Opinion ID: 2615100
Heading Depth: 2
Heading Rank: 3

Heading: effect of prior foreclosure sale

Text: Because we find that CBS had inquiry notice of the ANB sale, it follows that CBS's interest in the Goose Lake property was concluded when ANB bid in the property on August 22, 1977. [3] Under the Alaska trust deed statutes, a foreclosure sale by a senior lienor cuts off the interests of junior lienors. AS 34.20.090(a) provides that a purchaser at a deed of trust sale takes the same title which the maker of the trust deed had at the time the instrument was executed. [4] We have interpreted this statute to mean that the land purchased at a deed of trust sale is subject to prior encumbrances, but not to those made after the deed of trust is executed. Alaska Laborers Training Fund v. P. & R. Enterprises, Inc., 583 P.2d 825, 826-27 (Alaska 1978); Lynch v. McCann, 478 P.2d 835, 836-37 (Alaska 1970). Hence, ANB took title to the Goose Lake property free and clear of the encumbrance of the second Deed of Trust. The ANB sale was invalidated by this court in Hagberg, but the sale was not invalid when it was held. Generally, irregularities in a deed of trust sale render it voidable, not void. Copsey v. Sacramento Bank, 133 Cal. 659, 66 P. 7, 8 (1901); Leonard v. Bank of America National Trust & Savings Association, 16 Cal. App.2d 341, 60 P.2d 325, 327 (1926). See 55 AmJur2d, Mortgages, § 746 (1971). In other words, until a sale is set aside, it stands as a valid legal transfer of title. Peterson v. Kansas City Life Insurance Co., 339 Mo. 700, 98 S.W.2d 770, 775 (1936); Hrovat v. Bingham, 341 S.W.2d 365, 368-69 (Mo. App. 1960). At the time it was held, the ANB sale was a valid legal transfer of title which foreclosed CBS's interest under the second Deed of Trust. When CBS held a foreclosure sale a week after the ANB sale, there was nothing for CBS to foreclose upon. As a result, the CBS sale did not convey title to the Goose Lake property. Setting aside the ANB sale could not validate CBS's title because CBS never had a title to validate. CBS was not entitled to hold its own foreclosure sale, as it had inquiry notice of the ANB sale and its interests were concluded by that sale. CBS was entitled to appear and bid at the ANB sale. If it was dissatisfied with the conduct or outcome of the ANB sale, then the remedies available to it were the remedies available to any dissatisfied mortgagee. CBS could have brought an action to set aside the sale or sued for damages. See National Life Insurance Co. v. Silverman, 454 F.2d 899, 905 (D.C. Cir.1971); Hrovat v. Bingham, 341 S.W.2d at 369. The suit brought by Richard Burnett and A.E. Hagberg made any action by CBS unnecessary. When this court set aside the ANB sale in Hagberg, Burnett and CBS resumed the positions they held before the sale took place. CBS was re-established as the beneficiary of the second Deed of Trust, and may look to Burnett for satisfaction of the debt underlying that deed of trust. Burnett, as the successor in interest to William Wester, is entitled to ownership of the Goose Lake property, along with the opportunity to redeem it from the many encumbrances upon it. As the holding of Hagberg made clear, Burnett has the right under AS 34.20.070(b) to cure any default on debts secured by either Deed of Trust by tendering the arrearage due. 585 P.2d at 561.