Alaska Foreclosure Law
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust, Mortgage
- Timeline: Varies by Process; Usually 90 days
- Right of Redemption1: Varies based on process
- Deficiency Judgments2 Allowed: Varies based on process
Lenders in the state of Alaska may foreclose on deeds of trusts or mortgages in default using either a non-judicial or judicial foreclosure process.
Judicial Foreclosure
A judicial process of foreclosure requires that the lender file a lawsuit and attain a court order to foreclose on a particular property. This type of process is generally used when no power of sale is present in the mortgage or deed of trust. A power of sale is a clause found in a deed of trust or mortgage that authorizes the sale or transfer of property as outlined by the terms of that clause.
Lenders will often use a judicial foreclosure process to request judgment on the note for the full amount and then sell the property to satisfy the judgment. This process is favored when the value of the property is less than the amount of the debt.
In a judicial foreclosure in Alaska, the process is carried out according to the rules of equity. Deficiency suits are permitted and the borrower has no rights of redemption.
Non-Judicial Foreclosure
If a power of sale clause exists in the deed of trust or mortgage document, a non-judicial process of foreclosure is favored. This process allows the lender to sell the property and pay off the balance of the loan in the event the homeowner defaults. The power to sell may be completed by the lender or their representative in situations where a power of sale exists. The procedure for this type of foreclosure is explained in the "Power of Sale Foreclosure Procedure" listed below.
Power of Sale Foreclosure Procedure
If the deed of trust or mortgage has a power of sale clause and it details the time, place and terms of sale, then the outlined procedure must be followed as long as it meets the minimum protection laws set forth by the State.
- The trustee must record a notice of default in the office of the recorder of the recording district in which the property is located not less than thirty (30) days after the default and not less than three (3) months before the sale.
- The notice of default must state the name of the borrower, the book and page where the deed is recorded and it must describe the property, the borrower’s default, the amount the borrower owes, and the trustee’s desire to sell. Also included is the date, time and place of the sale.
- The trustee must mail a copy of the default notice by certified mail to the last known address of:
- the borrower, and
- any person whose claim or lien on the property appears of record or is known to the lender of trustee and
- any occupant within ten (10) days after recording the notice of default. The trustee may also elect to have the notice delivered personally instead of by mail.
The sale must be made at a public auction held at the front door of a courthouse in the district where the property is located. The lender may bid at the auction. The trustee must sell to the highest and best bidder. Postponements of the sale by the trustee are also allowed when the proper procedure is followed.
The borrower may cure the default and stop the sale by paying a sum equal to the missed payments plus attorney’s fees at any time prior to the sale of the property. The lender may not require the borrower to pay off the entire remaining principal balance of the loan to cure the default. They are only required by law to pay the missed payments and attorney’s fees to cure the default. However, a lender may refuse to accept the borrower’s monies if the lender has recorded a notice of default two or more times. If the lender refuses to accept payment, they may instead proceed with the foreclosure sale.
1 A borrower’s right to reacquire property lost due to a foreclosure.
2 A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
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