00 CS FOR SENATE BILL NO. 18(L&C) 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 new subsections to read: 04 (b) In addition to the notice required by (a) of this section, notice of the sale of 05 real property on execution shall be given by publishing a notice of the sale on an 06 Internet website for at least 45 days before the date of the sale. The publication must 07 run for at least 30 days, including at least 10 of the last 15 days before the actual date 08 of the sale. 09 (c) To qualify as an Internet website on which notices of sale may be 10 published under (b) of this section, an Internet website must 11 (1) be available to any person; 12 (2) be completely free to the public for viewing and not require a 13 subscription; 14 (3) be used primarily to advertise real property under foreclosure; 15 (4) have been in continuous operation for more than one year; 01 (5) have a viewership of at least 5,000 different visitors each month 02 that is verified by an independent audit; and 03 (6) have an office in the state and the office has staff that includes a 04 senior management person. 05  * Sec. 2. AS 09.35.142 is amended to read: 06 Sec. 09.35.142. Action to establish newspaper or Internet website status. A 07 person who owns a publication may bring an action under AS 22.10.020(g) to 08 establish that the publication is a newspaper of general circulation under 09 AS 09.35.140(a)(2) [AS 09.35.140(2)]. A person who owns an Internet website  10 may bring an action under AS 22.10.020(g) to establish that the Internet website  11 qualifies as an Internet website on which notices of sale may be published under  12 AS 09.35.140(b).  13  * Sec. 3. AS 34.20.070(b) is amended to read: 14 (b) Not less than 30 days after the default and not less than 90 days [THREE 15 MONTHS] before the sale, the trustee shall record in the office of the recorder of the 16 recording district in which the trust property is located a notice of default setting out 17 (1) the name of the trustor, (2) the book and page where the trust deed is recorded or 18 the serial number assigned to the trust deed by the recorder, (3) a description of the 19 trust property, including the property's street address if there is a street address for the 20 property, (4) a statement that a breach of the obligation for which the deed of trust is 21 security has occurred, (5) the nature of the breach, (6) the sum owing on the 22 obligation, (7) the election by the trustee to sell the property to satisfy the obligation, 23 and (8) the date, time, and place of the sale. An inaccuracy in the street address may 24 not be used to set aside a sale if the legal description is correct. At any time up to five  25 days before the sale, if the default has arisen by failure to make payments required by 26 the trust deed, the default may be cured by payment of the sum in default other than 27 the principal that would not then be due if no default had occurred, plus attorney fees 28 or court costs actually incurred by the trustee due to the default. If, under the same 29 trust deed, notice of default under this subsection has been recorded two or more times 30 previously and the default has been cured under this subsection, the trustee may elect 31 to refuse payment and continue the sale. 01  * Sec. 4. AS 34.20.070(c) is amended to read: 02 (c) Within 10 days after recording the notice of default, the trustee shall mail a 03 copy of the notice by certified mail to the last known address of each of the following 04 persons or their legal representatives: (1) the trustor [GRANTOR] in the trust deed; 05 (2) the successor in interest to the trustor [GRANTOR] whose interest appears of 06 record or of whose interest the trustee or the beneficiary has actual notice, or who is in 07 actual physical possession of the property; (3) any other person actually in physical 08 possession of [OR OCCUPYING] the property; (4) any person having a lien or 09 interest subsequent to the interest of the trustee in the trust deed, where the lien or 10 interest appears of record or where the trustee or the beneficiary has actual notice of 11 the lien or interest. The notice may be delivered personally instead of by mail. 12  * Sec. 5. AS 34.20.070 is amended by adding new subsections to read: 13 (e) In (c) of this section, if the existence of a lien or nonpossessory interest can 14 only be inferred from an inspection of the real property, the person holding the lien or 15 nonpossessory interest is not entitled to notice under this subsection unless the lien or 16 nonpossessory interest appears of record or a written notice of the lien or 17 nonpossessory interest has been given to the beneficiary or trustee before the 18 recording of the notice of default. 19 (f) If the trustee delivers notice personally under (c) of this section to the 20 property or to an occupant of the property, the trustee may, notwithstanding (c) of this 21 section, deliver the notice up to 20 days after the notice of default is recorded. If there 22 is not a structure on the property and a person is not present on the property at the time 23 of delivery, the trustee may place the notice on the property, or as close as practicable 24 to the property if 25 (1) there is not a practical road access to the property; or 26 (2) access to the property is restricted by gates or other barriers. 27 (g) If the trustee or other person who delivered notice under (f) of this section 28 signs an affidavit for the delivery, the affidavit is prima facie evidence that the trustee 29 complied with (f) of this section. After one year from the delivery, as evidenced by the 30 affidavit, the trustee is conclusively presumed to have complied with (f) of this section 31 unless, within one year from the delivery, an action has been filed in court to contest 01 the foreclosure based on failing to comply with (f) of this section. 