SCS CSHB 108(L&C): "An Act relating to real property foreclosures, to the sale of property on execution, and to deeds of trust."
00 SENATE CS FOR CS FOR HOUSE BILL NO. 108(L&C) 01 "An Act relating to real property foreclosures, to the sale of property on execution, and 02 to deeds of trust." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 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 section, and publishing a copy of the 02 notice four times, once a week for four successive weeks in a newspaper of general 03 circulation published nearest to the place of sale; an inaccuracy in the street address 04 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 newspaper that is not covered by (1) of this 05 subsection, or by another person, 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, excluding a period when publication is interrupted by a 20 labor dispute or by a natural disaster or other casualty that the publisher cannot 21 control; and has a total paid circulation or paid distribution of at least 500 copies, or 10 22 percent of the total population of the judicial district, whichever is less; in this 23 paragraph, "judicial district" means the judicial district where the place of sale is 24 located; 25 (3) holds a second class mailing permit from the United States Postal 26 Service; 27 (4) is not published primarily to distribute advertising; and 28 (5) is not intended primarily for a particular professional or 29 occupational group. 30 * Sec. 3. AS 09.35.142 is amended to read: 31 Sec. 09.35.142. Action to establish newspaper or Internet website status. A
01 person who owns a publication may bring an action under AS 22.10.020(g) to 02 establish that the publication is a newspaper of general circulation under 03 AS 09.35.140. A person who owns an Internet website may bring an action under 04 AS 22.10.020(g) to establish that the Internet website qualifies as an Internet 05 website on which notices of sale may be published under AS 09.35.140(b) 06 [AS 09.35.140(2)]. 07 * Sec. 4. AS 34.20.070(b) is amended to read: 08 (b) Not less than 30 days after the default and not less than 90 days [THREE 09 MONTHS] before the sale, the trustee shall record in the office of the recorder of the 10 recording district in which the trust property is located a notice of default setting out 11 (1) the name of the trustor, (2) the book and page where the trust deed is recorded or 12 the serial number assigned to the trust deed by the recorder, (3) a description of the 13 trust property, including the property's street address if there is a street address for the 14 property, (4) a statement that a breach of the obligation for which the deed of trust is 15 security has occurred, (5) the nature of the breach, (6) the sum owing on the 16 obligation, (7) the election by the trustee to sell the property to satisfy the obligation, 17 [AND] (8) the date, time, and place of the sale, and (9) the statement described in 18 (e) of this section describing conditions for curing the default. An inaccuracy in the 19 street address may not be used to set aside a sale if the legal description is correct. At 20 any time before the sale date stated in the notice of default or to which the sale is 21 postponed under AS 34.20.080(e), if the default has arisen by failure to make 22 payments required by the trust deed, the default may be cured and sale under this 23 section terminated by payment of the sum then in default, other than the principal 24 that would not then be due if no default had occurred, and foreclosure [PLUS 25 ATTORNEY] fees and [OR COURT] costs actually incurred by the beneficiary and 26 trustee due to the default. If, under the same trust deed, notice of default under this 27 subsection has been recorded two or more times previously and the default has been 28 cured under this subsection, the trustee may elect to refuse payment and continue the 29 sale. 30 * Sec. 5. AS 34.20.070(c) is amended to read: 31 (c) Within 10 days after recording the notice of default, the trustee shall mail a
01 copy of the notice by certified mail to the last known address of each of the following 02 persons or their legal representatives: (1) the trustor [GRANTOR] in the trust deed; 03 (2) the successor in interest to the trustor [GRANTOR] whose interest appears of 04 record or of whose interest the trustee or the beneficiary has actual notice, or who is in 05 actual physical possession of the property; (3) any other person actually in physical 06 possession of [OR OCCUPYING] the property; (4) any person having a lien or 07 interest subsequent to the interest of the trustee in the trust deed, where the lien or 08 interest appears of record or where the trustee or the beneficiary has actual notice of 09 the lien or interest, except as provided in (f) of this section. The notice may be 10 delivered personally instead of by mail. 11 * Sec. 6. AS 34.20.070 is amended by adding new subsections to read: 12 (e) The statement required by (b)(9) of this section must state that, if the 13 default has arisen by failure to make payments required by the trust deed, the default 14 may be cured and the sale under this section terminated if 15 (1) payment of the sum then in default, other than the principal that 16 would not then be due if default had not occurred, and foreclosure fees and costs 17 actually incurred by the beneficiary and trustee due to the default is made at any time 18 before the sale date stated in the notice of default or to which the sale is postponed; 19 and 20 (2) when notice of default under (b) of this section has been recorded 21 two or more times previously under the same trust deed and the default has been cured 22 under (b) of this section, the trustee does not elect to refuse payment and continue the 23 sale. 24 (f) In (c)(4) of this section, if the existence of a lien or nonpossessory interest 25 can only be inferred from an inspection of the real property, the person holding the 26 lien or nonpossessory interest is not entitled to notice under (c) of this section unless 27 the lien or nonpossessory interest appears of record or a written notice of the lien or 28 nonpossessory interest has been given to the beneficiary or trustee before the 29 recording of the notice of default. 30 (g) If the trustee delivers notice personally under (c) of this section to the 31 property or to an occupant of the property, the trustee may, notwithstanding (c) of this
