ATTENTION all landlords and investors; there are new laws coming July 1, 2019! Nevada’s Democratic Governor Steve Sisolak recently signed off on, and put into effect, some big changes to the way landlords in Nevada deal with evicting their tenants. These changes were cleared by the Governor in early June 2019 after the legislators in Nevada decided to pass almost all of the proposed changes within Senate Bill 151 (SB151).
SB151 has sparked many discussions within Nevada’s real estate industry. Since it’s initial proposal there have been numerous comments, many critical, from those within the industry. The President of Nevada REALTORS, Keith Lynam, noted, “This is bad public policy that should never have been approved by the Legislature.” You can read the full article covering President Lynam’s views of SB151 here. Most of the sour taste coming from the passing of the SB151 laws is due to the direct effect it will have on current Nevada landlords and potential investors. These two parties have always been an important part of the housing market in Nevada, especially the Las Vegas Valley. However, the changes that start on July 1, 2019 have the potential to change this moving forward.
What Are The Changes?
Before you understand why certain SB151 laws enacted by legislators, and approved by Governor Sisolak, will effect investor interest let’s look at the key changes.
- Notices must now be served by licensed professionals. Notices can only be served by the following persons: Licensed Process Server, Attorney, Agent of Retained Attorney, Constable or Sheriff. Prior law allowed the landlord themselves or landlord’s property manager or agent (under perjury of penalty declaration of service) to serve an eviction notice to a tenant.
- Tenants who pay rent late can now be charged a MAXIMUM late fee of ONLY 5% of the periodic rent. (example: $1000/month rental unit, max late fee for one month late is $50). Prior letter of the law said landlord’s can charge a “reasonable” late fee. (old example: $1000/month rental unit, accepted “reasonable” late fee could be $50 automatic plus $10/day; meaning one month late fee could be $300)
- Tenants now have 7 full judicial days, upon being properly served a non-payment of rent eviction notice, to pay their rent due or surrender the keys and property possession back to the landlord. Before the changes the tenants had to do the same by noon of the 5th judicial day.
- Sheriff or Constable Lockouts (tenant being removed) can no longer take place prior to the 24 hour notice period ending. The tenants, upon being served a 24 hour lockout notice, must be removed between the end of the 24 hours but no later than 36 hours after service. Prior to this change the Sheriff or Constable could show up at the property anytime within 24 hours of serving the 24 hour notice.
- Landlords must allow access to the property during the first 5 calendar days after the tenant has been evicted in order to get any leftover personal property. Prior law said the tenant must get their leftover personal property within 30 calendar days of being removed but placed no burden on the landlord within the first 5 calendar days.
The Effect on Landlords & Investors
- Landlords now have NO CHOICE when it comes to dealing with bad tenants. They now MUST PAY for a professional to simply serve a piece of paper to their bad tenants. This now pulls more money from the landlord’s pocket when they’re already losing money because of a bad tenant situation. This is just an additional burden that was and is completely unnecessary.
- Now tenants can play more games, take longer to pay rent, and cost the landlords additional money (not to mention stress) because of this 5% cap on late fees. This goes somewhat hand-in-hand with the new 7 judicial day period the tenants now have when paying late. This is truly bothersome in the eyes of a landlord. Basically now a simple non-payment of rent eviction case can easily drag out into the next month and the landlord has to pay lots of money, incur wasted time, and at the end of the day may only receive a minimal 5% late fee. There are other factors within an eviction case but 5% cap is absolutely a slap in the face to Nevada landlords.
- Seven full judicial days may not seem like that big of a difference at first glance when compared to five, right? Well let’s break this down and show you how two days is not really two days.
- Tenant rent is due on Wednesday, June 1st
- Landlord serves late notice on Thursday, June 2nd
- Five day law would give tenant until 12:00PM on Thursday, June 9th to pay full amount due or the landlord could take immediate court action. Court action could be taken on that same Thursday, June 9th starting as early as 12:01PM and could potentially result in a judge’s order for summary eviction by Friday June 10th. This could result in a tenant being removed as early as the following Wednesday, June 15th. The entire process would have taken from June 2nd to June 15th, 14 calendar days. That’s the fastest a tenant could be removed for not paying rent with the old five day law; typical turn around, if tenant didn’t fight the eviction (that’s an additional possibility with any type of eviction case) was about 2 1/2 to 3 weeks.
- Seven day law would give tenant until the end of business day Monday, June 13th to pay full rent. The earliest the landlord could take court action would be Tuesday, June 14th. This could result in a judge’s order as early as Wednesday, June 15th. This would mean the earliest the Sheriff or Constable could remove the tenant would be Monday, June 20th. Fastest timetable from start to finish is June 2nd to June 20th, 19 calendar days. As you can see, two days is NOT two days. Essentially non-paying tenants can get an extra weekend and few more days of living rent free while landlords are handcuffed and forced to lose even more money because of the new laws.
- The new “not sooner than 24 hour” law effectively gives tenants a larger window of opportunity to delay the judge’s eviction order. When a tenant receives a 24 hour notice they can go to the courts and file motions, appeals, bankruptcies and use other delay tactics to stall the eviction effort. Keep in mind that when tenants receive the 24 hour notice it means the court/judge has already granted the landlord the right to legally remove the tenant via a sheriff or constable. So again, with a full 24 hours minimum, now the tenant has a larger window of time to play games and cost the landlord additional anxiety, stress, and of course more money because they don’t want to pay rent.
- The new five calendar day law requiring landlords to give tenants access to their leftover personal property isn’t too big of a deal in most cases. However, let’s consider all the above examples when examining this change. So this is after the landlord has finally removed the burdensome tenant from the property. Great it’s over, finally! Sorry, not quite yet landlords. You must now allow your favorite tenant continued access for the next five calendar days to get all of their **** from the property so you can rehab, clean and prepare it for the next, hopefully better, tenant. By the way, **** stands for personal property on this blog post. I’m sure all landlords will be happy to work alongside their recently evicted tenants, especially right after spending hundreds (sometimes thousands) of dollars to do so. All of this being said, it is right the tenants are allowed to get their stuff; this five day law change was completely unnecessary however because the old law already allowed them 30 calendar days to work with the landlord to get their belongings.
Potential Effect on Investor Interest
When considering the July 1, 2019 changes there’s one final and important question to ask:
“Will investors now be less interested in putting their money in the Nevada housing market?”
After reading this article, and doing some additional research, the answer for all current landlords and potential future investors is most likely a saddening “YES”!
