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Moving to Strike Fees in a California Quiet Title Action

Issue: Can a defendant in a quiet title action in California properly move to strike a claim for attorney’s fees in a complaint before discovery?

Conclusion: Yes, a defendant in a quiet title action in California can move to strike a claim for attorney’s fees in a complaint before discovery if the claim is irrelevant, false, or an improper matter in any of the pleadings.

Rules and Application:  

In the absence of some special agreement, statutory provision, or exceptional circumstances, attorney’s fees are to be paid by the party employing the attorney. Cal. Civ. Proc. Code § 1021 (2019) [1]; Prentice v. N. Am. Title Guar. Corp., 59 Cal. 2d 618, 620, 30 Cal. Rptr. 821, 823, 381 P.2d 645, 647 (1963); Reid v. Valley Rests., Inc., 48 Cal. 2d 606, 610, 311 P.2d 473, 475 (1957).

Relevant portions of Cal. Civ. Proc. Code (“CCP”) § 435(b) states: “Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof . . . .”

Following the above statute, CCP § 436 states:

The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper:

(a) Strike out any irrelevant, false, or improper matter inserted in any pleading.

(b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.

California courts have generally been hesitant to find implied waivers of attorney fees. In Folsom v. Butte County Assn. of Governments, 32 Cal.3d 668, 671 (1982), the Supreme Court concluded that an agreement silent as to fees does not bar a motion pursuant to CCP § 1021.5. Rather, statutory attorney fees are properly awarded “unless expressly or by necessary implication excluded by the stipulation.” (32 Cal.3d at p. 678, italics added.) Absent “affirmative agreement of the parties to the contrary,” the trial court retains jurisdiction after the filing of a compromise agreement to consider a statutory fee motion. (Id. at p. 679; see also Washburn v. City of Berkeley (1987) 195 Cal.App.3d 578 (1987)

Federal courts have been similarly loathe to infer fee waivers. In Wakefield v. Mathews, 852 F.2d 482, 484 (9th Cir. 1988), the court noted that, “Waiver of attorneys’ fees should not be presumed from a silent record.” It then held that while “general releases of all claims and costs” do not waive attorney fees (Ashley v. Atlantic Richfield Co., 794 F.2d 128, 140 (3d Cir. 1986), El Club Del Barrio v. United Community Corporations, 735 F.2d 98, 100 (3d Cir. 1984)), an express release which includes “‘costs or expenses of any nature whatsoever, known or unknown, fixed or contingent'” does. (Wakefield, supra, at p. 484.)

Additionally, Mabee v. Nurseryland Garden Centers, Inc., 88 Cal.App.3d 420 (1979), states “[Where] attorney fees are incurred in a prior action, or sought in a proceeding as damages — as for example in false imprisonment or malicious prosecution suits — or where recovery is sought in an action by an attorney against his client for an agreed or a reasonable fee, then the claim for attorney fees is part of the damage sought in the principal action. Only in such circumstances would the attorney fee be required to be pleaded and proven — as any other item of damages — at trial. No similar procedural and evidentiary base is required where ‘the attorney fee was not the cause of action but an incident to it.'” (Id. at p. 425, citing Huber v. Shedoudy (1919) 180 Cal. 311, 314.)

Following Mabee, California courts have consistently “distinguish[ed] between” attorney’s fees that are sought as “the allowance … to the prevailing party as an incident to the principal cause of action,” and those that are sought as “part of the cause of action.” (Mabee, 88 Cal.App.3d 420, 425, superseded by statute on another ground as stated in Santisas v. Goodin, 17 Cal.4th 602, 629.) When sought by the “prevailing party … as an incident to [the] judgment” (Mabee, at p. 425), attorney’s fees may be “properly awarded [as a form of cost] after entry of a . . . judgment” (Khavarian Enterprises, Inc. v. Commline, Inc., 216 Cal.App.4th 310, 327 (2013)). However, when “fees are part of the relief sought[, they] must be pleaded and proved at trial.” (Id.) As explained by our Supreme Court: “‘[W]here attorney fees are . . . sought in a proceeding as damages . . . , then the claim for attorney fees is part of the damage sought in the principal action. … [I]n such circumstances … the attorney fee [would] be required to be pleaded and proven—as any other item of damages—at trial. No similar procedural and evidentiary base is required where “the attorney fee was not the cause of action but an incident to it.”’ (Folsom v. Butte County Assn. of Governments, 32 Cal.3d 668, 678, fn. 16 (1982), quoting Mabee, supra, 88 Cal.App.3d at p. 420.)

