Bill would change Nevada probate laws after RJ investigation

LAS VEGAS — Nevada lawmakers introduced a bill that would add steps needed to take over a probate case, after the Las Vegas Review-Journal found a cottage industry reaped paydays selling dead people’s homes through court but often didn’t make a dime for heirs.

The state Senate Judiciary Committee put forward a measure on March 20 that would increase requirements for people seeking to manage a probate case. Such cases involve transferring ownership of a dead person’s property and settling their debts.

Sen. Melanie Scheible, D-Las Vegas, chair of the committee, said she’s looking to hold a hearing on the bill the week of April 7.

A Review-Journal investigation published last year found a group of private administrators, real estate agents, lawyers and house flippers cashed in on dead people’s homes across Southern Nevada for years, through probate cases that routinely started without family participation.

Under Nevada law, virtually anyone can manage a probate case, even if they have no connection to the deceased, and sell the dead person’s home with limited court oversight, the Review-Journal found.

Scheible said in a phone interview Wednesday that she really wasn’t aware of the issues in probate court until she read the Review-Journal’s coverage.

As she recalled, she thought of the system: “Something is wrong here.”

‘Based on evidence’

Family members have top priority in Nevada to manage a probate case, but last on the 10-deep list in state law is anyone “legally qualified” for the task. It’s a low bar, as any adult in Nevada can run a probate case if they are not a convicted felon, the newspaper found.

“I was definitely a little surprised by that,” Scheible said.

Would-be administrators also could be blocked over a conflict of interest, “drunkenness” or “lack of integrity,” state law says.

The Judiciary Committee’s measure, Senate Bill 404, would require those who are just legally qualified to obtain a “finding of good cause” for their appointment.

This finding “must be based on evidence,” including a statement of qualifications and an affidavit of their due diligence to find any living heir, such as a report from an heir finder and proof of service of certified mail to all potential heirs, the measure says.

Scheible said she and a few assistants talked to probate judges, probate administrators and heirs who navigated the system in Nevada. The parties were concerned that administrators did not conduct an adequate search for heirs and had no business or qualifications to oversee a case, Scheible said.

She indicated that judges can’t base a decision to approve or reject an appointment to manage a probate case on the person’s reasons for stepping in or their experience, given the current legal requirements.

“Without this bill, a judge’s hands are kind of tied,” Scheible said.

‘Service to the community’

Two of Southern Nevada’s most prolific private administrators of the past decade — Estate Administration Services founder Thomas G. Moore and his probate successor Cynthia “Cyndi” Sauerland, an agent with Compass Realty & Management — were involved with at least 500 probate cases combined in Clark County District Court.

They often started cases without family involvement and routinely obtained court authority to sell homes through a process that does not require a judge’s approval of the deal or competitive bidding that could boost the price, the Review-Journal found.

They frequently sold homes at steep discounts to estimated values, often to the same circle of repeat buyers who resold them within months. Overall, their three biggest probate buyers flipped more than 130 homes for $13.4 million above the combined purchase price, the Review-Journal’s nine-month investigation found.

Meanwhile, the probate cases often ended with nothing for heirs.

Moore, Sauerland and their associate Adam Fenn of Compass Realty — who bought at least two dozen homes through probate from Sauerland and flipped most of them — previously said they were helping solve the problem of abandoned homes.

It’s not uncommon in Las Vegas for empty buildings to get taken over by squatters, fall into disrepair, become a neighborhood nuisance or go up in flames.

“It’s a service to the community,” Sauerland previously said. “It’s not just, ‘Everybody’s running around making money.’”

Fenn previously said that many heirs had washed their hands of the situation.

“This is something we feel we’re the solution for,” he said.

‘This company knows what they’re doing’

The probate group tracked by the Review-Journal frequently sold homes through lender-approved transactions known as short sales. In such deals, a property is purchased for less than what’s owed on the seller’s mortgage, typically because the home fell in value.

Moore sold 230-plus homes through probate. But on at least 164 occasions, he reported having nothing to distribute to heirs because he sold the home through a short sale, the Review-Journal found.

He previously said short sales are subject to an “extreme” approval and audit process with lenders and insurers.

Southern Nevada probate lawyer Elyse Tyrell has said the high volume of underwater homes and short sales tracked by the Review-Journal raised concerns for her, noting an administrator could still get paid even if the family doesn’t.

“I’m always concerned when there’s nothing for (the) family and nothing for heirs,” she said.

People who worked on Moore’s cases made plenty of money. Clear Counsel Law Group, which represented Moore in almost all of his cases tracked by the Review-Journal, earned at least $1.16 million working with him, the newspaper found.

Compass Realty booked almost $890,000 in commissions across nearly 120 of Moore’s cases, though it also paid for more than $135,000 worth of legal fees and other bills. Fenn’s former brokerage, Haines & Krieger Realty, earned more than $600,000 in commissions across nearly 100 of Moore’s cases.

Moore’s cases also generated hundreds of thousands of dollars for services with vague descriptions in court records that some Southern Nevada probate lawyers, and a few real estate agents with short-sale experience, had never heard of, the Review-Journal found.

Sauerland sold more than 100 homes through probate court, the newspaper found. She has said that 65 percent of her sales had equity for the estate.

She also said that Compass handled the listings when she sold homes through probate.

“It’s every time,” she told the Review-Journal. “This company knows what they’re doing with these properties.”

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