lender must direct the trustee to reconvey the property. The trustee then records a deed of reconveyance. If a lender doesn’t respond, Nevada law allows the borrower to use a surety bond to get the reconveyance.
For real property secured by a mortgage, the lender must record a certificate of discharge or satisfaction after full payment and request.9Nevada Public Law. NRS 106.290 – Recording of Discharge of Mortgage by Mortgagee This recorded certificate clears the mortgage lien.
Mechanics’ lien claimants are required to record a release of their Notice of Lien within 10 days of full payment and request. This is filed with the county recorder. A mechanic’s lien can also be discharged if an enforcement action is not started in time.
Security interests in personal property under the UCC are released by filing a termination statement. If no obligation remains, the secured party must provide or file this statement with the Secretary of State upon the debtor’s demand. For consumer goods, there is an affirmative duty to file it promptly.
When a judgment lien is satisfied, the judgment creditor must formally acknowledge it. If an abstract of judgment was recorded, a certified copy of the satisfaction should be recorded with the county recorder to clear the lien on real property.
Potential Liability for Improper Liens
Asserting a property claim with a lien in Nevada means ensuring its legitimacy. Filing or maintaining an improper, excessive, or flawed lien can result in legal consequences, including the lien’s invalidation and financial liability for any damages caused.
Nevada law specifically addresses liability for improper mechanics’ liens. Nevada Revised Statutes section 108.2274 states that knowingly making false statements in lien documents or wrongfully recording a lien can make a person liable for damages, attorney’s fees, and possibly punitive damages if malice is proven.
Filing any improper lien on real property can also lead to a slander of title claim. This happens if a false, malicious statement harms property title and causes financial loss. An improper lien clouds the title, making it difficult to sell or finance the property. Successful claims can recover costs for the decreased property value and legal fees.
Filing false or forged documents that affect property can also lead to criminal charges. Nevada Revised Statutes section 205.395 makes it a felony to knowingly file such instruments, which can result in imprisonment and fines.10Nevada Public Law. NRS 205.395 – False Representation Concerning Title and Criminal Penalties Accuracy in lien filings is therefore very important.