Can a Lease Be in Effect if the Tenants Are Evicted in Foreclosure?

Full question:

My daughter is renting in Las Vegas, Nevada. She was home for a holiday in January and upon returning to Vegas found a foreclosure/eviction notice on the door of the house that she is renting. This notice was from a bank and said that the tenants (she shares the house with others) had to be out by the 15th of Feb. The landlord contacted the tenants today and told them it has been fixed now and they can stay. In the meanwhile they have gone out and found other accommodations and have committed to rental on a different property. The landlord is telling them they are still liable for the lease on the property they are in. The question is is that a fact? How do they check to see if the problem is indeed 'fixed'? Wouldn't the foreclosure/eviction notice void their obligation on the current lease?

• Category: Real Property
• Subcategory: Foreclosure
• Date: 04/07/2025
• State: Nevada

Answer:

Knowing whether a prospective rental property or your current rental property is in foreclosure is very important. Although you may pay your rent consistently and on time, if your rental unit is foreclosed upon, you may still be evicted by the new owner (although see below for information on legal protections that apply to you if your rental unit is foreclosed).

Although state law now requires a landlord to disclose in writing to a prospective tenant if the property to be rented is in foreclosure, people do not always comply with the law and there is no similar obligation as to current tenants. To find out if a rental unit is in foreclosure:

1.Go to the Clark County Assessor website;
2.In the top left corner, click on address search and then enter the address;
3.You should see a listing with the exact address. Click on the “parcel number” and write it down;
4.Next, go to the Clark County Recorder website;
5.Click on the “search records” link which is the second listing on the upper far left side of the site;
6.Click on "Parcel #" and enter the relevant parcel number into the search screen and choose to see all document types or, under “Category,” select only foreclosure documents;
7.This will give you your search results and should show whether or not a Default has been filed, meaning that the homeowner is delinquent in their mortgage payments, and if a Notice of Trustee Sale has been filed, meaning that the home is going to be sold.

Effective 10/1/09, NRS 40.255 following “residential (4 units or less) foreclosures” of dwellings rented by the month or longer, tenants may vacate at any time during the notice period without penalty. No record of eviction may be entered if you vacate within the notice period.

In any case, you may be able to negotiate to see what the new owner might offer if you agree to move early. Many banks which foreclose may offer you a “cash for keys” option.

Please see:

http://www.clarkcountycourts.us/CivilSHC/landlord-tenant-evictions/eviction-foreclosure.html#2

If you wish to use the legal system to resolve your dispute, you may want to review the following general information regarding contract law and breach of contract actions:

Contracts are agreements that are legally enforceable. A contract is an agreement between two parties that creates an obligation to do or refrain from doing a particular thing. The purpose of a contract is to establish the terms of the agreement by which the parties have fixed their rights and duties. An oral contract is an agreement made with spoken words and either no writing or only partially written. An oral contract may generally be enforced the same as a written agreement. However, it is much more difficult with an oral contract to prove its existence or the terms. Oral contracts also usually have a shorter time period within which a person seeking to enforce their contract right must sue. A written contract generally provides a longer time to sue than for breach of an oral contract. Contracts are mainly governed by state statutory and common (judge-made) law and private law. Private law generally refers to the terms of the agreement between the parties, as parties have freedom to override many state law requirements regarding formalities of contracts. Each state has developed its own common law of contracts, which consists of a body of jurisprudence developed over time by trial and appellate courts on a case-by-case basis.

An unjustifiable failure to perform all or some part of a contractual duty is a breach of contract. A legal action for breach of contract arises when at least one party's performance does not live up to the terms of the contract and causes the other party to suffer economic damage or other types of measurable injury. A lawsuit for breach of contract is a civil action and the remedies awarded are designed to place the injured party in the position they would be in if not for the breach. Remedies for contractual breaches are not designed to punish the breaching party. The five basic remedies for breach of contract include the following: money damages, restitution, rescission, reformation, and specific performance. A money damage award includes a sum of money that is given as compensation for financial losses caused by a breach of contract. Parties injured by a breach are entitled to the benefit of the bargain they entered, or the net gain that would have accrued but for the breach. The type of breach governs the extent of damages that may be recovered.

Restitution is a remedy designed to restore the injured party to the position occupied prior to the formation of the contract. Parties seeking restitution may not request to be compensated for lost profits or other earnings caused by a breach. Instead, restitution aims at returning to the plaintiff any money or property given to the defendant under the contract. Plaintiffs typically seek restitution when contracts they have entered are voided by courts due to a defendant's incompetence or incapacity.

Rescission is the name for the remedy that terminates the contractual duties of both parties, while reformation is the name for the remedy that allows courts to change the substance of a contract to correct inequities that were suffered. In order to have a rescission, both parties to the contract must be placed in the position they occupied before the contract was made. Courts have held that a party may rescind a contract for fraud, incapacity, duress, undue influence, material breach in performance of a promise, or mistake, among other grounds.

Specific performance is an equitable remedy that compels one party to perform, as nearly as practicable, his or her duties specified by the contract. Specific performance is available only when money damages are inadequate to compensate the plaintiff for the breach.

Promissory estoppel is a term used in contract law that applies where, although there may not otherwise be an enforceable contract, because one party has relied on the promise of the other, it would be unfair not to enforce the agreement. Promissory estoppel arises from a promise which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character on the part of the promisee and which does induce such action or forebearance in binding if injustice can be avoided only by enforcement of the promise. Detrimental reliance is a term commonly used to force another to perform their obligations under a contract, using the theory of promissory estoppel. Promissory estoppel may apply when a promise was made; reliance on the promise was reasonable or foreseeable; there was actual and reasonable reliance on the promise; the reliance was detrimental; and injustice can only be prevented by enforcing the promise. Detrimental reliance must be shown to involve reliance that is reasonable, which is a determination made on an individual case-by-case basis, taking all factors into consideration. Detrimental means that some type of harm is suffered.

Reasonable reliance is usually referred to as a theory of recovery in contract law. It was what a prudent person might believe and act upon based on something told by another. Sometimes a person acts in reliance on the promise of a profit or other benefit, only to learn that the statements or promises were either incorrect or were exaggerated. The one who acted to their detriment in reasonable reliance may recover damages for the costs of his/her actions or demand performance. Reasonable reliance connotes the use of the standard of an ordinary and average person.