Enrolled HB 108: Relating to real property foreclosures, to the sale of property on execution, and to deeds of trust.
00Enrolled HB 108 01 Relating to real property foreclosures, to the sale of property on execution, and to deeds of 02 trust. 03 _______________ 04 * Section 1. AS 09.35.140 is amended to read: 05 Sec. 09.35.140. Notice of sale on execution. Before the sale of property on 06 execution, notice of the sale shall be given as follows: 07 (1) notice of the sale of personal property is given by posting a written 08 or printed notice of the time and place of sale in three public places within five miles 09 of the place where the sale is to be held, not less than 10 days before the day of sale; 10 [ONE OF THE NOTICES SHALL BE POSTED AT THE POST OFFICE NEAREST 11 TO THE PLACE WHERE THE SALE IS TO TAKE PLACE;] 12 (2) notice of the sale of real property is given by posting a similar 13 notice particularly describing the property, including the property's street address if 14 there is a street address for the property, not less than 30 days before the day of sale in
01 three public places, as provided in (1) of this subsection [SECTION], and publishing a 02 copy of the notice four times, once a week for four successive weeks in a newspaper 03 of general circulation published nearest to the place of sale; an inaccuracy in the street 04 address may not be used to set aside a sale if the legal description is correct [; IN THIS 05 PARAGRAPH, "NEWSPAPER OF GENERAL CIRCULATION" MEANS A 06 PUBLICATION THAT 07 (A) IS PUBLISHED IN NEWSPAPER FORMAT; 08 (B) IS DISTRIBUTED AT LEAST ONCE A WEEK FOR AT 09 LEAST 50 WEEKS EACH YEAR WITHIN THE JUDICIAL DISTRICT, 10 EXCLUDING A PERIOD WHEN PUBLICATION IS INTERRUPTED BY A 11 LABOR DISPUTE OR BY A NATURAL DISASTER OR OTHER 12 CASUALTY THAT THE PUBLISHER CANNOT CONTROL; AND HAS A 13 TOTAL PAID CIRCULATION OR PAID DISTRIBUTION OF AT LEAST 14 500 COPIES, OR 10 PERCENT OF THE TOTAL POPULATION OF THE 15 JUDICIAL DISTRICT, WHICHEVER IS LESS; IN THIS 16 SUBPARAGRAPH, "JUDICIAL DISTRICT" MEANS THE JUDICIAL 17 DISTRICT WHERE THE PLACE OF SALE IS LOCATED; 18 (C) HOLDS A SECOND CLASS MAILING PERMIT FROM 19 THE UNITED STATES POSTAL SERVICE; 20 (D) IS NOT PUBLISHED PRIMARILY TO DISTRIBUTE 21 ADVERTISING; AND 22 (E) IS NOT INTENDED PRIMARILY FOR A PARTICULAR 23 PROFESSIONAL OR OCCUPATIONAL GROUP]. 24 * Sec. 2. AS 09.35.140 is amended by adding new subsections to read: 25 (b) In addition to the notice required by (a) of this section, notice of the sale of 26 real property on execution shall be given by publishing a notice of the sale on an 27 Internet website beginning at least 45 days before the date of the sale. Publication of 28 the notice must begin not later than the first day that the notice is published under 29 (a)(2) of this section and must continue at least through the day in the fourth week that 30 the notice is published under (a)(2) of this section. 31 (c) To qualify as an Internet website on which notices of sale may be
01 published under (b) of this section, an Internet website must, 02 (1) if operated by a newspaper of general circulation, be completely 03 free to the public for viewing and not require a subscription; or 04 (2) if operated by a person who is not covered by (1) of this 05 subsection, 06 (A) be available to any person; 07 (B) be completely free to the public for viewing and not require 08 a subscription; 09 (C) be used primarily to advertise real property under 10 foreclosure; 11 (D) have been in continuous operation for more than one year; 12 (E) have a viewership of at least 5,000 different visitors each 13 month that is verified by an independent audit; and 14 (F) have an office in the state and the office has staff that 15 includes a senior management person. 16 (d) In this section, "newspaper of general circulation" means a publication that 17 (1) is published in newspaper format; 18 (2) is distributed at least once a week for at least 50 weeks each year 19 within the judicial district where the place of sale is located, excluding a period when 20 publication is interrupted by a labor dispute or by a natural disaster or other casualty 21 that the publisher cannot control; 22 (3) holds a second class mailing permit from the United States Postal 23 Service; 24 (4) is not published primarily to distribute advertising; and 25 (5) is not intended primarily for a particular professional or 26 occupational group. 27 * Sec. 3. AS 09.35.142 is amended to read: 28 Sec. 09.35.142. Action to establish newspaper or Internet website status. A 29 person who owns a publication may bring an action under AS 22.10.020(g) to 30 establish that the publication is a newspaper of general circulation under 31 AS 09.35.140. A person who owns an Internet website may bring an action under
01 AS 22.10.020(g) to establish that the Internet website qualifies as an Internet 02 website on which notices of sale may be published under AS 09.35.140(b) 03 [AS 09.35.140(2)]. 04 * Sec. 4. AS 34.20.070(b) is amended to read: 05 (b) Not less than 30 days after the default and not less than 90 days [THREE 06 MONTHS] before the sale, the trustee shall record in the office of the recorder of the 07 recording district in which the trust property is located a notice of default setting out 08 (1) the name of the trustor, (2) the book and page where the trust deed is recorded or 09 the serial number assigned to the trust deed by the recorder, (3) a description of the 10 trust property, including the property's street address if there is a street address for the 11 property, (4) a statement that a breach of the obligation for which the deed of trust is 12 security has occurred, (5) the nature of the breach, (6) the sum owing on the 13 obligation, (7) the election by the trustee to sell the property to satisfy the obligation, 14 [AND] (8) the date, time, and place of the sale, and (9) the statement described in 15 (e) of this section describing conditions for curing the default. An inaccuracy in the 16 street address may not be used to set aside a sale if the legal description is correct. At 17 any time before the sale date stated in the notice of default or to which the sale is 18 postponed under AS 34.20.080(e), if the default has arisen by failure to make 19 payments required by the trust deed, the default may be cured and sale under this 20 section terminated by payment of the sum then in default, other than the principal 21 that would not then be due if no default had occurred, and [PLUS] attorney and other 22 foreclosure fees and [OR COURT] costs actually incurred by the beneficiary and 23 trustee due to the default. If, under the same trust deed, notice of default under this 24 subsection has been recorded two or more times previously and the default has been 25 cured under this subsection, the trustee may elect to refuse payment and continue the 26 sale. 27 * Sec. 5. AS 34.20.070(c) is amended to read: 28 (c) Within 10 days after recording the notice of default, the trustee shall mail a 29 copy of the notice by certified mail to the last known address of each of the following 30 persons or their legal representatives: (1) the trustor [GRANTOR] in the trust deed; 31 (2) the successor in interest to the trustor [GRANTOR] whose interest appears of
01 record or of whose interest the trustee or the beneficiary has actual notice, or who is in 02 actual physical possession of the property; (3) any other person actually in physical 03 possession of [OR OCCUPYING] the property; (4) any person having a lien or 04 interest subsequent to the interest of the trustee in the trust deed, where the lien or 05 interest appears of record or where the trustee or the beneficiary has actual notice of 06 the lien or interest, except as provided in (f) of this section. The notice may be 07 delivered personally instead of by mail. 08 * Sec. 6. AS 34.20.070 is amended by adding new subsections to read: 09 (e) The statement required by (b)(9) of this section must state that, if the 10 default has arisen by failure to make payments required by the trust deed, the default 11 may be cured and the sale under this section terminated if 12 (1) payment of the sum then in default, other than the principal that 13 would not then be due if default had not occurred, and attorney and other foreclosure 14 fees and costs actually incurred by the beneficiary and trustee due to the default is 15 made at any time before the sale date stated in the notice of default or to which the 16 sale is postponed; and 17 (2) when notice of default under (b) of this section has been recorded 18 two or more times previously under the same trust deed and the default has been cured 19 under (b) of this section, the trustee does not elect to refuse payment and continue the 20 sale. 21 (f) In (c)(4) of this section, if the existence of a lien or nonpossessory interest 22 can only be inferred from an inspection of the real property, the person holding the 23 lien or nonpossessory interest is not entitled to notice under (c) of this section unless 24 the lien or nonpossessory interest appears of record or a written notice of the lien or 25 nonpossessory interest has been given to the beneficiary or trustee before the 26 recording of the notice of default. 27 (g) If the trustee delivers notice personally under (c) of this section to the 28 property or to an occupant of the property, the trustee may, notwithstanding (c) of this 29 section, deliver the notice up to 20 days after the notice of default is recorded. If there 30 is not a structure on the property and a person is not present on the property at the time 31 of delivery, the trustee may place the notice on the property, or as close as practicable
01 to the property if 02 (1) there is not a practical road access to the property; or 03 (2) access to the property is restricted by gates or other barriers. 04 (h) If the trustee or other person who delivered notice under (g) of this section 05 signs an affidavit for the delivery, the affidavit is prima facie evidence that the trustee 06 complied with (g) of this section. After one year from the delivery, as evidenced by 07 the affidavit, the trustee is conclusively presumed to have complied with (g) of this 08 section unless, within one year from the delivery, an action has been filed in court to 09 contest the foreclosure based on failing to comply with (g) of this section. 10 (i) If a person who is entitled to receive notice by mail under (c) of this section 11 is known by the beneficiary or trustee to be deceased, the trustee may satisfy the 12 notice requirements of (c) of this section by mailing the notice to the last known 13 address of the deceased person and to the personal representative of the deceased 14 person if the beneficiary or trustee knows that a personal representative has been 15 appointed for the deceased person. 16 (j) If a person who is entitled to receive notice by mail under (c) of this section 17 is known by the beneficiary or trustee to be deceased but the trustee and the 18 beneficiary do not know that a personal representative has been appointed for the 19 deceased person, the trustee may satisfy the notice requirements of (c) of this section 20 by 21 (1) mailing the notice to the heirs and devisees of the deceased person 22 (A) whose names and addresses are known to the beneficiary or 23 trustee; or 24 (B) who have recorded a notice of their interest in the property; 25 and 26 (2) publishing and posting the notice of the foreclosure as provided by 27 law for the sale of real property on execution, except that the notice must be titled "To 28 the Heirs or Devisees of (insert the name of the deceased person)" and include in the 29 body of the notice a list of the names of the persons who are known by the beneficiary 30 or trustee to be the heirs and devisees of the deceased person. 31 (k) If notice is given as required by (i) and (j) of this section, an heir or
01 devisee of the deceased person may not challenge the foreclosure on the ground that 02 the heir or devisee did not receive notice of the sale, unless the heir or devisee 03 challenges the foreclosure on this ground within 90 days after the sale. 04 (l) A person may bring an action in court to enjoin a foreclosure on real 05 property only if the person is 06 (1) the trustor of the deed of trust under which the real property was 07 foreclosed; 08 (2) a guarantor of the obligation that the real property is securing; 09 (3) a person who has an interest in the real property that has been 10 recorded; 11 (4) a person who has a recorded lien against the real property; 12 (5) an heir to the real property; 13 (6) a devisee of the real property; or 14 (7) the attorney general acting under other legal authority. 15 (m) If a person brings an action under (l) of this section to stop a sale of real 16 property, and if the sale is being brought because of a default in the performance of a 17 nonmonetary obligation required by the deed of trust that the real property is securing, 18 the court may impose on the person the conditions that the court determines are 19 appropriate to protect the beneficiary. 20 (n) In this section, "devisee," "heir," and "personal representative" have the 21 meanings given in AS 13.06.050. 22 * Sec. 7. AS 34.20.080(a) is amended to read: 23 (a) The sale authorized in AS 34.20.070 shall be made under the terms and 24 conditions and in the manner set out in the deed of trust. The proceeds from a sale 25 shall be placed in a trust account until they are disbursed. However, the sale shall 26 be made 27 (1) at public auction held at the front door of a courthouse of the 28 superior court in the judicial district where the property is located, unless the deed of 29 trust specifically provides that the sale shall be held in a different place, except that a 30 trustee may also accept bids by telephone, the Internet, and electronic mail if the 31 trustee has taken reasonable steps to ensure that the bidding methods using the
