SB 18: "An Act relating to property foreclosures and executions; and amending Rule 65, Alaska Rules of Civil Procedure."
00 SENATE BILL NO. 18 01 "An Act relating to property foreclosures and executions; and amending Rule 65, 02 Alaska Rules of Civil Procedure." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 09.35.140 is amended by adding a new subsection to read: 05 (b) In addition to the notice required by (a) of this section, notice of the sale of 06 real property shall be given by publishing a notice of the sale on an Internet website 07 that 08 (1) is available to any person; 09 (2) is completely free and does not require a subscription; 10 (3) is not used primarily to distribute advertising for goods, services, 11 real property other than real property under foreclosure, or other websites; 12 (4) has been in continuous operation for more than one year; 13 (5) has a viewership of at least 5,000 different visitors each month that 14 is verified by an independent audit; and
01 (6) has an office in the state and the office has staff that includes a 02 senior management person. 03 * Sec. 2. AS 34.20.070(b) is amended to read: 04 (b) Not less than 30 days after the default and not less than three months 05 before the sale, the trustee shall record in the office of the recorder of the recording 06 district in which the trust property is located a notice of default setting out (1) the 07 name of the trustor, (2) the book and page where the trust deed is recorded or the serial 08 number assigned to the trust deed by the recorder, (3) a description of the trust 09 property, including the property's street address if there is a street address for the 10 property, (4) a statement that a breach of the obligation for which the deed of trust is 11 security has occurred, (5) the nature of the breach, (6) the sum owing on the 12 obligation, (7) the election by the trustee to sell the property to satisfy the obligation, 13 and (8) the date, time, and place of the sale. An inaccuracy in the street address may 14 not be used to set aside a sale if the legal description is correct. At any time up to five 15 days before the sale, if the default has arisen by failure to make payments required by 16 the trust deed, the default may be cured by payment of the sum in default other than 17 the principal that would not then be due if no default had occurred, plus attorney fees 18 or court costs actually incurred by the trustee due to the default. If, under the same 19 trust deed, notice of default under this subsection has been recorded two or more times 20 previously and the default has been cured under this subsection, the trustee may elect 21 to refuse payment and continue the sale. 22 * Sec. 3. AS 34.20.070(c) is amended to read: 23 (c) Within 10 days after recording the notice of default, the trustee shall mail a 24 copy of the notice by certified mail to the last known address of each of the following 25 persons or their legal representatives: (1) the grantor in the trust deed; (2) the 26 successor in interest to the grantor whose interest appears of record or of whose 27 interest the trustee or the beneficiary has actual notice, or who is in actual possession 28 of the property; (3) any other person actually in possession of or occupying the 29 property; (4) any person having a lien or interest subsequent to the interest of the 30 trustee in the trust deed, where the lien or interest appears of record or where the 31 trustee or the beneficiary has actual notice of the lien or interest. The notice may be
01 delivered personally instead of by mail. 02 * Sec. 4. AS 34.20.070 is amended by adding new subsections to read: 03 (e) In (c) of this section, if the existence of a lien or nonpossessory interest can 04 only be inferred from an inspection of the real property, the person holding the lien or 05 nonpossessory interest is not entitled to notice under this subsection unless the lien or 06 nonpossessory interest appears of record or a written notice of the lien or 07 nonpossessory interest has been given to the beneficiary or trustee before the 08 recording of the notice of default. 09 (f) If the trustee delivers notice personally under (c) of this section to the 10 property or to an occupant of the property, the trustee may, notwithstanding (c) of this 11 section, deliver the notice up to 20 days after the notice of default is recorded. If there 12 is not a structure on the property and a person is not present on the property at the time 13 of delivery, the trustee may place the notice on the property, or as close as practicable 14 to the property if 15 (1) there is not a practical road access to the property; or 16 (2) access to the property is restricted by gates or other barriers. 