Opinion ID: 1177349
Heading Depth: 1
Heading Rank: 4

Heading: security interest in a leasehold

Text: Although we affirm the district court's decision inasmuch as it applies to the asserted defense based upon the alleged agreement, we find the court below erred when it allowed Wham to take possession of a leasehold by means of the security agreement. Secured transactions of the type underlying the instant case are governed by Nevada's version of Article Nine of the Uniform Commercial Code, set forth at NRS 104.901-104.9507. NRS 104.9104 enumerates those transactions which are expressly excluded from coverage under Nevada's version of Article Nine. Of particular significance in the instant case is the exclusion contained in NRS 104.9104(10), which provides, in pertinent part, that Article Nine does not apply to the creation or transfer of an interest in or lien on real estate, including a lease or rents thereunder... . (Emphasis added.) Further, NRS 104.9102(1)(a) provides in pertinent part that Article Nine applies to any transaction which is intended to create a security interest in personal property or fixtures... . This unequivocal language makes it quite clear that a leasehold is not subject to the provisions of Article Nine even though it might be listed in the security agreement. See Hilst v. Bennett, 175 Colo. 78, 485 P.2d 880, 882 (1971); see also Ingram v. Ingram, 214 Kan. 415, 521 P.2d 254, 260-261 (1974). In the instant case, the note provided it was secured by the leasehold interest in the Vegas Valley Drive property. On the strength of this note, the district court allowed Wham to take possession of the leasehold, to remain in possession despite Diercks's efforts to regain the property, and finally to dispose of the collateral. It is quite clear, however, that the leasehold could not be transferred or disposed of under an Article Nine security agreement. [1] Thus, Wham should not have been permitted to take possession or dispose of the property, and the district court's failure to recognize that the leasehold could not be transferred in this fashion constituted error.