01 telephone, the Internet, or electronic mail are fair, accessible, and designed to 02 result in money that is immediately available for disbursement; and 03 (2) after public notice of the time and place of the sale has been given 04 in the manner provided by law for the sale of real property on execution. 05 * Sec. 8. AS 34.20.080(b) is amended to read: 06 (b) The attorney for the trustee or another agent of the trustee may conduct 07 the sale and act in the sale as the auctioneer for the trustee. The trustee may set 08 reasonable rules and conditions for the conduct of the sale. Sale shall be made to 09 the highest and best bidder. The beneficiary under the trust deed may bid at the 10 trustee's sale. Except as provided by (g) of this section, the [THE] trustee shall 11 execute and deliver to the purchaser a deed to the property sold. 12 * Sec. 9. AS 34.20.080(e) is amended to read: 13 (e) The trustee may postpone sale of all or any portion of the property by 14 delivering to the person conducting the sale a written and signed request for the 15 postponement to a stated date and hour. The person conducting the sale shall publicly 16 announce the postponement to the stated date and hour at the time and place originally 17 fixed for the sale. This procedure shall be followed in any succeeding postponement, 18 but the foreclosure may not be postponed for more than 12 months unless a new 19 notice of the sale is given under (a)(2) of this section. A sale may be postponed for 20 up to 12 months from the sale date stated in the notice of default under 21 AS 34.20.070(b) without providing a basis for challenging the validity of the 22 foreclosure process because of the length of time the foreclosure has been 23 pending. 24 * Sec. 10. AS 34.20.080 is amended by adding new subsections to read: 25 (f) After delivery of a deed under (b) of this section, the trustee shall distribute 26 any cash proceeds of the sale in the following order to 27 (1) the beneficiary of the deed of trust being foreclosed until the 28 beneficiary is paid the full amount that is owed under the deed of trust to the 29 beneficiary; 30 (2) the persons who held, at the time of the sale, recorded interests, 31 except easements, in the property, that were subordinate to the foreclosed deed of
01 trust; the distribution under this paragraph shall be made according to the priority of 02 the recorded interest, and a recorded interest with a higher priority shall be satisfied 03 before distribution is made to the recorded interest that is next lower in priority; 04 however, if a person holds a recorded interest that is an assessment, the person is 05 entitled only to the amount of the assessment that was due at the time of the sale; in 06 this paragraph, "recorded interest" means an interest, including a lease, recorded under 07 AS 40.17; 08 (3) the trustor in the trust deed if the trustor is still the owner of the 09 property at the time of the foreclosure sale, but, if the trustor is not still the owner of 10 the property at the time of the foreclosure sale, then to the trustor's successor in 11 interest whose interest appears of record at the time of the foreclosure sale. 12 (g) The trustee may withhold delivery of the deed under (b) of this section for 13 up to 10 days after the sale. If, during the 10 days, the trustee determines that the sale 14 should not have proceeded, the trustee may not issue the deed but shall 15 (1) inform the beneficiary, the otherwise successful bidder, and the 16 trustor of the trust deed or the trustor's successor in interest that the sale is rescinded; 17 and 18 (2) return to the otherwise successful bidder money received from the 19 otherwise successful bidder as a bid on the property; return of this money is the 20 otherwise successful bidder's only remedy if the trustee withholds delivery of the deed 21 under (b) of this section. 22 (h) If a trustee rescinds a sale under (g) of this section and the obligation 23 secured by the deed of trust remains in default, the trustee may, at the request of the 24 beneficiary, reschedule the sale for a date that is not less than 45 days after the date of 25 the rescinded sale. Not less than 30 days before the rescheduled sale date, the trustee 26 shall 27 (1) mail notice of the rescheduled sale date by certified mail to the last 28 known address of each of the persons identified by AS 34.20.070(c); and 29 (2) publish and post the notice of the rescheduled sale date as provided 30 by law for the sale of real property on execution. 31 (i) Unless a sale is rescinded under (g) of this section, the sale completely
