EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

1-1 Section 1. Chapter 645 of NRS is hereby amended by adding thereto

1-2 the provisions set forth as sections 2 to 21, inclusive, of this act.

1-3 Sec. 2. As used in sections 2 to 21, inclusive, of this act, unless the

1-4 context otherwise requires, the words and terms defined in sections 3 to

1-5 10, inclusive, of this act have the meanings ascribed to them in those

1-6 sections.

1-7 Sec. 3. "Brokerage agreement" means a written contract between

1-8 an owner and a real estate broker in which the owner agrees to pay a

1-9 commission to the real estate broker for services provided by the broker

1-10 relating to the disposition of commercial real estate as specified in the

1-11 agreement.

1-12 Sec. 4. "Commercial real estate" means any real estate located in

1-13 this state. The term does not include:

1-14 1. Improved real estate that consists of not more than four residential

1-15 units;

2-1 2. Unimproved real estate for which not more than four residential

2-2 units may be developed or constructed pursuant to any zoning

2-3 regulations or any development plan applicable to the real estate; or

2-4 3. A single-family residential unit, including a condominium,

2-5 townhouse or home within a subdivision, if the unit is sold, leased or

2-6 otherwise conveyed unit by unit, regardless of whether the unit is part of

2-7 a larger building or parcel that consists of more than four units.

2-8 Sec. 5. "Commission" means any fee or other compensation agreed

2-9 upon by a real estate broker and an owner specified in a brokerage

2-10 agreement.

2-11 Sec. 6. "Disposition" means a voluntary conveyance or other

2-12 transfer of title or any interest of an owner in any commercial real estate

2-13 specified in a brokerage agreement.

2-14 Sec. 7. "Escrow" has the meaning ascribed to it in subsection 3 of

2-15 NRS 645A.010.

2-16 Sec. 8. "Escrow agent" has the meaning ascribed to it in subsection

2-17 5 of NRS 645A.010.

2-18 Sec. 9. "Owner" means a person who holds legal title to or any

2-19 interest in any commercial real estate that is described in a brokerage

2-20 agreement, including, without limitation, any assignee in interest and

2-21 any agent of a person. The term does not include a mortgagee, trustee

2-22 under or beneficiary of a deed of trust or an owner or holder of a claim

2-23 that encumbers any real estate or any improvement on that real estate.

2-24 Sec. 10. "Owner’s net proceeds" means the gross receipts to which

2-25 an owner is entitled upon the disposition of any commercial real estate

2-26 specified in a brokerage agreement. The term does not include:

2-27 1. Any money that is required to pay an encumbrance, claim or lien

2-28 that has priority over a claim recorded pursuant to the provisions of

2-29 section 14 of this act other than an encumbrance, claim or lien that the

2-30 person to whom the commercial real estate is conveyed or otherwise

2-31 transferred authorizes to remain after the disposition of the real estate;

2-32 or

2-33 2. Any costs incurred by the owner to close escrow for that

2-34 commercial real estate.

2-35 Sec. 11. 1. A real estate broker has a claim upon the owner’s net

2-36 proceeds from the disposition of commercial real estate for any

2-37 commission earned by the real estate broker pursuant to a brokerage

2-38 agreement. For the purposes of this subsection, a commission shall be

2-39 deemed to be earned when the real estate broker has performed his duties

2-40 pursuant to the brokerage agreement.

2-41 2. The claim belongs to the real estate broker named in the

2-42 brokerage agreement and not to an employee or independent contractor

2-43 of the real estate broker.

3-1 3. A claim that is recorded pursuant to the provisions of section 14 of

3-2 this act:

3-3 (a) Is a claim upon personal property and does not attach to the title

3-4 of any real property.

3-5 (b) May be waived if, on or before the date the brokerage agreement is

3-6 executed, the real estate broker signs a written waiver of his right to

3-7 enforce the claim. The waiver must be printed in upper case letters and

3-8 must be limited to one transaction. A person other than the real estate

3-9 broker may not waive the rights of the real estate broker pursuant to this

3-10 section, regardless of whether that person may execute and bind the real

3-11 estate broker to a brokerage agreement.

3-12 (c) May not be enforced by a person other than the real estate broker

3-13 and the owner.

3-14 4. A claim of a third party may not be brought or otherwise

3-15 adjudicated pursuant to the provisions of sections 2 to 21, inclusive, of

3-16 this act.

3-17 5. The recording or enforcement of a claim by a real estate broker

3-18 pursuant to the provisions of sections 2 to 21, inclusive, of this act does

3-19 not relieve the owner of his obligation to close escrow for any

3-20 commercial real estate.

