MECHANIC'S LIENS:
1. Not every lien waiver provision violates public policy. The enforceability of each lien waiver clause must be resolved on a case-by-case basis by considering whether the form of the lien waiver clause violates Nevada’s public policy to secure payment for contractors. NOTE: Subsequent to the events described in this case, the Nevada legislature amended NRS Chapter 108 to prohibit lien waivers unless such waivers comply with the statutory requirements and specific forms set forth in NRS 108.2453 and NRS 108.2457.
2. "Pay-if-paid" provisions (i.e. the right to payment is contingent upon the obligor being paid) are unenforceable because they violate public policy. NOTE: Subsequent to the events described in this case, the Nevada legislature enacted NRS 624.624 and 624.626, which make pay-if-paid provisions unenforceable.
3. Change orders become part of the original contract and are therefore lienable.

PARTITION / JUDICIAL SALES: Judicial sales to bona fide purchasers generally are not subject to later challenge if an underlying judgment is reversed on appeal. Although as a general matter judicial sales to bona fide purchasers will survive appellate reversals, these sales may be challenged collaterally or in remanded proceedings in the original action if the order of sale was void. Here the court order for a sale in a partition action was void because the court did not have jurisdiction after it wrongly denied a motion to dismiss under NRCP 41(e) for failure to bring the action to trial within 5 years.

WATER RIGHTS: Water rights are freely alienable, but the transferee can only use the water in accordance with NRS 533.040.
RECORDING: The case explains the procedure for searching the grantor/grantee indices: The prospective purchaser first searches the grantee index for the purported owner's name to ascertain when and from whom the purported owner received the property. Using that name, the purchaser checks the grantee index for the names of each previous owner, thus establishing the "chain of title." The purchaser must then search the grantor index, starting with the first owner in the chain of title, to see whether he or she transferred or encumbered the property during the time between his or her acquisition of the property and its transfer to the next person in the chain of title.

FORECLOSURE: This case is not of much interest to people in the title industry. But it is interesting because it shows the kind of liability a lender incurs when it forecloses on a condominium unit and mistakenly enters the wrong unit, disposes of the owners' personal property, then purportedly re-sells the unit.

JUDGMENTS:  After Nevada’s 6-year limitation period for the enforcement of judgments expired on the original domestication of the foreign judgment, the judgment was renewed in the issuing state, which has a 10-year limitation period for renewing judgments, and could again be domesticated in Nevada.

EASEMENTS: Plaintiff could not establish an easement over defendant's property under any of the 3 theories he raised:
1. Deeds in the chain of title granted the City a road easement, but did not grant easements to the property owners.
2. An easement by necessity requires (1) prior common ownership of the land to be benefitted and the land to be burdened and (2) the easement is "reasonably necessary" to use the land. However, "reasonable necessity" requires something significantly greater than inconvenience, which must exist both at the time of the severance of the parcels and present necessity. Here plaintiff has no present necessity because he has access to two other public roads from his property.
3. Plaintiff does not have private easement rights in the abandoned road because an abandoned public easement reverts to abutting property owners in the approximate proportion that the easement was dedicated by the abutting owners or their predecessors.

CONTRACTS:
1. When a contract does not make the time for a party's performance of the essence, either party can make it so by setting a reasonable time for performance and notifying the other party of an intention to abandon the contract if it is not performed within that time.
2. Absent such a demand for performance, or a term making time of the essence, a contract must be performed within a reasonable time. What constitutes a reasonable time for a contract's performance is a question of fact to be determined based on the nature of the contract and the circumstances surrounding its making.
3. When a contract contains a condition precedent to a party's performance, that party may waive the condition and tender performance so long as the parties included the condition in the contract for the sole benefit of the party seeking to waive the condition. Whether a condition included in a contract is for the benefit of one or both parties is a question of fact.

NOTARIES / RECORDING:
1. Claims for notary misconduct or negligence brought under NRS 240.150(1) and NRS 240.150(2) are claims upon a liability created by statute, other than a penalty or forfeiture, and are subject to a three-year statute of limitations under NRS 11.190(3)(a).
2. A recorded but improperly acknowledged instrument may provide constructive notice only if honoring the instrument would not improperly benefit the notary or any party to the instrument and would not create harm.
3. A court may consider the individual factual circumstances surrounding a defective acknowledgment, thereby permitting it to waive certain technical notarial violations while protecting against actual harm that may flow from honoring an improperly acknowledged document.