Here at the MLC, we love to discuss technicalities of attorney’s fees. Give us a call if you want to discuss further.

[1] Cal. Civ. Proc. Code § 1021: “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.”

 

Are Non-Compete Agreements Enforceable in Nevada?

Many employers want to have their employees sign contracts prohibiting them from working for a competing business after they leave their current job, commonly called “non-compete agreements.” In Nevada, these agreements are allowed, but must meet certain requirements to be enforceable in court.

Nevada Supreme Court’s Decision in Golden Road

In 2016, the Nevada Supreme Court invalidated the enforceability of a non-compete agreement of a casino host. Golden Rd. Motor Inn, Inc. v. Islam, 132 Nev. Adv. Rep. 49, 376 P.3d 151 (2016). The non-compete agreement prohibited the defendant “from employment, affiliation, or service with any gaming business or enterprise” in a 150-mile radius from her current job. Id. at 155. The court looked to see if any time period, geographical limitation, or restriction on areas of future employment were greater than necessary for the protection of the employer. Id.

The key issue was protecting the casino from the employee’s ability to lure casino customers away, therefore damaging its business. Id. at 155. This agreement was unreasonable because she could hypothetically be prevented from being a janitor at a casino, which could not lure away casino customers, and thus was unreasonable to protect the employer. The Court also found that courts do not have the power to modify agreements to remove the unreasonable restraints on trade. Id. at 159-60.

Nevada’s Legislature Amends NRS § 613.195

Following the Golden Road decision, the Nevada State Legislature enacted amendments to NRS § 613.195. This statute specifically identifies the limitations of non-compete agreements. For the agreement to be enforceable, the non-compete agreement must:

(a) Be supported by valuable consideration;

(b) Not impose a greater restraint than is necessary for the employer’s protection;

(c) Does not impose an undue hardship in the employee; and

(d) Imposes restrictions appropriate in relation to the consideration supporting the covenant.

NRS § 613.195(1). If the agreement fails in any respect, it is “void and unenforceable.”

However, the statute also requires courts to modify the agreements under specific circumstances to make them enforceable. The court must modify any agreement’s unreasonable limitations as to time, geographical area, or scope of restrained activity so that the agreement no longer contains an unreasonable restraint on trade. Id. at (5). The court must also modify the agreement if it contains more protection than is necessary for the employer’s protection, and to remove any undue hardship on the employee. In other words, if the agreement’s restrictions are too broad, but supported by valuable consideration, the court will modify the agreement, reducing the restrictions to make it enforceable.

Conclusion

Non-compete agreements can be complicated. For employers, it is important to make the restrictions clear; and also make plain why those restrictions are necessary for the protection of the business. For employees, it is important to understand if the restrictions will keep you from taking a new position.

As always, if you think you might need an attorney, you probably do. You can contact us here, we love answering questions!

More Than You Want to Know About Renewing Judgements

Generally, a judgment is only valid for six years from the date it was entered. NRS § 11.190(1)(a). This means that if the judgment is not collected within that six-year period, the ability to collect the judgment expires. However, Nevada allows for judgments to be renewed, which if done correctly will continue the judgment for another six years from the date of renewal. This process has several steps but they cannot be done incorrectly because Nevada courts strictly enforce the statutory procedure. As the Nevada Supreme Court put it “NRS 17.214’s mandatory requirements of filing, recording, and service of the affidavit are plainly set forth and must be followed for judgment renewal.” Leven v. Frey, 123 Nev. 399, 403 (2007).

