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26th Legislature(2009-2010)

Bill Text 26th Legislature


00 Enrolled 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.                                                                              
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