A Nevada property has two deeds of trust recorded against it: a first deed of trust for $300,000 recorded in 2018, and a second deed of trust for $80,000 recorded in 2020. The property is sold at a trustee's sale initiated by the first deed of trust holder for $320,000. How are the proceeds distributed?

Correct Answer

B) The first deed of trust holder receives $300,000, the second deed of trust holder receives $20,000, and any remainder goes to the borrower

In Nevada, lien priority follows the 'first in time, first in right' principle based on recording dates. When the first deed of trust holder forecloses, the sale proceeds are distributed in order of lien priority: first, the costs of the trustee's sale; then the first deed of trust balance ($300,000); then junior lienholders in order of priority. Here, the second deed of trust holder would receive $20,000 (the remaining proceeds after paying the first lienholder). Any remaining funds after all liens are satisfied would go to the borrower.