When a Judgment can be Renewed

NRS § 17.214 sets forth the process for renewing judgments. Even though the judgment itself is valid for a six-year period, it must be renewed before it expires. The statute requires the renewal process to begin at least 90 days before the judgment expires. If the process is correctly followed, the renewed judgment will be valid for six years. Additionally, the judgment can essentially be continually renewed forever, following the same procedure at least 90 days prior to the expiration of the renewed judgment.

The Affidavit of Renewal of Judgment

To renew a judgment, the judgment creditor (the party to whom the judgment is owed) must file an “Affidavit of Renewal of Judgment” with the clerk of the court. This must be the same court where the judgment was entered and docketed. The affidavit must contain the following information:

  • Names of the parties to the judgment;
  • The date and amount of the judgment;
  • The number and page of the docket in which the judgment is entered;
  • Information as to whether there is an outstanding writ of execution for enforcement of the judgment;
  • The date and amount of any payment on the judgment;
  • Whether there are any setoffs or counterclaims in favor of the judgment debtor;
  • The exact amount due on the judgment;
  • If the judgment was docketed by the clerk upon a certified copy from another court, and an abstract of judgment has been recorded with the county clerk, the name of each county in which the transcript has been docketed and the abstract recorded; and
  • Any other fact or circumstance necessary to a complete disclosure of the exact condition of the judgment.

A very important requirement of the statute is that the Affidavit “must be based on the personal knowledge of the affiant, and not upon information and belief.” If there is information that you may need to seek out prior to renewing the judgment, you may want to start preparing your affidavit and gathering the necessary information early. Within three days of filing the affidavit with the court, the judgment creditor must send a copy of the affidavit by certified mail, return receipt requested, to the judgment debtor’s last known address.

Recorded Judgments

Judgments are often recorded with a county clerk to assist with collection efforts. If the judgment has been recorded, the affidavit must also include the name of the county of recording and either the document number of the recorded judgment or the number of the page of the book where it was recorded. Additionally, the within three days of filing the affidavit of renewal, the affidavit must also be recorded with the county where the judgment has been recorded.

So basically….

Renewing a judgment is a valuable tool for a party still trying to collect on a judgment that has not been fully paid. Because there are important deadlines for filing the affidavit of renewal of judgment, and detailed information must be included in the affidavit, consulting an attorney who is familiar with the process can help ensure your judgment renewal goes smoothly and provides additional time for collection.

As always, “If you think you might need an attorney, you probably do.” Contact us here to set up a complimentary consultation.

Litigation: NRCP 54(b) Certification of Partial Summary Judgement

NRCP 54(b) allows a Court to make some orders on a motion for summary judgment final while the rest of the case moves forward. A ruling on partial summary judgment is not final and will not compel action by any party unless it is given finality through NRCP 54(b) certification. See NRCP 54; Allis-Chalmers Corp. v. Phila. Elec. Co., 521 F.2d 360, 365 (3d Cir. 1975).[1]  

NRCP 54(b) states, in relevant part “When an action presents more than one claim for relief…, the court may direct entry of a final judgment as to … fewer than all, claims … only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated,… does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims…” This shows that a decision on a partial motion for summary judgment is not final or binding unless it is certified as such under NRCP 54(b).

This reading is further supported by caselaw. See e.g. Cascade Drinking Waters v. Cent. Tel. Co., 88 Nev. 702, 703, 504 P.2d 697, 697 (1972) (“This court has held that a judgment dismissing fewer than all parties to an action without an express determination that there is no just reason for delay by the district court is not a final judgment…”)[2]

Therefore, any order on a motion for partial summary judgment is not final and does not compel action unless it is either certified or incorporated into a final judgment on the entire case. Any order on a partial motion for summary judgment which is not certified is “of an interlocutory nature.” See Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 5, 100 S. Ct. 1460, 1463 (1980). Furthermore, an order on a motion for partial summary judgment is not appealable unless it is certified pursuant to NRCP 54(b). NRAP 3A(b); Cascade Drinking Waters, 88 Nev. at 703.

At Morris Law Center, we love to dig into the technicalities of the rules. As such, if you are an opposing attorney, do not expect to catch us slipping. However, if you are a fan of legal procedure, give us a call to discuss further.


Sources:

[1] “Under 54(b) procedure, the essential inquiry is whether, after balancing the competing factors, finality of judgment should be ordered to advance the interests of sound judicial administration and public policy.” While that case considered FRCP 54(b) rather than NRCP 54(b), the reasoning is identical and after the amendments which took effect on March 1st, the rules were deliberately brought into harmony.

[2] See also Allis-Chalmers Corp. v. Phila. Elec. Co., 521 F.2d 360, 367 (3d Cir. 1975) (finding that a “lack of competent Rule 54(b) certification” created a “lack of finality”).

Options For Enforcement of Settlement Agreements

Your options are when an agreement isn’t working

What happens when you’ve reached a settlement agreement in your case using alternative dispute resolution, such as mediation or arbitration, yet one of the parties involved isn’t holding up their end of the bargain? You must be thinking “there has to be something that can be done,” and you’d be right. Below are a few options to consider when someone isn’t honoring an agreed upon settlement.

Motion to Enforce Settlement Agreement

If a case has already been filed in Nevada district court, one of the options you can consider is having the court order the other party to honor the agreement. To accomplish this, you would have to file a Motion to Enforce. In Nevada, a settlement agreement is a contract governed by general principles of contract law, and a district court has the authority to enforce a settlement agreement in an existing case where it already has jurisdiction. In order to enforce a settlement agreement, the moving party must show either: (1) a written, signed agreement; or (2) terms entered into the court minutes reduced to an order. If granted, the other party to the settlement must comply with the terms of the agreement. If they do not comply, you could pursue further remedies, such as moving to hold the other party in contempt for not following the court’s order.

Sue for Breach of Settlement Agreement

Another option is to move to add a claim for Breach of Contract (if a suit has already been filed) or to file a Complaint for Breach of Contract. In some cases, suing for a Breach of Contract is an easier case to prove than the facts of the underlying dispute, which could provide an easier route to a favorable judgment.

You might also consider an additional claim for Breach of the Implied Covenant of Good Faith and Fair Dealing. This claim would apply in cases where a party to the settlement made the agreement knowing they would not be able to fulfill their part of the agreement. This claim is meant to ensure that all parties enter into an agreement in good faith to one another and prohibits unfair acts by one party that would work to the disadvantage of the other. This claim might be available even if the court determines there is no breach of the settlement agreement itself, giving additional options for relief.

Proceed with Underlying Case

Another option to weigh is considering moving to set aside the initial agreement and proceed with litigation. This would essentially ignore the settlement agreement and proceed with the original lawsuit. However, litigation options generally come at a greater financial cost than settlement, which is something to consider.

Conclusion

In conclusion, all is not lost if the opposing party doesn’t meet their obligations. You have plenty of options to enforce the agreement, or to move on and continue litigation.

If you need assistance in your settlement agreement, or just have questions, please feel free to contact us at Morris Law Center for your complimentary consult.

And as always, “If you think you might need an attorney, you probably do.”

Is Judge Judy Enforceable? Or is The Entire Show Fake For TV?

Most people who have been channel surfing know who Judge Judy is – a daytime TV judge, who is quick to insult and reprimand people while dishing out justice. Many of us have wondered if Judge Judy is genuinely a magistrate, or if the entire premise of the show is just another fake reality program designed for entertainment. The answer may not be as simple as one would think.

