Alaska Foreclosure Laws

Answers

How are trust deeds or mortgage liens treated in Alaska?

Alaska primarily operates as a trust deed. Alaska law also permits mortgages to serve as liens upon real property and for judicial foreclosures to occur through the courts. Because the power of sale provisions in deeds of trust is a faster mechanism to effectuate foreclosure, this is the primary vehicle to foreclose quickly. Many lenders will use a judicial note action to seek judgment on the note for the full indebtedness and then sell the subject property to satisfy the judgment. This process is used when the value of the property is less than the amount of the debt.

How are Alaska mortgages foreclosed?

The most expedient method of foreclosure in Alaska involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action but requires notice called an election to foreclose. When the trust deed is initially signed it will usually contain a provision called a power of sale clause, which upon default allows a trustee to sell the property in order to satisfy the underlying defaulted loan. Because this is a non-judicial remedy there are very stringent notice requirements and the legal documents are required to contain the power of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:

1. Prior to initiating a foreclosure and not less than thirty (30) days after default the lender must file a notice of default in the county in which the property is located. Within ten (10) days after the filing of the notice, a copy of the notice must then be mailed by certified mail to the defaulting borrower.
2. A notice of sale as described above must contain certain information, including the date, time and place of sale, as well as a description of the default, the lenders election to sell, and the recording information from the deed of trust.

The property owner can terminate the foreclosure so long as the loan is brought current before the day of the sale schedule date unless this process has occurred twice previously at which point the trustee can refuse payment and continue with the sale. The sale may be postponed upon public notice at the date of the sale.

In Alaska, the lenders can also go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. If the deed of trust does not contain the power of sale language, the lender must seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

What are the legal instruments that establish an Alaska mortgage or deed of trust?

The documents are known as the deed of trust, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, a mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

How long does it take to foreclose a property in Alaska?

Depending on the timing of the various required notices, it usually takes approximately 90-100 days to effectuate an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and postponements of sales, or files for bankruptcy.

Is there a right of redemption in Alaska?

No, Alaska has no post-sale statutory right of redemption for foreclosures, which would allow a party whose property has been foreclosed to reclaim that property unless such language is contained in the deed of trust.

Are deficiency judgments permitted in Alaska?

No, a deficiency judgment may not be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage or deed of trust secures. This provision is set forth in Section 100, of Alaska Statutes, Title 34, Chapter 20. A judicial action under the note only, may give rise to a judgment upon which a deficiency may be based.

What statutes govern Alaska foreclosures?

The laws that govern Alaska foreclosures are found in Title 34 Alaska Statutes (Property) and Chapter 20 (Mortgages and Trust Deeds), Section 70 (Sale by Trustee), Section 80 (Sale at Public Auction). To view these statutes on the Web, you can visit: