HB 163: "An Act relating to real property foreclosures, executions, and deeds of trust."

00 HOUSE BILL NO. 163 01 "An Act relating to real property foreclosures, executions, and deeds of trust." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 09.35.140 is amended by adding a new subsection to read: 04 (b) In addition to the notice required by (a) of this section, notice of the sale of 05 real property shall be given by publishing a notice of the sale on an Internet website 06 that 07 (1) is available to any person; 08 (2) is completely free and does not require a subscription; 09 (3) is not used primarily to distribute advertising for goods, services, 10 real property other than real property under foreclosure, or other websites; 11 (4) has been in continuous operation for more than one year; 12 (5) has a viewership of at least 5,000 different visitors each month that 13 is verified by an independent audit; and 14 (6) has an office in the state and the office has staff that includes a 15 senior management person.

01 * Sec. 2. AS 34.20.070(b) is amended to read: 02 (b) Not less than 30 days after the default and not less than 90 days [THREE 03 MONTHS] before the sale, the trustee shall record in the office of the recorder of the 04 recording district in which the trust property is located a notice of default setting out 05 (1) the name of the trustor, (2) the book and page where the trust deed is recorded or 06 the serial number assigned to the trust deed by the recorder, (3) a description of the 07 trust property, including the property's street address if there is a street address for the 08 property, (4) a statement that a breach of the obligation for which the deed of trust is 09 security has occurred, (5) the nature of the breach, (6) the sum owing on the 10 obligation, (7) the election by the trustee to sell the property to satisfy the obligation, 11 and (8) the date, time, and place of the sale. An inaccuracy in the street address may 12 not be used to set aside a sale if the legal description is correct. At any time up to five 13 days before the sale, if the default has arisen by failure to make payments required by 14 the trust deed, the default may be cured by payment of the sum in default other than 15 the principal that would not then be due if no default had occurred, plus attorney fees 16 or court costs actually incurred by the trustee due to the default. If, under the same 17 trust deed, notice of default under this subsection has been recorded two or more times 18 previously and the default has been cured under this subsection, the trustee may elect 19 to refuse payment and continue the sale. 20 * Sec. 3. AS 34.20.070(c) is amended to read: 21 (c) Within 10 days after recording the notice of default, the trustee shall mail a 22 copy of the notice by certified mail to the last known address of each of the following 23 persons or their legal representatives: (1) the grantor in the trust deed; (2) the 24 successor in interest to the grantor whose interest appears of record or of whose 25 interest the trustee or the beneficiary has actual notice, or who is in actual possession 26 of the property; (3) any other person actually in possession of or occupying the 27 property; (4) any person having a lien or interest subsequent to the interest of the 28 trustee in the trust deed, where the lien or interest appears of record or where the 29 trustee or the beneficiary has actual notice of the lien or interest. The notice may be 30 delivered personally instead of by mail. 31 * Sec. 4. AS 34.20.070 is amended by adding new subsections to read:

01 (e) In (c) of this section, if the existence of a lien or nonpossessory interest can 02 only be inferred from an inspection of the real property, the person holding the lien or 03 nonpossessory interest is not entitled to notice under this subsection unless the lien or 04 nonpossessory interest appears of record or a written notice of the lien or 05 nonpossessory interest has been given to the beneficiary or trustee before the 06 recording of the notice of default. 07 (f) If the trustee delivers notice personally under (c) of this section to the 08 property or to an occupant of the property, the trustee may, notwithstanding (c) of this 09 section, deliver the notice up to 20 days after the notice of default is recorded. If there 10 is not a structure on the property and a person is not present on the property at the time 11 of delivery, the trustee may place the notice on the property, or as close as practicable 12 to the property if 13 (1) there is not a practical road access to the property; or 14 (2) access to the property is restricted by gates or other barriers. 15 (g) If the trustee who delivered notice under (f) of this section signs an 16 affidavit for the delivery, the affidavit is prima facie evidence that the trustee complied 17 with (f) of this section. After one year from the delivery, the trustee is conclusively 18 presumed to have complied with (f) of this section unless, within one year from the 19 delivery, an action has been filed in court to contest the foreclosure based on failing to 20 comply with (f) of this section. 21 (h) If a person who is entitled to receive notice by mail under (c) of this 22 section is known by the beneficiary or trustee to be deceased, the trustee may satisfy 23 the notice requirements of (c) of this section by mailing the notice to the last known 24 address of the deceased person and to the personal representative of the deceased 25 person if the beneficiary or trustee knows that a personal representative has been 26 appointed for the deceased person. 27 (i) If a person who is entitled to receive notice by mail under (c) of this section 28 is known by the beneficiary or trustee to be deceased but the trustee and the 29 beneficiary do not know that a personal representative has been appointed for the 30 deceased person, the trustee may satisfy the notice requirements of (c) of this section 31 by