QUIET TITLE: 1) An easement was not extinguished by prescription where the dominant tenement owners gained access to the easement area on a regular basis by climbing over and walking around fences erected on the easement area by the owner of the servient tenement; 2) The original grantor's reservation of the right to promulgate reasonable regulations for use of the easement ran with the land and passed to successive owners of the servient tenement; 3) The District Court did not have a similar right to promulgate regulations for use of the easement; 4) Attorney's fees are only available as special damages in slander of title actions and not simply when a litigant seeks to remove a cloud upon title.

CC&R's: The original developer of a recreational vehicle park had authority, consistent with NRS 116.003, to define "declarant" in the CC&R's differently than the definition set forth in NRS 116.035. Therefore the successor in interest to the original developer is a "declarant" as set forth by the CC&R's and also owns land within the community, and had to approve any material amendment.

JUDGMENTS: Judgment renewal under NRS 17.214 requires 1) the timely filing of an affidavit, 2) timely recording of the affidavit (if the judgment to be renewed was recorded), and 3) timely service of the affidavit. These requirements must be complied with strictly or the renewal is invalid.

DISCLOSURE: Under NRS 113.140(1), a seller of residential property has a duty to disclose only those conditions that materially and adversely affect the value or use of the property, and of which the seller is aware. Because repaired water damage does not constitute a defect under NRS Chapter 113 and Nelson did not know of the presence of elevated amounts of mold in the cabin, she did not violate the disclosure requirements contained in NRS 113.130 when she completed the Seller's Real Property Disclosure Form.

HOMESTEADS / JUDGMENTS: An abstract judgment lien under NRS 17.150 cannot attach to homestead property that is fully exempt, both at the time the judgment is recorded and at the time the property is sold. The Court in footnote 13 states that it does not address the situation where a debtor’s home is fully exempt at the time the lien is recorded, but the debtor subsequently gains surplus equity in his home prior to or during the sale or transfer. The Court points out that one could argue that the abstract judgment lien attaches to the surplus equity when and if it exists, and that at such time the creditor could execute against the surplus equity, but that was not the question certified to the court, so it declined to address the issue.

RECORDING: The Court denied a petition for a writ of mandamus challenging a district court order expunging a lis pendens. The Court held that the recording numbers of two deeds of trust controlled priority where they were recorded at exactly the same time. Court also points out that the higher numbered TD reflected the possibility of being junior to another TD because it contained a recital requiring the borrower to meet his obligations "under any mortgage, deed of trust or other security agreement with a lien which has priority over this Deed of Trust".

NOTE: I reviewed the actual recorded TD's. TD #4670 secured a $380,000 loan and is on a Fannie Mae/Freddie Mac form used for first TD's. TD #4671 secured a $95,000 loan and is on a form used for junior TD's and, in fact, states at the bottom of the first page: "Nevada - Second Mortgage - 1/80 - FNMA/FHLMC Uniform Instrument Form 3829". [Emphasis added.] It is not clear to me that the Court would rely on order of the recording numbers if the $95,000 TD had been recorded first.

It seems possible that the Court would do like California does and seek to determine the intention of the parties. However, it may not go as far as California courts in holding that the mere fact of simultaneous recording imposes a duty of inquiry into the intention of the parties regardless of the recording numbers assigned to the documents.

DEEDS OF TRUST / MECHANICS' LIENS: A lender did not comply with the statutory scheme of NRS 106.300 to 106.400 regarding future advances. However, the Court held that statutory scheme to be an optional safe-harbor that applies only if the parties opt-in. Since the parties did not do so, the Court applied common law principles in holding that obligatory advances are entitled to the same priority as the deed of trust, which was senior to mechanics' liens on a work of improvement commenced after recordation of the deed of trust.

TRUSTEE'S SALES / ANTI-DEFICIENCY: Where a bankruptcy court sets aside, as a preference, a deed of trust securing a guaranty, two exceptions to Nevada's anti-deficiency rules apply: 1) NRS Section 40.430(4)(i) (bankruptcy stay of foreclosure) and 2) NRS Section 40.430(4)(j) (sold-out junior lienholder). Guarantor's waiver of notice under NRS Section 107.095(1) constitutes a waiver under 40.430(4)(i) of the notice required by that section.

CONTRACTS: After entering into a contract to sell real property, the seller told the buyer he was terminating the sale, but would sell for a higher price. The buyer agreed and signed a contract for the higher price. Subsequently the buyer sued to enforce the original contract. The Court held that the second contract was invalid, and the buyer could enforce the original contract, under the "preexisting duty rule". No consideration supported the second contract where the seller promised to do what he was already obligated to do.

DEEDS: A deed that described more property than the seller intended may be reformed to describe the correct property where the seller made a unilateral mistake, and the buyer knew about it but failed to bring it to the seller's attention.