01 section, deliver the notice up to 20 days after the notice of default is recorded. If there 02 is not a structure on the property and a person is not present on the property at the time 03 of delivery, the trustee may place the notice on the property, or as close as practicable 04 to the property if 05 (1) there is not a practical road access to the property; or 06 (2) access to the property is restricted by gates or other barriers. 07 (h) If the trustee or other person who delivered notice under (g) of this section 08 signs an affidavit for the delivery, the affidavit is prima facie evidence that the trustee 09 complied with (g) of this section. After one year from the delivery, as evidenced by 10 the affidavit, the trustee is conclusively presumed to have complied with (g) of this 11 section unless, within one year from the delivery, an action has been filed in court to 12 contest the foreclosure based on failing to comply with (g) of this section. 13 (i) If a person who is entitled to receive notice by mail under (c) of this section 14 is known by the beneficiary or trustee to be deceased, the trustee may satisfy the 15 notice requirements of (c) of this section by mailing the notice to the last known 16 address of the deceased person and to the personal representative of the deceased 17 person if the beneficiary or trustee knows that a personal representative has been 18 appointed for the deceased person. 19 (j) If a person who is entitled to receive notice by mail under (c) of this section 20 is known by the beneficiary or trustee to be deceased but the trustee and the 21 beneficiary do not know that a personal representative has been appointed for the 22 deceased person, the trustee may satisfy the notice requirements of (c) of this section 23 by 24 (1) mailing the notice to the heirs and devisees of the deceased person 25 (A) whose names and addresses are known to the beneficiary or 26 trustee; or 27 (B) who have recorded a notice of their interest in the property; 28 and 29 (2) publishing and posting the notice of the foreclosure as provided by 30 law for the sale of real property on execution, except that the notice must be titled "To 31 the Heirs or Devisees of (insert the name of the deceased person)" and include in the
01 body of the notice a list of the names of the persons who are known by the beneficiary 02 or trustee to be the heirs and devisees of the deceased person. 03 (k) If notice is given as required by (i) and (j) of this section, an heir or 04 devisee of the deceased person may not challenge the foreclosure on the ground that 05 the heir or devisee did not receive notice of the sale, unless the heir or devisee 06 challenges the foreclosure on this ground within 90 days after the sale. 07 (l) A person may bring an action in court to enjoin a foreclosure on real 08 property only if the person is 09 (1) the trustor of the deed of trust under which the real property was 10 foreclosed; 11 (2) a guarantor of the obligation that the real property is securing; 12 (3) a person who has an interest in the real property that has been 13 recorded; 14 (4) a person who has a recorded lien against the real property; 15 (5) an heir to the real property; 16 (6) a devisee of the real property; or 17 (7) the attorney general acting under other legal authority. 18 (m) If a person brings an action under (l) of this section to stop a sale of real 19 property, and if the sale is being brought because of a default in the performance of a 20 nonmonetary obligation required by the deed of trust that the real property is securing, 21 the court may impose on the person the conditions that the court determines are 22 appropriate to protect the beneficiary. 23 (n) In this section, "devisee," "heir," and "personal representative" have the 24 meanings given in AS 13.06.050. 25 * Sec. 7. AS 34.20.080(a) is amended to read: 26 (a) The sale authorized in AS 34.20.070 shall be made under the terms and 27 conditions and in the manner set out in the deed of trust. The proceeds from a sale 28 shall be placed in escrow until they are disbursed. However, the sale shall be made 29 (1) at public auction held at the front door of a courthouse of the 30 superior court in the judicial district where the property is located, unless the deed of 31 trust specifically provides that the sale shall be held in a different place, except that a
01 trustee may also accept bids by telephone, the Internet, and electronic mail if the 02 trustee has taken reasonable steps to ensure that the bidding methods using the 03 telephone, the Internet, or electronic mail are fair, accessible, and designed to 04 result in money that is immediately available for disbursement; and 05 (2) after public notice of the time and place of the sale has been given 06 in the manner provided by law for the sale of real property on execution. 07 * Sec. 8. AS 34.20.080(b) is amended to read: 08 (b) The attorney for the trustee or another agent of the trustee may conduct 09 the sale and act in the sale as the auctioneer for the trustee. The trustee may set 10 reasonable rules and conditions for the conduct of the sale. Sale shall be made to 11 the highest and best bidder. The beneficiary under the trust deed may bid at the 12 trustee's sale. Except as provided by (g) of this section, the [THE] trustee shall 13 execute and deliver to the purchaser a deed to the property sold. 14 * Sec. 9. AS 34.20.080(e) is amended to read: 15 (e) The trustee may postpone sale of all or any portion of the property by 16 delivering to the person conducting the sale a written and signed request for the 17 postponement to a stated date and hour. The person conducting the sale shall publicly 18 announce the postponement to the stated date and hour at the time and place originally 19 fixed for the sale. This procedure shall be followed in any succeeding postponement, 20 but the foreclosure may not be postponed for more than 12 months unless a new 21 notice of the sale is given under (a)(2) of this section. A sale may be postponed for 22 up to 12 months from the sale date stated in the notice of default under 23 AS 34.20.070(b) without providing a basis for challenging the validity of the 24 foreclosure process because of the length of time the foreclosure has been 25 pending. 26 * Sec. 10. AS 34.20.080 is amended by adding new subsections to read: 27 (f) After delivery of a deed under (b) of this section, the trustee shall distribute 28 any cash proceeds of the sale in the following order to 29 (1) the beneficiary of the deed of trust being foreclosed until the 30 beneficiary is paid the full amount that is owed under the deed of trust to the 31 beneficiary;