Judy Sheindlin is a retired Family Court Judge from Manhattan. She first passed the New York state bar exam in 1965 and practiced as an attorney until she was appointed as a judge in 1982. After retiring in 1996, she began filming Judge Judy. So over 20 years ago, Judge Judy was in fact a real judge, presiding over real cases, in a real courtroom. Today, however, Judge Judy Sheindlin acts as an arbitrator. The cases she arbitrates are real cases from real courtrooms, but the plaintiffs and defendants in her cases have both agreed to a Binding Arbitration Agreement with Judge Judy instead of pursuing their cases in front of an active judge. 1

Appearing on this daytime hit doesn’t just mean being on TV – if you are contacted by one of Judge Judy’s 60+ researchers/producers, not only will you receive a paid trip to Los Angeles, CA, you will be compensated to appear on the show. It has been said that participants are given anywhere from $100-$500 just to appear on the show! Aside from this, the producers will also pay any fines or fees that Judge Judy awards to either side of the dispute. You only must be willing to let the world watch your drama and have a Judy-ism or two yelled at you to receive a free trip to the coast. You’ll get some extra money in hand, and ultimately resolve your dispute – which is what it’s all about!

So, to answer the burning question: Is Judge Judy enforceable? Yes… and no. The cases shown are real cases, with the participants being persuaded to give up their lawsuit in a real court of law. The courtroom audience members, however, are reported to all be paid actors (at a much lower rate per hour than Judy herself). Judge Judy was once a real judge but is now an arbitrator – a very high paid arbitrator. It’s been reported that Judge Judy gets paid over $45 million a year, while working approximately only 52 days!

Do you have your own dispute that you’d like to keep off TV, but still have resolved? We’ll be here for you more than 52 days a year!

As we always say, “If you think you might need an attorney, you probably do.” Contact us before anything is set in stone. We love answering questions!

 

Mediation vs. Arbitration: What is The Difference?

Some people may mistakenly think that mediation and arbitration are synonymous with one another, and while it’s true there are some similarities between these two processes, the differences are considerable. Both mediation and arbitration utilize a neutral third party to oversee the dispute outside of the court system, and both are alternatives to traditional litigation. In some cases, both mediation and arbitration can be binding on the parties.

In mediation, a single agreed upon mediator is selected to assist in facilitating a discussion between two disputing parties to ultimately come to an agreeable resolution on both sides in a more informal environment.

Arbitration, however, has an agreed upon arbitrator taking on the role of a judge, hearing evidence, making decisions, and issuing opinions. In some arbitration cases, the neutral third party is a panel with both sides of the dispute selecting their preferred arbitrator, then the arbitrators themselves selecting a third to join the panel so a majority vote would prevail if necessary.

While mediation seeks mutual agreement through facilitated discussion between the parties, arbitration imposes rules by the arbitrator making decisions on their behalf. In arbitration, one of both of the parties may end up dissatisfied with that decision of the arbitrator.

In some cases, a judge may order a dispute to go through an alternative dispute resolution before continuing in the courtroom. Alternative dispute resolution generally indicates arbitration or mediation, and can many times lead to an acceptable and agreeable resolution for all involved without the need for time consuming and costly litigation in a formal court setting.

In the Eighth Judicial District Court every contested civil case is reviewed by the Alternative Dispute Resolution Office, with 75% of cases that are assigned to arbitration being successfully resolved. Parties in District Court can bypass assigned arbitration by agreeing to participate in mediation. According to the United States Department of Justice, in 2017 55% of cases were resolved by court-ordered alternative dispute resolution, and 75% of cases were resolved by parties voluntarily seeking alternative dispute resolution.

For more information on Alternative Dispute Resolution in Clark County, CLICK HERE.

So, mediation and arbitration, although having a different procedure, has a similar and fairly successful goal of resolving disputes between parties.

Our Las Vegas estate planning attorneys at Morris Law Center would love to assist answering any questions about your dispute and obtaining a resolution to it. Contact us today to set up your complimentary consult.

What’s The Difference Between Medical And Recreational Marijuana in Nevada?

Now that recreational marijuana has been legal in Nevada for some time, many of you may be wondering what differences exist between the two. While the legalization of recreational weed didn’t change how the medical marijuana program was governed, legal differences between the two may affect whether you decide to apply for a medical card.

