Nevada Revised Statutes

Nev. Rev. Stat. § 104.1203 (2026)

Lease distinguished from security interest

✓ current as of July 2026

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NRS 104.1203 Lease distinguished from security interest.

1. Whether a transaction in the form of a lease creates a lease or security interest is determined by the facts of each case.

2. A transaction in the form of a lease creates a security interest if the consideration that the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease and is not subject to termination by the lessee, and:

(a) The original term of the lease is equal to or greater than the remaining economic life of the goods;

(b) The lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;

(c) The lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement; or

(d) The lessee has an option to become the owner of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement.

3. A transaction in the form of a lease does not create a security interest merely because:

(a) The present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into;

(b) The lessee assumes risk of loss of the goods;

(c) The lessee agrees to pay, with respect to the goods, taxes, insurance, filing, recording or registration fees, or service or maintenance costs;

(d) The lessee has an option to renew the lease or to become the owner of the goods;

(e) The lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed; or

(f) The lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.

4. Additional consideration is nominal if it is less than the lessee’s reasonably predictable cost of performing under the lease agreement if the option is not exercised. Additional consideration is not nominal if:

(a) When the option to renew the lease is granted to the lessee, the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed; or

(b) When the option to become the owner of the goods is granted to the lessee, the price is stated to be the fair market value of the goods determined at the time the option is to be performed.

5. The “remaining economic life of the goods” and “reasonably predictable” fair market rent, fair market value or cost of performing under the lease agreement must be determined with reference to the facts and circumstances at the time the transaction is entered into.

(Added to NRS by 2005, 829)

Notes of Decisions

Cited in 8 cases (1 in the last 5 years), 1980–2025 · leading case: K Mart Corp. v. Ponsock, 732 P.2d 1364 (Nev. 1987).

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K Mart Corp. v. Ponsock, 732 P.2d 1364 (Nev. 1987). · cites it 2× “The warehouse gave notice to the customer that on nonpayment of storage fees the stored goods were to be sold.”

Consol. Generator-Nevada, Inc. v. Cummins Engine Co., 971 P.2d 1251 (Nev. 1998). “NRS 104.1203. This court has held that good faith is a question of fact.”

Aluevich v. Harrah's, 660 P.2d 986 (Nev. 1983). · cites it 2× “, see NRS 104.1203, to the enforcement of a warehouseman's lien.”

A.C. Shaw Constr., Inc. v. Washoe Cnty., 784 P.2d 9 (Nev. 1989). “Specifically, appellants contend that all contracts contain an implied covenant of good faith and fair dealing, and, therefore, the district court erred in determining that the public works contract in question does not contain the implied covenant of good faith and fair dealing.”

Ainsworth v. Combined Ins. Co. of Am., 763 P.2d 673 (Nev. 1988). “NRS 104.1203. In Nevada, insurance contracts are directly regulated by statutes which prohibit deceptive advertising and other unfair trade practices.”

Bradley v. Romeo, 716 P.2d 227 (Nev. 1986). “Neither does the earlier alteration or Ham’s testimony that the loan was made to Romeo rather than to American justify cancellation of the note due to lack of “good faith” under NRS 104.1203. Accord, see Bill’s Coal Co.”

Mitchell v. Bailey & Selover, Inc., 605 P.2d 1138 (Nev. 1980). · cites it 2× “: The single issue presented by this appeal is whether the good faith obligation of the Uniform Commercial Code, NRS 104.1203, applies to the enforcement of a warehouseman’s lien pursuant to NRS 104.”

Ameritina Dental Craig LLC dba Nevada Dentistry & Braces v. Ray Am., Inc.; Brandon Bomer; Does I through X; & Roe Corporations I through X inclusive (D. Nev. 2025). “12 NRS 104.1203. Good faith is a question of fact.”

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