3-21 Sec. 12. 1. Except as otherwise provided in subsection 3, if a real

3-22 estate broker wishes to enforce a claim pursuant to the provisions of

3-23 sections 2 to 21, inclusive, of this act, he shall, within 7 days after a

3-24 commission is earned by the real estate broker pursuant to a brokerage

3-25 agreement, provide a written notice of the claim to:

3-26 (a) The owner of the commercial real estate specified in the brokerage

3-27 agreement; and

3-28 (b) The escrow agent closing the transaction for the commercial real

3-29 estate.

3-30 2. A real estate agent who fails to provide a notice of a claim within

3-31 the period specified in subsection 1 may not enforce the claim pursuant

3-32 to the provisions of sections 2 to 21, inclusive, of this act.

3-33 3. A real estate broker is not required to provide a written notice of a

3-34 claim to an escrow agent pursuant to this section if the identity of the

3-35 escrow agent is unknown to the real estate agent at the time the notice is

3-36 provided by the real estate broker to the owner pursuant to paragraph (a)

3-37 of subsection 1.

3-38 Sec. 13. 1. A notice of claim specified in section 12 of this act must

3-39 include:

3-40 (a) The name of the owner of the commercial real estate;

3-41 (b) The name of the person who executed the brokerage agreement, if

3-42 other than the owner;

4-1 (c) The name, business name, if any, and the license number of the

4-2 real estate broker;

4-3 (d) The amount claimed by the real estate broker;

4-4 (e) A detailed description of the commercial real estate; and

4-5 (f) A copy of the brokerage agreement pursuant to which the real

4-6 estate broker claims a commission.

4-7 2. The notice must:

4-8 (a) Be verified by the oath of the real estate broker who provides the

4-9 notice; and

4-10 (b) Include an acknowledgment by the real estate broker.

4-11 Sec. 14. 1. If an owner is served with a notice of a claim pursuant

4-12 to section 12 of this act, the owner shall, within 5 days after service of the

4-13 notice but not later than 7 days before the disposition of the commercial

4-14 real estate:

4-15 (a) Confirm or deny the claim set forth in the notice; and

4-16 (b) Notify, in writing, the real estate broker who provided the notice to

4-17 the owner.

4-18 2. If the owner confirms the claim and notifies the real estate broker

4-19 of that fact pursuant to subsection 1, the owner may instruct the escrow

4-20 agent for the commercial real estate to pay to the real estate broker the

4-21 amount claimed by the real estate broker in the notice of the claim.

4-22 3. If the owner fails to notify the real estate broker within the period

4-23 specified in subsection 1 or notifies the real estate broker that he denies

4-24 the claim, the real estate broker may record the notice of the claim in the

4-25 office of the county recorder where the commercial real estate or any

4-26 portion of the commercial real estate is located.

4-27 Sec. 15. 1. Except as otherwise provided in this subsection, if:

4-28 (a) An escrow agent receives a notice of a claim pursuant to section

4-29 12 of this act;

4-30 (b) A notice of claim is recorded pursuant to section 14 of this act; or

4-31 (c) An escrow agent has actual notice of a claim specified in

4-32 paragraph (b),

4-33 the escrow agent shall reserve from the owner’s net proceeds an amount

4-34 that is equal to the amount claimed by the real estate broker in his

4-35 recorded claim. If the amount of the owner’s net proceeds is insufficient

4-36 to satisfy the amount of the claim, the escrow agent shall reserve the

4-37 entire amount of the owner’s net proceeds. In determining whether the

4-38 amount of the owner’s net proceeds is insufficient to satisfy the amount

4-39 of the claim, the escrow agent may consider any encumbrance, claim or

4-40 lien that has priority over the claim of the real estate broker pursuant to

4-41 section 18 of this act.

5-1 2. If the escrow agent determines that the amount of the owner’s net

5-2 proceeds is insufficient to satisfy the amount of the claim, the escrow

5-3 agent:

5-4 (a) Shall, within 3 days after making that determination but not later

5-5 than the close of escrow, notify the real estate broker of that fact in

5-6 writing; and

5-7 (b) Shall not release to the owner any portion of the owner’s net

5-8 proceeds unless the escrow agent receives a copy of the written

5-9 agreement executed by the owner and the real estate broker authorizing

5-10 the escrow agent to release those proceeds to the owner.

5-11 3. Except as otherwise provided in paragraph (b) of subsection 2 and

5-12 section 17 of this act, if an owner’s net proceeds or any portion of an

5-13 owner’s net proceeds are reserved pursuant to this section, the escrow

5-14 agent who reserves those proceeds shall not release the proceeds to any

5-15 person until the rights of the owner and the real estate broker are

5-16 determined pursuant to section 17 of this act.

5-17 4. A reservation of an owner’s net proceeds or any portion of an

5-18 owner’s net proceeds pursuant to this section does not relieve the owner

5-19 of his obligation to close escrow for the commercial real estate.

5-20 Sec. 16. 1. If:

5-21 (a) A notice of a claim is recorded pursuant to section 14 of this act;

5-22 (b) An escrow agent has reserved an owner’s net proceeds or any

5-23 portion of an owner’s net proceeds pursuant to section 15 of this act; and

5-24 (c) Escrow for the disposition of the commercial real estate
5-25 has closed,

5-26 the escrow agent may, in accordance with the provisions of NRS

5-27 645A.177, deposit with the district court of the county where the claim is

5-28 recorded the amount of the owner’s net proceeds reserved by him

5-29 pursuant to section 15 of this act.

5-30 2. If an escrow agent deposits an owner’s net proceeds with a district

5-31 court pursuant to subsection 1, the escrow agent is discharged from any

5-32 further liability concerning those proceeds.

5-33 Sec. 17. 1. If a claim is recorded pursuant to section 14 of this act,

5-34 the owner against whom the claim is recorded may:

5-35 (a) File a civil action concerning the claim in the district court of the

5-36 county where the commercial real estate or a portion of the commercial

5-37 real estate is located; and

5-38 (b) At the time the summons is issued or at any time before the

5-39 complaint is answered by the real estate broker, apply to the district court

5-40 for an order directing the real estate broker to appear before the court to

5-41 show cause why the claim should not be dismissed.

6-1 2. If the court issues an order directing the real estate broker to

6-2 appear before the court, the order must:

6-3 (a) State that, if the real estate broker fails to appear at the time and

6-4 place specified in the order, the claim will be dismissed with prejudice

6-5 pursuant to subsection 3;

6-6 (b) Specify a time and date on which the court will conduct a hearing

6-7 on the matter; and

6-8 (c) Establish a period within which the owner must serve a notice of

6-9 the order on the real estate broker and the escrow agent.

6-10 3. If the real estate broker fails to appear at the time and place

6-11 specified in the order issued pursuant to subsection 2, the court shall

6-12 issue an order:

6-13 (a) Dismissing the claim with prejudice;

6-14 (b) Canceling the notice of the claim recorded pursuant to section 14

6-15 of this act; and

6-16 (c) Requiring the real estate broker to record in the office of the

6-17 county recorder of the county where the notice of the claim is recorded a

6-18 copy of the order of cancellation issued pursuant to paragraph (b).

6-19 An order issued pursuant to this subsection must state that the

6-20 cancellation of the notice of the claim has the same effect as an

6-21 expungement of that notice.

6-22 4. If a hearing is conducted pursuant to this section, the court shall

6-23 consider the showing made by the parties at the hearing and shall make a

6-24 preliminary determination of which party, with reasonable probability, is

6-25 entitled to the amount of the owner’s net proceeds claimed by the broker

6-26 pending final adjudication of the claims of the parties.

6-27 5. If, after the hearing, the district court determines there is a

6-28 reasonable probability that:

6-29 (a) The real estate broker is entitled to the amount of the owner’s net

6-30 proceeds claimed by him, the court shall, if those proceeds:

6-31 (1) Have been deposited with the court by the escrow agent

6-32 pursuant to section 16 of this act, release the proceeds to the real estate

6-33 broker; or

6-34 (2) Have not been deposited with the court by the escrow agent

6-35 pursuant to that section, order the escrow agent to release the proceeds to

6-36 the real estate broker; or

6-37 (b) The owner is entitled to the amount of the owner’s net proceeds

6-38 claimed by the real estate broker, the court shall, if those proceeds:

6-39 (1) Have been deposited with the court by the escrow agent

6-40 pursuant to that section, release the proceeds to the owner; or

6-41 (2) Have not been deposited with the court by the escrow agent,

6-42 order the escrow agent to release the proceeds to the owner.

7-1 6. If the owner believes the claim is frivolous and is made without

7-2 reasonable cause, the owner may include in the application submitted

7-3 pursuant to subsection 1 a request for an order directing the real estate

7-4 broker to appear and show cause why the claim should not be dismissed

7-5 on those grounds. If the court issues such an order, any hearing

7-6 conducted pursuant to that order must be conducted in the manner

7-7 provided in NRS 108.2275. In addition to any remedy set forth in that

7-8 section, the court may award compensatory damages to the owner.

7-9 7. The prevailing party in any civil action filed or hearing conducted

7-10 pursuant to this section is entitled to receive:

7-11 (a) Any costs incurred by that party for the civil action or hearing;

7-12 and

7-13 (b) A reasonable attorney’s fee.

7-14 8. Proceedings conducted pursuant to this section do not affect any

7-15 rights or remedies otherwise available to the owner or the real estate

7-16 broker.