First, medical users can possess up to two and a half (2.5) ounces of “usable marijuana” in a two-week period, while recreational users can only possess one (1) ounce.[1]  Basically, if you don’t have a medical card and you’re caught with more than an ounce of marijuana on you, it’s a felony charge. [2] Significantly, medical users also don’t have to pay a hefty 10% tax that recreational users pay.

A restriction that applies to recreational users that doesn’t necessarily apply to medical users is the right to grow your own marijuana. Medical users can grow their own pot even if they live within 25 miles of a retail store as long as they are too ill, don’t have the ability to travel, or if they are grandfathered in as a cultivator prior to July 2013[3]. Furthermore, while recreational users can only grow 6 plants per person, medical users can grow 12.

Another difference between recreational and medical use is the legally allowable age. As many of us are familiar with, a person must be over the age of 21 in order to use and buy recreationally, but not so for the medical side of things. Persons under the age of 21, and even 18, may use marijuana if they have qualified for the card.[4] Those under the age of 18 just need to have an official care-giver. Of course, qualifying for a medical marijuana card requires written affirmation from a healthcare provider.[5]

One of the most notable differences is the Medical Marijuana Registry. While those over the age of 21 can purchase marijuana somewhat anonymously in Nevada, those who have a Medical Marijuana license will be on the state’s database of cardholders. There’s no way around this, since the Medical Marijuana program is run by the state. There are also some nuances involved with the registry, since the information technically falls under HIPPA; while HIPPA protects a person’s medical information, it won’t necessarily stop the fact that you’re on the registry from showing up on background checks.

The law does not prevent employers or landlords from discriminating based on the fact that a person uses marijuana. Furthermore, being a Medical Marijuana Cardholder means you won’t be able to apply for gun licenses, or purchase guns. A Nevadan woman actually appealed this very issue all the way to the 9th U.S. Circuit, but the court ruled that the ban of gun sales to cardholders does not violate the Second Amendment.[6]

However, with more states slowly legalizing recreational marijuana, and with the huge amount of tax revenue it’s brought in for the government, the overall stigma will probably fade. The recreational market has also made purchasing marijuana a much easier task for medical users, as more and more legal dispensaries open to support the growing market. Marijuana is still a new industry, so there’s a way to go before all the kinks are ironed out, but for now, there are some significant differences between being a cardholder and buying recreational marijuana.

And finally, as we always say, “If you think you might need an attorney, you probably do.” Contact us before anything is set in stone. We love answering questions!

 

By Winnie Wu, Legal Assistant at Morris Law Center, Former UNLV Undergraduate Research Scholar and 2018 University Libraries Lance and Elena Calvert Undergraduate Research Award Winner


Sources:

[1] NRS. 453A.200 3(b)(1)

[2] NRS. 453A.200 3(b)(vb2)

[3] NRS 453A. 200 (6)

[4] NRS 453A.210

[5] Id.

[6] Thanawala, Sudhin. US Court Upholds Ban on Gun Sales to Marijuana Card Holders. (August, 2016). Associated Press. Retrieved from https://apnews.com/bbb3ef37357d4799bec33cb2d36a7bae

7 Steps to Take if You Are in an Accident

Being involved in an accident, whether a car accident or a slip and fall, can be a difficult experience. Here are the steps you should take in case you are in an accident.

    1. Seek medical treatment immediately if you are injured.
    2. Obtain contact info for witnesses.
    3. File a report/call the police.
      a. If you slip and fall, report it to the establishment immediately.
      b. If you are in an auto accident and there are injuries, call the police.
    4. Take pictures at the scene.
      a. Before the cars are moved or the substance you slipped on is cleaned, take pictures.
      b. For a car accident, these pictures should include a picture of the insurance card for the other driver(s). Also, don’t forget to include license plates in pictures of the cars.
    5. Stay off of social media. Do not talk about the accident or your injuries on social media as this can be used against you in a lawsuit.
    6. Report the claim to your insurance.
      a. You may need to eventually give a statement, but for now just get the claim open.
      b. The other driver’s insurance might cold call you to “take a statement.” They are only looking for one thing: a reason to deny your claim. Don’t talk to them until you consult an attorney.
    7. Contact an attorney.  We are here for you whenever you need us. From communication with insurance adjusters to gathering medical records, we are here to take away the stress of being in an accident so that you can focus on healing.