01 terminates the rights of the trustor of the trust deed in the property. 02 (j) If a sale is rescinded under (g) of this section, the deed of trust foreclosed 03 in the rescinded sale is restored to the validity and priority it would have had as though 04 the sale had not occurred. 05 * Sec. 11. AS 34.20.120(a) is amended to read: 06 (a) The trustee under a trust deed upon real property given to secure an 07 obligation to pay money and conferring no duties upon the trustee other than the duties 08 that are incidental to the exercise of the power of sale conferred in the deed may be 09 substituted by recording in the mortgage records of the recording district in which the 10 property is located a substitution executed and acknowledged by 11 (1) all the beneficiaries under the trust deed, or their successors in 12 interest; or 13 (2) the attorneys for all of the beneficiaries or the attorneys for all 14 of the beneficiaries' successors in interest. 15 * Sec. 12. AS 34.20.120(b) is amended to read: 16 (b) The substitution must contain 17 (1) the date of execution of the trust deed; 18 (2) the names of the trustee, trustor, and beneficiary, and, if the 19 substitution is executed by the attorney for the beneficiary or successor in 20 interest to the beneficiary, the name, address, and Alaska Bar Association 21 identification number of the attorney; 22 (3) the book and page where the trust deed is recorded or the serial 23 number assigned to the trust deed by the recorder; 24 (4) the name of the new trustee; and 25 (5) an acknowledgment signed and acknowledged by the trustee 26 named in the trust deed of a receipt of a copy of the substitution, or an affidavit of 27 service of a copy of it. 28 * Sec. 13. AS 34.20 is amended by adding a new section to read: 29 Sec. 34.20.125. Trustee bond required. (a) Before performing the duties of a 30 trustee under AS 34.20.070 and 34.20.080, a person shall obtain a surety bond in the 31 amount of $100,000 to protect the trustors and beneficiaries of trust deeds against
01 fraud or defalcation by the trustee in the performance of the duties. 02 (b) The bond required by (a) of this section must be a bond that is terminable 03 at any time by the surety by sending written notice by first class United States mail to 04 the obligee and the principal at the address for each that is last known by the surety, 05 and to the department. The bond terminates when 45 days have expired after the date 06 the notice is mailed. The surety is not liable for an act or omission of the principal that 07 occurs after the termination. The surety is not liable after the termination for more than 08 the face amount of the bond, regardless of the number of claims made against the bond 09 or the number of years the bond remains in force. A revision of the amount of the 10 bond is not cumulative. 11 (c) If a bond terminates under (b) of this section, the person who obtained the 12 bond under (a) of this section shall give notice of the bond's termination to the 13 department and may not act as a trustee until the person obtains another bond under (a) 14 of this section. 15 (d) Each year, a trustee shall file evidence of the bond with the department. 16 The department shall verify that the evidence is satisfactory to indicate the existence 17 of the bond, keep an updated list of trustees who are bonded, and make the evidence 18 and the list available to the public for inspection. The department may charge the 19 trustee a reasonable fee for verifying the existence of the bond and maintaining the 20 records required by this subsection. 21 (e) The bonding requirements of this section do not apply to 22 (1) a state agency, including the Alaska Housing Finance Corporation 23 and the Alaska Industrial Development and Export Authority; or 24 (2) an attorney who is licensed to practice law in this state and is an 25 active member of the Alaska Bar. 26 (f) In this section, "department" means the Department of Commerce, 27 Community, and Economic Development.