Alaska Foreclosure Law
Alaska State Foreclosure Law dictates that lenders may avail of the Judicial and Non-Judicial processes to foreclose deeds of trust or mortgages in default. The typical time of process last about 90 days and the deeds of trust and mortgages are the security instruments used. Deficiency Judgments and the Right of Redemption depend upon the process employed.
In Judicial Foreclosure, petitioners must file a lawsuit for an order to foreclose. Within the past 20 years, this process was used more often when the property being foreclosed is worth substantially less than the amount owed. Generally, when the court declares a foreclosure, the property will be auctioned off and awarded to the highest bidder. This type of process is carried out according to the rules of equity. The lenders may petition for a deficiency judgment and the borrower has no right of redemption. Non-Judicial Foreclosure is used when a power of sale clause exists in the security instruments. “Power of Sale” is the process wherein the borrower agrees to sell the property to settle the remaining balance from a loan in case of default. Its difference from the judicial foreclosure is that it doesn’t need any court order to auction off the property. The lender or their representative, commonly referred to as the “trustee,” may execute the “power of sale.”
Power of Sale Foreclosure Guideline
Should the security instruments contain a power of sale clause, the terms specified therein should be strictly followed, provided it meets the minimum protection laws set by the State of Alaska. Otherwise, the non-judicial foreclosure should be carried out through the following process:
- The lender, or a trustee, must file a notice of default in the Office of the Recorder of the district in which the property is located not less than 30 days after the default and not less than 3 months before the sale.
- The notice must state the borrower’s name, the book and page where the deed is recorded; a description of the property; the borrower’s default; the amount owed; the lender’s intent to sell; and the date, time, and place of the sale.
- Within 10 days after filing the notice, the lender or the trustee must personally deliver or mail a copy of the notice by certified mail to the last known address of (a) the borrower, (b) any person whose claim on the property appears on the record or is known to the lender, and (c) any person occupying the property.
The borrower may settle the default prior to the selling date by paying the total due amount plus all additional expenses incurred. The lender may just require the borrower to pay the arrears and the legal fees to settle the default instead of the entire remaining balance. If the lender has recorded a notice of default at least twice, Alaskan statutes dictate that the lender may refuse settlement and proceed with the foreclosure sale.
The property must be publicly auctioned at the front door of a courthouse in the district where it is located. The lender may bid at the auction, but the property must be sold to the highest bidder. When this type of foreclosure process is used, the borrower has a right to redeem the property and deficiency judgments are not allowed.
The trustee may postpone the auction by delivering to the conductor of the sale a signed request including an alternative date and time. The conductor of the sale will announce the postponement and the alternative schedule on the original date and time of sale. This procedure should be followed in succeeding postponements.
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