- January 12, 2016
- All Nebraska Issuing Offices
- UNDERWRITING - Nebraska Trust Deeds
This Bulletin is meant to serve as a reminder that nonjudicial foreclosure and sale of real estate via power of sale granted in a trust deed must strictly follow the provisions of the Nebraska Trust Deeds Act. Insuring title out of a nonjudicial foreclosure sale when statutory provisions weren’t properly followed can result in the sale being overturned, causing a failure of title. While not an exhaustive treatment of nonjudicial foreclosures in Nebraska, the following points are important requirements to keep in mind when examining the underlying proceedings prior to insuring title of a purchaser from a nonjudicial sale.
- Power of Sale: The Trustee’s power of sale must be specifically provided for in the Trust Deed. (§76-1005, Neb. R.R.S.). This will usually be found in the opening paragraphs of the trust deed and will contain language similar to “. . .conveys to the trustee, in trust, with power of sale. . .” Without power of sale having been properly granted, the trust deed will have to be foreclosed judicially – a result that your lender customer probably did not contemplate.
- The Trustee: Only specifically qualified individuals or other entities may serve as Trustee. (§76-1003). If a person or entity is named Trustee who is not qualified, no valid nonjudicial sale may be conducted.
- Notice of Default: Upon breach of any of the conditions of the trust deed, the beneficiary of the trust deed may direct the trustee to record a Notice of Default in the real estate records. This may be done by the Trustee or the Trustee’s attorney. (§76-1006).
- Notice of Sale: After the lapse of not less than one month, or lapse of two months for agricultural property, the Trustee or Trustee’s attorney must file a Notice of Sale. (§76-1006).
- Notice by Publication: The Trustee or Trustee’s attorney shall give written notice of the time and place of sale by publication, publication to be at least five times, once a week for five consecutive weeks. The last publication must be at least ten days but not more than 30 days prior to the sale. (§76-1007).
- The Sale: The sale may be conducted by the Trustee or the Trustee’s attorney.
- The Trustee’s Deed: The Trustee (only) executes and delivers the deed to the purchaser at the trustee’s sale.
The date-sensitive events noted above are often recited in the Trustee’s Deed. In the event this information is not contained in the recitals of the Trustee’s Deed, it would be reasonable to request evidence of compliance with the statutory requirements.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.