Key changes take effect in commercial foreclosure law

Effective October 2011, the Nevada Legislature passed a bill adding a new statute focusing specifically on commercial tenancies. Codified as Nevada Revised Statutes 118C.101 through 118C.230, these sections were designed to create protections and remedies expressly for commercial landlords and tenants. Prior to the enactment of this law, there were no Nevada statutes focusing solely on the commercial tenancy. Rather, both residential and commercial transactions were governed under one statute, which focused primarily on residential tenancies.

The new statutes provide several key changes that commercial landlords and tenants should be aware of, a few of which are detailed below:

Tenant lockout without court order

NRS 118C.200 provides that a landlord or a landlord's agent may change the door locks on a commercial premises leased to a tenant who is delinquent in paying at least part of the rent. No court order is necessary. Previously, court intervention was required before a tenant could be locked out of the premises.

Under the new law, the lockout can take place immediately after a tenant becomes delinquent. If a landlord or landlord's agent changes the locks, written notice must be posted on the front door of the premises for at least five days stating the name and address or telephone number of the person or company from which the new key may be obtained. The tenant can only obtain the new key, however, if the tenant pays all past-due rent.

If a commercial tenant believes he has been unlawfully locked out, the tenant must file a verified complaint for re-entry in the Justice Court. If the court reasonably believes an unlawful lockout may have occurred, the court shall issue an order requiring tenant to post a bond equal to one month of rent, and upon posting of the bond may issue a temporary writ of restitution that entitles the tenant to immediate and temporary possession of the premises, pending a final hearing on the complaint for reentry.

A tenant who is wrongfully locked out may also recover from the landlord an amount equal to the sum of the tenant's actual damages, one month's rent or $500, whichever is greater.

Recovery of abandoned property

Previously, if a landlord reasonably believed a tenant had abandoned the premises without notice, the landlord could not recover possession and dispose of personal property until the tenant was absent from the premises for a period of time equal to one-half the time for periodic rental payments.

The new statute removes the waiting period and clarifies that a tenant is presumed to have abandoned the property "if goods, equipment or other property, in an amount substantial enough to indicate a probable intent to abandon the commercial premises, is being or has been removed from the commercial premises" and "the removal is not within the normal course of business of the tenant." Thus, the new law permits a landlord to recover possession of abandoned property much more quickly.

Disposal of abandoned personal property

A landlord previously had to provide thirty days notice before disposing of abandoned personal property. The new law shortens this notice period to 14 calendar days.

Under the new law, a landlord may dispose of abandoned personal property after notifying the tenant in writing of his intention to do so. The notice must be sent certified mail, return-receipt requested, and the landlord must give the tenant 14 days from the date the notice was mailed to reclaim the property. If the tenant attempts to reclaim the personal property, the landlord may charge and collect the reasonable and actual costs of inventory, moving and safe storage, if necessary, before releasing the property.

If, after 14 days has elapsed, the tenant has not attempted to reclaim his property, the landlord may dispose of it. A landlord may recover his or her reasonable costs out of the sale of the abandoned personal property.

Terms of a lease

Landlords and tenants should be aware that the terms of a written lease agreement will supersede the statutes described above. Accordingly, tenants may want to negotiate into their lease additional safeguards to prevent or delay a lockout or the disposal of presumed abandoned property. Conversely, landlords may want to ensure that the language in their standard lease agreements mirrors the language used in NRS Chapter 118C.

Jessica Woelfel, an associate at McDonald Carano Wilson, practices in commercial and complex litigation, employment and labor law, intellectual property and construction law. Contact her at www. mcdonaldcarano.com.