02 (h) If a person who is entitled to receive notice by mail under (c) of this 03 section is known by the beneficiary or trustee to be deceased, the trustee may satisfy 04 the notice requirements of (c) of this section by mailing the notice to the last known 05 address of the deceased person and to the personal representative of the deceased 06 person if the beneficiary or trustee knows that a personal representative has been 07 appointed for the deceased person. 08 (i) If a person who is entitled to receive notice by mail under (c) of this section 09 is known by the beneficiary or trustee to be deceased but the trustee and the 10 beneficiary do not know that a personal representative has been appointed for the 11 deceased person, the trustee may satisfy the notice requirements of (c) of this section 12 by 13 (1) mailing the notice to the heirs and devisees of the deceased person 14 (A) whose names and addresses are known to the beneficiary or 15 trustee; or 16 (B) who have recorded a notice of their interest in the property; 17 and 18 (2) publishing and posting the notice of the foreclosure as provided by 19 law for the sale of real property on execution, except that the notice must be titled "To 20 the Heirs or Devisees of (insert the name of the deceased person)" and include in the 21 body of the notice a list of the names of the persons who are known by the beneficiary 22 or trustee to be the heirs and devisees of the deceased person. 23 (j) If notice is given as required by (h) and (i) of this section, an heir or 24 devisee of the deceased person may not challenge the foreclosure on the ground that 25 the heir or devisee did not receive notice of the sale, unless the heir or devisee 26 challenges the foreclosure on this ground within three months after the sale. 27 (k) A person may bring an action in court to enjoin a foreclosure on real 28 property only if the person is the trustor of the deed of trust under which the real 29 property was foreclosed, a guarantor of the obligation that the real property is 30 securing, a person who has an interest in the real property that has been recorded, a 31 person who has a recorded lien against the real property, an heir to the real property, 01 devisee of the real property, or a state agency. 02 (l) If a person brings an action under (k) of this section to stop a sale of real 03 property, and if the sale is being brought because of a default in the performance of a 04 nonmonetary obligation required by the deed of trust that the real property is securing, 05 the court may impose on the person the conditions that the court determines are 06 appropriate to protect the beneficiary. 07 (m) In this section, "devisee," "heir," and "personal representative" have the 08 meanings given in AS 13.06.050. 09  * Sec. 6. AS 34.20.080(a) is amended to read: 10 (a) The sale authorized in AS 34.20.070 shall be made under the terms and 11 conditions and in the manner set out in the deed of trust. The proceeds from a sale  12 shall be placed in escrow until they are disbursed. However, the sale shall be made 13 (1) at public auction held at the front door of a courthouse of the 14 superior court in the judicial district where the property is located, unless the deed of 15 trust specifically provides that the sale shall be held in a different place, except that a  16 trustee may also accept bids by telephone, the Internet, and electronic mail if the  17 trustee has taken reasonable steps to ensure that the bidding methods using the  18 telephone, the Internet, or electronic mail are fair, accessible, and designed to  19 result in money that is immediately available for disbursement; and 20 (2) after public notice of the time and place of the sale has been given 21 in the manner provided by law for the sale of real property on execution. 22  * Sec. 7. AS 34.20.080(b) is amended to read: 23 (b) The attorney for the trustee or another agent of the trustee may conduct 24 the sale and act in the sale as the auctioneer for the trustee. The trustee may set  25 reasonable rules and conditions for the conduct of the sale. Sale shall be made to 26 the highest and best bidder. The beneficiary under the trust deed may bid at the 27 trustee's sale. Except as provided by (g) of this section, the [THE] trustee shall 28 execute and deliver to the purchaser a deed to the property sold. 29  * Sec. 8. AS 34.20.080(e) is amended to read: 30 (e) The trustee may postpone sale of all or any portion of the property by 31 delivering to the person conducting the sale a written and signed request for the 01 postponement to a stated date and hour. The person conducting the sale shall publicly 02 announce the postponement to the stated date and hour at the time and place originally 03 fixed for the sale. This procedure shall be followed in any succeeding postponement,  04 but the foreclosure may not be postponed for more than 12 months unless a new  05 notice of the sale is given under (a)(2) of this section. A sale may be postponed for  06 up to 12 months from the sale date stated in the notice of default under  07 AS 34.20.070(b) without providing a basis for challenging the validity of the  08 foreclosure process because of the length of time the foreclosure has been  09 pending. 