ONE ACTION RULE: Under the one action rule of NRS 40.430, a creditor forfeited the real estate collateral under a deed of trust where he first obtained an out-of-state judgment on the debt.

EQUITABLE SUBROGATION: Equitable subrogation is allowed even with actual knowledge of the intervening lien, as long as the intervening lien holder is not prejudiced, and as long as the mortgagee reasonably expected to get security with a priority equal to the mortgage that was paid. Furthermore, a refinancing mortgagee should be found to lack such an expectation only where there is affirmative proof that the mortgagee intended to subordinate its mortgage to the intervening interest.

MECHANICS' LIENS: The right to a mechanics' liens can be waived in a construction contract. HOWEVER, NRS 108.2453, prohibits such waiver after October 1, 2003, except under certain circumstances.

HOMESTEADS: The homestead exemption is inapplicable when the proceeds used to purchase real property can be traced directly to funds obtained through fraud or similar tortious conduct.

RECORDING: The district court found that an access road depicted on a record of survey did not create an easement because the record of survey did not meet the statutory requirements for a parcel or subdivision map, as required to create an easement. The Supreme Court held that the County Recorder is not liable for recording the defective map because it has not duty to determine whether a document serves its intended purpose, given that recording is a purely ministerial task.

JUDGMENTS: Under NRS 17.150(2), a judgment lien expires after six years from the date the judgment was docketed if the judgment is not renewed within such time frame. The judgment, itself, was renewed subsequent to the six-year period, but the court does not explain why that was allowed.

RAILROADS: Upon abandonment by the railroad of a right-of-way granted by Congress before 1871, the right-of way reverts to the underlying landowner, not to the adjacent landowner (unless the right-of-way runs through a municipality, in which case it reverts to the municipality). Note that before 1871, the right-of-way that railroads received was a limited fee with the right of reverter, but after 1871 it was an exclusive-use easement because in 1871 Congress discontinued conveying the land outright.

MECHANICS' LIENS: Employees may file mechanics' liens for their wages, but only where their services improve the property.

Court's Note: The opinion in this matter was amended by an order filed on September 24, 2003.

TITLE INSURANCE: A title company is not the insured's agent, so it's knowledge of an encumbrance is not imputed to the insured. The court does not explain why recordation of the encumbrance did not, itself, impart constructive notice to the insured. (This case follows the California case of Rice v. Taylor (1934) 220 Cal. 629.)

MECHANIC'S LIENS: A mechanic's lien cannot include amounts claimed for delay damages. NRS 108.222(1) limits the amount of mechanic's liens to the contract price for, or in the absence of a contract the value of, labor performed or material furnished or rented.

MECHANIC'S LIENS: The beneficiary of a deed of trust is not a necessary party to a mechanic's lien enforcement action. Only the owner of the property is a necessary party. However, a beneficiary of a deed of trust may bring a subsequent action to determine priority and contest matters that were at issue in the foreclosure action.

ESCROW:
1. Double Escrow Case. The Court adopted the holding in Burkons v. Ticor Title Ins. Co. of California, 813 P.2d 710 (Ariz. 1991). Although not required to investigate, when an escrow agent is aware of facts and circumstances that a reasonable escrow agent would perceive as evidence of fraud by one of the parties to the escrow, then there is a duty to disclose to the other party.

2. An escrow agent owes a duty to disclose fraud only to parties to the escrow, not to third parties.

3. An escrow agent does not have a duty to a third party for disbursing disputed funds to the parties to the escrow in accordance with the escrow instructions.

HOMESTEADS: A conveyance of homestead property by one party to a declaration of homestead is void. The court also makes the somewhat confusing comment that: "To the extent that the homestead property here did not exceed the statutory value stated in NRS 115.010, [the plaintiff] is entitled to prevail on her quiet title action." (Emphasis added.)

LEASES: The Nevada Constitution prohibits the state from contracting for “public debts”, which are debts that bind future legislatures to successive appropriations. However, a lease-purchase agreement is valid where the lease 1) contains a nonappropriation clause, 2) limits recourse to the leased property and 3) does not create a long-term obligation binding on future legislatures.

DEEDS OF TRUST/MORTGAGES: NRS 106.240, which provides that mortgages and deeds of trust secured by real property are extinguished 10 years after the due date, applies to all such debts, and is not limited to protecting BFP's. However, it is a question of fact in this case as to whether the owner is estopped (based on certain representations) from raising the statute.

MECHANIC'S LIENS: Preparatory work which was performed by a civil engineering firm, including engineering studies, surveys, creation of parcel maps and drawings, and the placement of temporary stakes, did not rise to the level of "work done" of a kind that would permit a mechanic's lien to attach.