17 (g) If the trustee who delivered notice under (f) of this section signs an 18 affidavit for the delivery, the affidavit is, without being recorded, prima facie evidence 19 that the trustee complied with (f) of this section. After one year from the delivery, the 20 trustee is conclusively presumed to have complied with (f) of this section unless, 21 within one year from the delivery, an action has been filed in court to contest the 22 foreclosure based on failing to comply with (f) of this section. 23 (h) If a person who is entitled to receive notice by mail under (c) of this 24 section is known by the beneficiary or trustee to be deceased, the trustee may satisfy 25 the notice requirements of (c) of this section by mailing the notice to the last known 26 address of the deceased person and to the personal representative of the deceased 27 person if the beneficiary or trustee knows that a personal representative has been 28 appointed for the deceased person. 29 (i) If a person who is entitled to receive notice by mail under (c) of this section 30 is known by the beneficiary or trustee to be deceased but the trustee and the 31 beneficiary do not know that a personal representative has been appointed for the
01 deceased person, the trustee may satisfy the notice requirements of (c) of this section 02 by 03 (1) mailing the notice to the heirs and devisees of the deceased person 04 (A) whose names and addresses are known to the beneficiary or 05 trustee; or 06 (B) who have recorded a notice of their interest in the property; 07 and 08 (2) publishing and posting the notice of the foreclosure as provided by 09 law for the sale of real property on execution, except that the notice must be titled "To 10 the Heirs or Devisees of (insert the name of the deceased person)" and include in the 11 body of the notice a list of the names of the persons who are known by the beneficiary 12 or trustee to be the heirs and devisees of the deceased person. 13 (j) If notice is given as required by (h) and (i) of this section, an heir or 14 devisee of the deceased person may not challenge the foreclosure on the ground that 15 the heir or devisee did not receive notice of the sale, unless the heir or devisee 16 challenges the foreclosure on this ground within four months after the sale. 17 (k) A person may bring an action in court to enjoin a foreclosure on real 18 property only if the person is the trustor of the deed of trust under which the real 19 property was foreclosed, a guarantor of the obligation that the real property is 20 securing, a person who has an interest in the real property that has been recorded, or a 21 person who has a recorded lien against the real property. 22 (l) If a person brings an action under (k) of this section to stop a sale of real 23 property, and if the sale is being brought because of a default in the performance of a 24 nonmonetary obligation required by the deed of trust that the real property is securing, 25 the court may impose on the person the conditions that the court determines are 26 appropriate to protect the beneficiary. 27 (m) In this section, "devisee," "heir," and "personal representative" have the 28 meanings given in AS 13.06.050. 29 * Sec. 5. AS 34.20.070 is amended by adding a new subsection to read: 30 (n) To bring an action under (k) of this section, a person must file the action 31 and accomplish service under the rules of court at least five days before the scheduled
01 date of the foreclosure sale. 02 * Sec. 6. AS 34.20.080(a) is amended to read: 03 (a) The sale authorized in AS 34.20.070 shall be made under the terms and 04 conditions and in the manner set out in the deed of trust. However, the sale shall be 05 made 06 (1) at public auction held at the front door of a courthouse of the 07 superior court in the judicial district where the property is located, unless the deed of 08 trust specifically provides that the sale shall be held in a different place, except that a 09 trustee may also accept bids by telephone, the Internet, and electronic mail if the 10 trustee has taken reasonable steps to ensure that the bidding methods using the 11 telephone, the Internet, or electronic mail are fair, accessible, and designed to 12 result in money that is immediately available for disbursement; and 13 (2) after public notice of the time and place of the sale has been given 14 in the manner provided by law for the sale of real property on execution. 15 * Sec. 7. AS 34.20.080(b) is amended to read: 16 (b) The attorney for the trustee or another agent of the trustee may conduct 17 the sale and act in the sale as the auctioneer for the trustee. Sale shall be made to the 18 highest and best bidder. The beneficiary under the trust deed may bid at the trustee's 19 sale. Except as provided by (h) of this section, the [THE] trustee shall execute and 20 deliver to the purchaser a deed to the property sold. 21 * Sec. 8. AS 34.20.080(e) is amended to read: 22 (e) The trustee may postpone sale of all or any portion of the property by 23 delivering to the person conducting the sale a written and signed request for the 24 postponement to a stated date and hour. The person conducting the sale shall publicly 25 announce the postponement to the stated date and hour at the time and place originally 26 fixed for the sale. This procedure shall be followed in any succeeding postponement, 27 but the foreclosure may not be postponed for more than 12 months unless a new 28 notice of the sale is given under (a)(2) of this section. A sale may be postponed for 29 up to 12 months from the sale date stated in the notice of default under 30 AS 34.20.070(b) without providing a basis for challenging the validity of the 31 foreclosure process because of the length of time the foreclosure has been