01 (2) the persons who held, at the time of the sale, recorded interests, 02 except easements, in the property, that were subordinate to the foreclosed deed of 03 trust; the distribution under this paragraph shall be made according to the priority of 04 the recorded interest, and a recorded interest with a higher priority shall be satisfied 05 before distribution is made to the recorded interest that is next lower in priority; 06 however, if a person holds a recorded interest that is an assessment, the person is 07 entitled only to the amount of the assessment that was due at the time of the sale; in 08 this paragraph, "recorded interest" means an interest, including a lease, recorded under 09 AS 40.17; 10 (3) the trustor in the trust deed if the trustor is still the owner of the 11 property at the time of the foreclosure sale, but, if the trustor is not still the owner of 12 the property at the time of the foreclosure sale, then to the trustor's successor in 13 interest whose interest appears of record at the time of the 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 trustor of the trust deed or the trustor'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 trustor of the trust deed in the property. 04 (j) If a sale is rescinded under (g) of this section, the deed of trust foreclosed 05 in the rescinded sale is restored to the validity and priority it would have had as though 06 the sale had not occurred. 07 * Sec. 11. AS 34.20.120(a) is amended to read: 08 (a) The trustee under a trust deed upon real property given to secure an 09 obligation to pay money and conferring no duties upon the trustee other than the duties 10 that are incidental to the exercise of the power of sale conferred in the deed may be 11 substituted by recording in the mortgage records of the recording district in which the 12 property is located a substitution executed and acknowledged by 13 (1) all the beneficiaries under the trust deed, or their successors in 14 interest; or 15 (2) the attorneys for all of the beneficiaries or the attorneys for all 16 of the beneficiaries' successors in interest. 17 * Sec. 12. AS 34.20.120(b) is amended to read: 18 (b) The substitution must contain 19 (1) the date of execution of the trust deed; 20 (2) the names of the trustee, trustor, and beneficiary, and, if the 21 substitution is executed by the attorney for the beneficiary or successor in 22 interest to the beneficiary, the name, address, and Alaska Bar Association 23 identification number of the attorney; 24 (3) the book and page where the trust deed is recorded or the serial 25 number assigned to the trust deed by the recorder; 26 (4) the name of the new trustee; and 27 (5) an acknowledgment signed and acknowledged by the trustee 28 named in the trust deed of a receipt of a copy of the substitution, or an affidavit of 29 service of a copy of it. 30 * Sec. 13. AS 34.20 is amended by adding a new section to read: 31 Sec. 34.20.125. Trustee bond required. (a) Before performing the duties of a
01 trustee under AS 34.20.070 and 34.20.080, a person shall obtain a surety bond in the 02 amount of $250,000 to protect the trustors and beneficiaries of trust deeds against 03 fraud or defalcation by the trustee in the performance of the duties. 04 (b) The bond required by (a) of this section must be a bond that is terminable 05 at any time by the surety by sending written notice by first class United States mail to 06 the obligee and the principal at the address for each that is last known by the surety, 07 and to the department. The bond terminates when 45 days have expired after the date 08 the notice is mailed. The surety is not liable for an act or omission of the principal that 09 occurs after the termination. The surety is not liable after the termination for more than 10 the face amount of the bond, regardless of the number of claims made against the bond 11 or the number of years the bond remains in force. A revision of the amount of the 12 bond is not cumulative. 13 (c) If a bond terminates under (b) of this section, the person who obtained the 14 bond under (a) of this section shall give notice of the bond's termination to the 15 department and may not act as a trustee until the person obtains another bond under (a) 16 of this section. 17 (d) Each year, a trustee shall file evidence of the bond with the department. 18 The department shall verify that the evidence is satisfactory to indicate the existence 19 of the bond, keep an updated list of trustees who are bonded, and make the evidence 20 and the list available to the public for inspection. The department may charge the 21 trustee a reasonable fee for verifying the existence of the bond and maintaining the 22 records required by this subsection. 23 (e) The bonding requirements of this section do not apply to 24 (1) a title insurance company authorized under AS 21.66 to transact a 25 title insurance business in this state; 26 (2) a title insurance limited producer who is licensed as required by 27 AS 21.66.270; or 28 (3) a state agency, including the Alaska Housing Finance Corporation 29 and the Alaska Industrial Development and Export Authority. 30 (f) In this section, "department" means the Department of Commerce, 31 Community, and Economic Development.