Governor Steve Sisolak began the moratorium via Emergency Directive 008 on March 29, 2020, following the closure of all non-essential businesses in the state. During the pendency of the moratorium, commercial landlords generally were prevented from charging late fees or commencing or continuing eviction proceedings against tenants who failed to pay rent and other amounts required under their leases, including tenants that were in default prior to March 29, 2020. Likewise, commercial lenders generally were prevented from charging late fees or commencing or pursuing foreclosure against their borrowers.
With the lifting of the moratorium, commercial landlords and lenders again have the full range of legal options in dealing with their tenants and borrowers.
The Governor’s recently announced Emergency Directive 025 allows commercial landlords to again charge late fees (other than with respect to late payments that arose during the moratorium), initiate lockouts, and commence eviction actions (including summary evictions) for non-payment of rent effective July 1. Emergency Directive 025 encourages landlords and tenants to negotiate repayment plans for past due rent. However, Nevada is not requiring such negotiations, evidenced by the immediate lifting of the moratorium and express guidance provided by the Governor and State Attorney General’s office. Similarly, under Emergency Directive 025, commercial lenders may again commence foreclosure proceedings against non-paying borrowers effective July 1.
It’s anticipated that some commercial landlords and lenders will begin pursuing remedies against their delinquent counterparties immediately.
To the extent a commercial landlord is aware that its tenant will refuse or otherwise be unable to bring its rent current, commencing the eviction process early and avoiding inevitable backlogs with the Las Vegas Justice Court will be beneficial. Backlogs and revised hours of operation of courts and recorder’s offices may also cause delays for lenders seeking to pursue foreclosure, and therefore, prompt action is recommended. Commercial landlords and lenders should also consider potential force majeure and other defenses that tenants may continue to make in response to commencement of eviction or foreclosure. Landlords and lenders should also consider a holistic review of all potential remedies available under the lease or loan documents, which may have been delayed by or not considered as a result of the moratorium, such as set-off against security deposits or escrow accounts, termination of lease extension rights, collection of protective advances, and demand for confirmation that taxes, insurance, common interest fees, and similar charges have been satisfied.
Attorneys in Ballard Spahr’s Las Vegas office are assisting commercial landlords and lenders as they maneuver the current environment and are available to provide counsel on potential approaches with delinquent counterparties, given the recent announcements.
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