 

Feel free to print this blog out and keep it in your glove box. We hope you never need it, but we want you to be prepared.

What You Should Know About Seller’s Disclosures in Nevada

Are you selling a house in Nevada? Are you buying a house in Nevada? Did you already buy a house in Nevada, and since discovered something that is wrong with the house? In any of these cases, you will need to know the requirements of NRS § 113.100 in regard to the seller’s disclosures. Below is an overview of the disclosure requirements, and what happens when something doesn’t get disclosed correctly.

Nevada’s Required Disclosures

In most residential property sales in Nevada, state law mandates the seller make disclosures about conditions on the property. See NRS § 113.130. These disclosures cover electrical, heating, cooling, plumbing and sewer systems, and anything else on the property that affects use or value. See NRS § 113.120. This process requires the seller to disclose any defect, which is defined in the statute as “a condition that materially affects the value or use of residential property in an adverse manner.”

What Needs to be Disclosed?

A seller is only required to disclose defects that they are aware of. In fact, the law makes clear that the seller is not required to disclose a defect of which they are not aware. NRS § 113.140. Additionally, the topics of disclosure are in a proscribed form that is adopted by the Nevada Real Estate Division, so you won’t be left trying to figure out the potential home or property features you need to address in the disclosures when selling your home.

Sellers can also rely on information that was given to them from government officials and experts like engineers, contractors, surveyors and inspectors. NRS § 113.150(5). This limits the ability of a buyer to claim damages from a known but undisclosed defect. So, a seller who is concerned about a potential defect is encouraged to consult with an appropriate expert to determine if there is a defect present before completing disclosures.

Sellers do not need to disclose defects that have been repaired. See Nelson v. Heer, 123 Nev. 217, 163 P.3d 420 (2007). For example, if a home had water damage, but the seller had it all repaired before making disclosures, it no longer needs to be disclosed.

Failure to Disclose

So, what happens if a seller fails to disclose a defect? The big risk is NRS § 113.150’s treble damages clause. Treble damages is a legal term for triple damages. The law allows a home purchaser who is saddled with a defect that the seller knew of, but did not disclose, to seek three times the cost of repair or replacement. This is a very big incentive for sellers to disclose known defects, because the consequences are steep. The purchaser can also seek court costs and attorney’s fees, making it even more crucial for sellers to make adequate disclosures. However, the treble damages, costs, and attorney’s fees are something the buyer can waive in a signed, notarized document.

What Real Estate Agents Should Know

Sellers’ real estate agents should be aware that they also have duties to disclose known defects, but are not in the precise situation that the seller is in. Licensed real estate agents are required to disclose to all parties “any material and relevant facts, data, or information which the licensee knows, or which by the exercise of reasonable care and diligence should have known, relating to the property which is the subject of the transaction.” NRS § 645.252. Generally, real estate agents are not liable for a misrepresentation of their client, but they can become liable if they knew the client made a misrepresentation, and the agent failed to inform the other party. NRS § 645.259. So, if a real estate agent knows of a defect and that her client failed to disclose it, she will need to disclose it to the buyer.

The good news for real estate agents is that even if they are liable for a failure to disclose, the treble damages clause does not apply, and the buyer’s recovery against an agent is limited to the decreased value of the property and damages resulting as a consequence of the nondisclosure. See Davis v. Beling, 128 Nev. 301, 278 P.3d 502 (2012)..  A successful plaintiff can recover the diminution in value as well as consequential damages from the agent. Id.

Conclusion

Real property transactions can be difficult and complicated, and seller’s disclosures are just one piece of the puzzle. Sellers and buyers should make use of the resources available through experts like engineers and inspectors, real estate agents, and even lawyers to ensure a smooth transaction. As always, if you think you might need an attorney, you probably do.