7-17 Sec. 18. 1. Except as otherwise provided in subsection 2, a claim

7-18 that is recorded pursuant to the provisions of section 14 of this act has

7-19 priority over any other encumbrance, claim or lien, if the claim of the

7-20 real estate broker is recorded before the encumbrance, claim or lien.

7-21 2. The provisions of subsection 1 do not apply to a lien recorded

7-22 pursuant to the provisions of NRS 108.221 to 108.246, inclusive.

7-23 Sec. 19. If a real estate broker records a claim pursuant to the

7-24 provisions of section 14 of this act and that claim is paid or otherwise

7-25 satisfied pursuant to that section, the real estate broker shall, within 3

7-26 days after the claim is paid or otherwise satisfied, record a written release

7-27 of that claim. The release must be recorded in the office of the county

7-28 recorder where the claim was recorded.

7-29 Sec. 20. Any notice that is required to be served pursuant to the

7-30 provisions of sections 2 to 21, inclusive, of this act must be served in the

7-31 manner provided in NRS 108.227.

7-32 Sec. 21. An escrow agent:

7-33 1. Is not liable in any civil action for any action taken to comply with

7-34 the provisions of sections 2 to 21, inclusive, of this act.

7-35 2. May charge and collect a fee from an owner or real estate broker

7-36 for any services provided by the escrow agent to the owner or real estate

7-37 broker pursuant to sections 2 to 21, inclusive, of this act.

7-38 Sec. 22. NRS 645.633 is hereby amended to read as follows:

7-43 member, without the legal right to do so.

8-1 2. Violating any order of the commission, any agreement with the

8-2 division, any of the provisions of this chapter, chapter 116, 119, 119A,

8-3 119B, 645A or 645C of NRS or any regulation adopted thereunder.

8-4 3. Paying a commission, compensation or a finder’s fee to any person

8-5 for performing the services of a broker, broker-salesman or salesman who

8-6 has not [first] secured his license pursuant to this chapter. This subsection

8-7 does not apply to payments to a broker who is licensed in his state of

8-8 residence.

8-9 4. A felony, or has entered a plea of guilty, guilty but mentally ill or

8-10 nolo contendere to a charge of felony or any crime involving fraud, deceit,

8-11 misrepresentation or moral turpitude.

8-12 5. Guaranteeing, or having authorized or permitted any person to

8-13 guarantee, future profits which may result from the resale of real property.

8-14 6. Failure to include a fixed date of expiration in any written brokerage

8-15 agreement or to leave a copy of the brokerage agreement with the client.

8-16 7. Accepting, giving or charging any undisclosed commission, rebate

8-17 or direct profit on expenditures made for a client.

8-18 8. Gross negligence or incompetence in performing any act for which

8-19 he is required to hold a license pursuant to this chapter, chapter 119, 119A

8-20 or 119B of NRS.

8-21 9. Any other conduct which constitutes deceitful, fraudulent or

8-22 dishonest dealing.

8-23 10. Any conduct which took place before [his being] he became

8-24 licensed, which was in fact unknown to the division and which would have

8-25 been grounds for denial of a license had the division been aware of the

8-26 conduct.

8-27 11. Knowingly permitting any person whose license has been revoked

8-28 or suspended to act as a real estate broker, broker-salesman or salesman,

8-29 with or on behalf of the licensee.

8-30 12. Recording or causing to be recorded a claim pursuant to the

8-31 provisions of sections 2 to 21, inclusive, of this act that is determined by a

8-32 district court to be frivolous and made without reasonable cause

8-33 pursuant to section 17 of this act.

8-34 Action may also be taken pursuant to NRS 645.630 against a person who is

8-35 subject to that section for the suspension or revocation of a real estate

8-36 broker’s, broker-salesman’s or salesman’s license issued to him by any

8-37 other jurisdiction.

8-38 Sec. 23. NRS 645A.175 is hereby amended to read as follows:

8-39 645A.175 1. Except as otherwise provided in subsection 2 or in the

8-43 documents necessary to release the money deposited in the escrow.

9-1 2. A party may refuse to execute a document necessary to release the

9-2 money deposited in the escrow only if a good faith dispute exists

9-3 concerning that money.

9-4 3. [If] Except as otherwise provided in sections 2 to 21, inclusive, of

9-5 this act, if a party refuses to execute a document necessary to release the

9-6 money deposited in the escrow within 30 days after the holder of the

9-7 escrow makes a written request for the execution, the party injured by the

9-8 [other party’s] failure of the other party to execute the document may

9-9 collect from that party:

9-10 (a) Actual damages of not less than $100 nor more than 1 percent of the

9-11 purchase price of the real property for which the money was deposited in

9-12 the escrow, whichever is greater;

9-13 (b) The money deposited in the escrow which was not held to resolve a

9-14 good faith dispute concerning the sale of the property; and

9-15 (c) A reasonable attorney’s fee.