Environmental impairment of real collateral: Waiver of lien; notice of waiver; exception; recording of waiver.
1. If real collateral is environmentally impaired and the debtor’s obligation is in default, a secured lender may:
(a) Waive his lien as to all of the real collateral and proceed as an unsecured creditor, including reduction of his claim against the debtor to judgment and any other rights and remedies permitted by law; or
(b) Waive his lien in accordance with paragraph (a) as to that part of the real collateral which is environmentally impaired and proceed against the unimpaired real collateral.
2. To waive his lien against all or part of the environmentally impaired real collateral, the secured lender must, before commencement of any action, record with the county recorder of the county where the real collateral is located a notice of intent to waive the lien and mail a copy thereof, by registered or certified mail, return receipt requested, with postage prepaid, to the debtor, to the person who holds the title of record on the date of the notice, and to those persons with an interest, as defined in NRS 107.090, whose interest or claimed interest is subordinate to the secured lender’s lien, at their respective addresses, if known, otherwise to the address of the real collateral. In the case of a partial waiver the notice of intent to waive may be contained in a notice of default and election to sell. The notice of intent to waive must contain:
(a) A legal description of the environmentally impaired real collateral;
(b) A statement that the secured lender intends to proceed against the debtor under the applicable paragraph of subsection 1; and
(c) If the secured lender is proceeding under paragraph (b) of subsection 1, a statement that he will proceed against the unimpaired property, which may result in a judgment for deficiency against the debtor as a result of diminution in value of the collateral because of the exclusion of the environmentally impaired portion.
3. A secured lender may not waive his lien as a result of any environmental impairment if he had actual knowledge of the environmental impairment at the time the lien was created. In determining whether a secured lender had such knowledge, the report of any person legally entitled to prepare the report with respect to the existence or absence of any environmental impairment is prima facie evidence of the existence or absence, as the case may be, of any environmental impairment.
4. A waiver made by a secured lender pursuant to this section is not final or conclusive until a final judgment, as defined in subsection 4 of NRS 40.435, has been obtained. If the waiver covers the full extent of the collateral, the lender shall immediately thereafter cause his lien to be released by recording the waiver in the same manner as the lien was recorded.
Last modified: February 27, 2006