10  * Sec. 9. AS 34.20.080 is amended by adding new subsections to read: 11 (f) After delivery of a deed under (b) of this section, the trustee shall distribute 12 any cash proceeds of the sale in the following order to 13 (1) the beneficiary of the deed of trust being foreclosed until the 14 beneficiary is paid the full amount that is owed under the deed of trust to the 15 beneficiary; 16 (2) the persons who held, at the time of the sale, recorded interests, 17 except easements, in the property, that were subordinate to the foreclosed deed of 18 trust; the distribution under this paragraph shall be made according to the priority of 19 the recorded interest, and a recorded interest with a higher priority shall be satisfied 20 before distribution is made to the recorded interest that is next lower in priority; 21 however, if a person holds a recorded interest that is an assessment, the person is 22 entitled only to the amount of the assessment that was due at the time of the sale; in 23 this paragraph, "recorded interest" means an interest, including a lease, recorded under 24 AS 40.17; 25 (3) the trustor in the trust deed if the trustor is still the owner of the 26 property at the time of the foreclosure sale, but, if the trustor is not still the owner of 27 the property at the time of the foreclosure sale, then to the trustor's successor in 28 interest whose interest appears of record at the time of the foreclosure sale. 29 (g) The trustee may withhold delivery of the deed under (b) of this section for 30 up to five days after the sale. If, during the five days, the trustee determines that the 31 sale should not have proceeded, the trustee may not issue the deed but shall 01 (1) inform the beneficiary, the otherwise successful bidder, and the 02 trustor of the trust deed or the trustor's successor in interest that the sale is rescinded; 03 and 04 (2) return to the otherwise successful bidder money received from the 05 otherwise successful bidder as a bid on the property; return of this money is the 06 otherwise successful bidder's only remedy if the trustee withholds delivery of the deed 07 under (b) of this section. 08 (h) If a trustee rescinds a sale under (g) of this section and the obligation 09 secured by the deed of trust remains in default, the trustee may, at the request of the 10 beneficiary, reschedule the sale for a date that is not less than 45 days after the date of 11 the rescinded sale. Not less than 30 days before the rescheduled sale date, the trustee 12 shall 13 (1) mail notice of the rescheduled sale date by certified mail to the last 14 known address of each of the persons identified by AS 34.20.070(c); and 15 (2) publish and post the notice of the rescheduled sale date as provided 16 by law for the sale of real property on execution. 17 (i) Unless a sale is rescinded under (g) of this section, the sale completely 18 terminates the rights of the trustor of the trust deed in the property. 19  * Sec. 10. AS 34.20.120(a) is amended to read: 20 (a) The trustee under a trust deed upon real property given to secure an 21 obligation to pay money and conferring no duties upon the trustee other than the duties 22 that are incidental to the exercise of the power of sale conferred in the deed may be 23 substituted by recording in the mortgage records of the recording district in which the 24 property is located a substitution executed and acknowledged by 25 (1) all the beneficiaries under the trust deed, or their successors in 26 interest; or  27 (2) the attorneys for all of the beneficiaries or the attorneys for all  28 of the beneficiaries' successors in interest. 29  * Sec. 11. AS 34.20.120(b) is amended to read: 30 (b) The substitution must contain 31 (1) the date of execution of the trust deed; 01 (2) the names of the trustee, trustor, and beneficiary, and, if the  02 substitution is executed by the attorney for the beneficiary or successor in  03 interest to the beneficiary, the name, address, and Alaska Bar Association  04 identification number of the attorney; 05 (3) the book and page where the trust deed is recorded or the serial 06 number assigned to the trust deed by the recorder; 07 (4) the name of the new trustee; and 08 (5) an acknowledgment signed and acknowledged by the trustee 09 named in the trust deed of a receipt of a copy of the substitution, or an affidavit of 10 service of a copy of it. 11  * Sec. 12. AS 34.20 is amended by adding a new section to read: 12 Sec. 34.20.125. Trustee bond required. (a) Before performing the duties of a 13 trustee under AS 34.20.070 and 34.20.080, a person shall obtain a surety bond in the 14 amount of $250,000 to protect the trustors and beneficiaries of trust deeds against 15 fraud or defalcation by the trustee in the performance of the duties. 16 (b) The bond required by (a) of this section must be a bond that is terminable 17 at any time by the surety by sending written notice by first class United States mail to 18 the obligee and the principal at the address for each that is last known by the surety. 19 The bond terminates when 30 days have expired after the date the notice is mailed. 20 The surety is not liable for an act or omission of the principal that occurs after the 21 termination. The surety is not liable after the termination for more than the face 22 amount of the bond, regardless of the number of claims made against the bond or the 23 number of years the bond remains in force. A revision of the amount of the bond is not 24 cumulative. 25 (c) Each year, a trustee shall file evidence of the bond with the Department of 26 Commerce, Community, and Economic Development. The Department of Commerce, 27 Community, and Economic Development shall verify that the evidence is satisfactory 28 to indicate the existence of the bond, keep an updated list of trustees who are bonded, 29 and make the evidence and the list available to the public for inspection. The 30 Department of Commerce, Community, and Economic Development may charge the 31 trustee a reasonable fee for verifying the existence of the bond and maintaining the 01 records required by this subsection. 02 (d) The bonding requirements of this section do not apply to 03 (1) a title insurance company authorized under AS 21.66 to transact a 04 title insurance business in this state; or 05 (2) a title insurance limited producer who is licensed as required by 06 AS 21.66.270.