01 pending. 02 * Sec. 9. AS 34.20.080 is amended by adding new subsections to read: 03 (f) After delivery of a deed under (b) of this section, if the beneficiary has bid 04 less than the amount that is owed under the deed of trust and the successful bidder bids 05 more than the beneficiary, the trustee shall distribute the sale proceeds, if any, in the 06 following order to 07 (1) the beneficiary of the deed of trust until the beneficiary is paid the 08 full amount that is owed under the deed of trust to the beneficiary; 09 (2) the persons who hold junior liens on the property in the order of the 10 priority of their liens until the persons who hold junior liens are paid in full or the sale 11 proceeds are exhausted; and 12 (3) the grantor in the trust deed. 13 (g) When distributing sale proceeds under (f) of this section, a person who 14 does not hold a lien or an ownership interest in the real property is not entitled to share 15 in the proceeds of the sale. In this subsection, 16 (1) "lien" includes a lien for an assessment on the real property only to 17 the extent of the amount of the assessment that is due at the time of the sale; 18 (2) "ownership interest" does not include an easement. 19 (h) The trustee may withhold delivery of the deed under (b) of this section for 20 up to five days after the sale. If, during the five days, the trustee determines that the 21 sale should not have proceeded, the trustee may not issue the deed but shall 22 (1) inform the beneficiary, the otherwise successful bidder, and the 23 grantor of the trust deed or the grantor's successor in interest that the sale is rescinded; 24 and 25 (2) return to the otherwise successful bidder money received from the 26 otherwise successful bidder as a bid on the property. 27 (i) If a trustee rescinds a sale under (h) of this section and the obligation 28 secured by the deed of trust remains in default, the trustee may, at the request of the 29 beneficiary, reschedule the sale for a date that is not less than 45 days after the date of 30 the rescinded sale. Not less than 30 days before the rescheduled sale date, the trustee 31 shall
01 (1) mail notice of the rescheduled sale date by certified mail to the last 02 known address of each of the persons identified by AS 34.20.070(c); and 03 (2) publish and post the notice of the rescheduled sale date as provided 04 by law for the sale of real property on execution. 05 (j) Unless a sale is rescinded under (h) of this subsection, the sale completely 06 terminates the rights of the grantor of the trust deed in the property. 07 * Sec. 10. AS 34.20 is amended by adding a new section to read: 08 Sec. 34.20.125. Trustee bond required. (a) Before performing the duties of a 09 trustee under AS 34.20.070 and 34.20.080, a person shall obtain a surety bond in the 10 amount of $250,000 to protect the grantors and beneficiaries of trust deeds against 11 fraud or defalcation by the trustee in the performance of the duties. 12 (b) Each year, a trustee shall file evidence of the bond with the Department of 13 Commerce, Community, and Economic Development. The Department of Commerce, 14 Community, and Economic Development shall verify that the evidence is satisfactory 15 to indicate the existence of the bond, keep an updated list of trustees who are bonded, 16 and make the evidence and the list available to the public for inspection. The 17 Department of Commerce, Community, and Economic Development may charge the 18 trustee a reasonable fee for verifying the existence of the bond and maintaining the 19 records required by this subsection. 20 (c) The bonding requirements of this section do not apply to 21 (1) a title insurance company authorized under AS 21.66 to transact a 22 title insurance business in this state; or 23 (2) a title insurance limited producer who is licensed as required by 24 AS 21.66.270. 25 * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 INDIRECT COURT RULE AMENDMENT. The provisions of AS 34.20.070(n), 28 enacted by sec. 5 of this Act have the effect of changing Rule 65, Alaska Rules of Civil 29 Procedure, by changing the procedure for injunctions in certain cases. 30 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 31 read:
01 CONDITIONAL EFFECT. AS 34.20.070(n), enacted by sec. 5 of this Act, takes 02 effect only if sec. 5 of this Act receives the two-thirds majority vote of each house required by 03 art. IV, sec. 15, Constitution of the State of Alaska.