01 (1) mailing the notice to the heirs and devisees of the deceased person 02 (A) whose names and addresses are known to the beneficiary or 03 trustee; or 04 (B) who have recorded a notice of their interest in the property; 05 and 06 (2) publishing and posting the notice of the foreclosure as provided by 07 law for the sale of real property on execution, except that the notice must be titled "To 08 the Heirs or Devisees of (insert the name of the deceased person)" and include in the 09 body of the notice a list of the names of the persons who are known by the beneficiary 10 or trustee to be the heirs and devisees of the deceased person. 11 (j) If notice is given as required by (h) and (i) of this section, an heir or 12 devisee of the deceased person may not challenge the foreclosure on the ground that 13 the heir or devisee did not receive notice of the sale, unless the heir or devisee 14 challenges the foreclosure on this ground within three months after the sale. 15 (k) A person may bring an action in court to enjoin a foreclosure on real 16 property only if the person is the trustor of the deed of trust under which the real 17 property was foreclosed, a guarantor of the obligation that the real property is 18 securing, a person who has an interest in the real property that has been recorded, or a 19 person who has a recorded lien against the real property. 20 (l) If a person brings an action under (k) of this section to stop a sale of real 21 property, and if the sale is being brought because of a default in the performance of a 22 nonmonetary obligation required by the deed of trust that the real property is securing, 23 the court may impose on the person the conditions that the court determines are 24 appropriate to protect the beneficiary. 25 (m) In this section, "devisee," "heir," and "personal representative" have the 26 meanings given in AS 13.06.050. 27 * Sec. 5. AS 34.20.080(a) is amended to read: 28 (a) The sale authorized in AS 34.20.070 shall be made under the terms and 29 conditions and in the manner set out in the deed of trust. The proceeds from a sale 30 shall be placed in escrow until they are disbursed. However, the sale shall be made 31 (1) at public auction held at the front door of a courthouse of the

01 superior court in the judicial district where the property is located, unless the deed of 02 trust specifically provides that the sale shall be held in a different place, except that a 03 trustee may also accept bids by telephone, the Internet, and electronic mail if the 04 trustee has taken reasonable steps to ensure that the bidding methods using the 05 telephone, the Internet, or electronic mail are fair, accessible, and designed to 06 result in money that is immediately available for disbursement; and 07 (2) after public notice of the time and place of the sale has been given 08 in the manner provided by law for the sale of real property on execution. 09 * Sec. 6. AS 34.20.080(b) is amended to read: 10 (b) The attorney for the trustee or another agent of the trustee may conduct 11 the sale and act in the sale as the auctioneer for the trustee. The trustee may set 12 reasonable rules and conditions for the conduct of the sale. Sale shall be made to 13 the highest and best bidder. The beneficiary under the trust deed may bid at the 14 trustee's sale. Except as provided by (g) of this section, the [THE] trustee shall 15 execute and deliver to the purchaser a deed to the property sold. 16 * Sec. 7. AS 34.20.080(e) is amended to read: 17 (e) The trustee may postpone sale of all or any portion of the property by 18 delivering to the person conducting the sale a written and signed request for the 19 postponement to a stated date and hour. The person conducting the sale shall publicly 20 announce the postponement to the stated date and hour at the time and place originally 21 fixed for the sale. This procedure shall be followed in any succeeding postponement, 22 but the foreclosure may not be postponed for more than 12 months unless a new 23 notice of the sale is given under (a)(2) of this section. A sale may be postponed for 24 up to 12 months from the sale date stated in the notice of default under 25 AS 34.20.070(b) without providing a basis for challenging the validity of the 26 foreclosure process because of the length of time the foreclosure has been 27 pending. 28 * Sec. 8. AS 34.20.080 is amended by adding new subsections to read: 29 (f) After delivery of a deed under (b) of this section, the trustee shall distribute 30 any cash proceeds of the sale in the following order to 31 (1) the beneficiary of the deed of trust being foreclosed until the

01 beneficiary is paid the full amount that is owed under the deed of trust to the 02 beneficiary; 03 (2) the persons who held, at the time of the sale, recorded interests, 04 except easements, in the property, that were subordinate to the foreclosed deed of 05 trust; the distribution under this paragraph shall be made according to the priority of 06 the recorded interest, and a recorded interest with a higher priority shall be satisfied 07 before distribution is made to the recorded interest that is next lower in priority; 08 however, if a person holds a recorded interest that is an assessment, the person is 09 entitled only to the amount of the assessment that was due at the time of the sale; in 10 this paragraph, "recorded interest" means an interest, including a lease, recorded under 11 AS 40.17; 12 (3) the person who held record title to the property at the time of the 13 foreclosure sale. 14 (g) The trustee may withhold delivery of the deed under (b) of this section for 15 up to five days after the sale. If, during the five days, the trustee determines that the 16 sale should not have proceeded, the trustee may not issue the deed but shall 17 (1) inform the beneficiary, the otherwise successful bidder, and the 18 grantor of the trust deed or the grantor's successor in interest that the sale is rescinded; 19 and 20 (2) return to the otherwise successful bidder money received from the 21 otherwise successful bidder as a bid on the property; return of this money is the 22 otherwise successful bidder's only remedy if the trustee withholds delivery of the deed 23 under (b) of this section. 24 (h) If a trustee rescinds a sale under (g) of this section and the obligation 25 secured by the deed of trust remains in default, the trustee may, at the request of the 26 beneficiary, reschedule the sale for a date that is not less than 45 days after the date of 27 the rescinded sale. Not less than 30 days before the rescheduled sale date, the trustee 28 shall 29 (1) mail notice of the rescheduled sale date by certified mail to the last 30 known address of each of the persons identified by AS 34.20.070(c); and 31 (2) publish and post the notice of the rescheduled sale date as provided

01 by law for the sale of real property on execution. 02 (i) Unless a sale is rescinded under (g) of this section, the sale completely 03 terminates the rights of the grantor of the trust deed in the property. 04 * Sec. 9. AS 34.20.120(a) is amended to read: 05 (a) The trustee under a trust deed upon real property given to secure an 06 obligation to pay money and conferring no duties upon the trustee other than the duties 07 that are incidental to the exercise of the power of sale conferred in the deed may be 08 substituted by recording in the mortgage records of the recording district in which the 09 property is located a substitution executed and acknowledged by 10 (1) all the beneficiaries under the trust deed, or their successors in 11 interest; or 12 (2) the attorneys for all of the beneficiaries or the attorneys for all 13 of the beneficiaries' successors in interest. 14 * Sec. 10. AS 34.20.120(b) is amended to read: 15 (b) The substitution must contain 16 (1) the date of execution of the trust deed; 17 (2) the names of the trustee, trustor, and beneficiary, or, if the 18 substitution is executed by the attorney for the beneficiary or successor in 19 interest to the beneficiary, the name, address, and Alaska Bar Association 20 identification number of the attorney; 21 (3) the book and page where the trust deed is recorded or the serial 22 number assigned to the trust deed by the recorder; 23 (4) the name of the new trustee; and 24 (5) an acknowledgment signed and acknowledged by the trustee 25 named in the trust deed of a receipt of a copy of the substitution, or an affidavit of 26 service of a copy of it. 27 * Sec. 11. AS 34.20 is amended by adding a new section to read: 28 Sec. 34.20.125. Trustee bond required. (a) Before performing the duties of a 29 trustee under AS 34.20.070 and 34.20.080, a person shall obtain a surety bond in the 30 amount of $250,000 to protect the grantors and beneficiaries of trust deeds against 31 fraud or defalcation by the trustee in the performance of the duties.

01 (b) The bond required by (a) of this section must be a bond that is terminable 02 at any time by the surety by sending written notice by first class United States mail to 03 the obligee and the principal at the address for each that is last known by the surety. 04 The bond terminates when 30 days have expired after the date the notice is mailed. 05 The surety is not liable for an act or omission of the principal that occurs after the 06 termination. The surety is not liable after the termination for more than the face 07 amount of the bond, regardless of the number of claims made against the bond or the 08 number of years the bond remains in force. A revision of the amount of the bond is not 09 cumulative. 10 (c) Each year, a trustee shall file evidence of the bond with the Department of 11 Commerce, Community, and Economic Development. The Department of Commerce, 12 Community, and Economic Development shall verify that the evidence is satisfactory 13 to indicate the existence of the bond, keep an updated list of trustees who are bonded, 14 and make the evidence and the list available to the public for inspection. The 15 Department of Commerce, Community, and Economic Development may charge the 16 trustee a reasonable fee for verifying the existence of the bond and maintaining the 17 records required by this subsection. 18 (d) The bonding requirements of this section do not apply to 19 (1) a title insurance company authorized under AS 21.66 to transact a 20 title insurance business in this state; or 21 (2) a title insurance limited producer who is licensed as required by 22 AS 21.66.270.