76-1005. Power of sale conferred on trustee.
A power of sale may be conferred upon the trustee which the trustee may exercise and under which the trust property may be sold in the manner provided in the Nebraska Trust Deeds Act after a breach of an obligation for which the trust property is conveyed as security, or at the option of the beneficiary a trust deed may be foreclosed in the manner provided by law for the foreclosure of mortgages on real property. The power of sale shall be expressly provided for in the trust deed.
Source
- Laws 1965, c. 451, § 5, p. 1426;
- Laws 1984, LB 679, § 19;
- Laws 1993, LB 547, § 2.
Annotations
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This section recognizes the existence of two different methods of foreclosing a trust deed: (1) by nonjudicial foreclosure or (2) by judicial foreclosure in the manner of mortgages. First Nat. Bank of Omaha v. Davey, 285 Neb. 835, 830 N.W.2d 63 (2013).
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Although the Nebraska Trust Deeds Act does not provide a remedy for a defective trustee’s sale, the trustor can sue in equity to set the sale aside. Gilroy v. Ryberg, 266 Neb. 617, 667 N.W.2d 544 (2003).
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Defects in a trustee’s sale conducted under a power of sale in a trust deed fall into one of three categories: (1) Those that render the sale void, (2) those that render the sale voidable, and (3) those that are inconsequential. Gilroy v. Ryberg, 266 Neb. 617, 667 N.W.2d 544 (2003).
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When a defect renders a trustee’s sale voidable, bare legal title passes to the sale purchaser. An injured party can have the sale set aside only so long as legal title has not moved to a bona fide purchaser. Gilroy v. Ryberg, 266 Neb. 617, 667 N.W.2d 544 (2003).
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When a trustee’s sale is void, no title passes, and adversely affected parties may have the sale set aside even though the property has passed into the hands of a bona fide purchaser. Gilroy v. Ryberg, 266 Neb. 617, 667 N.W.2d 544 (2003).
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When the party seeking to set aside a trustee’s sale establishes only an inconsequential defect, equity will not set aside the sale. Gilroy v. Ryberg, 266 Neb. 617, 667 N.W.2d 544 (2003).
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When the beneficiary elects to judicially foreclose, the law governing foreclosure of mortgages applies. State Bank of Trenton v. Lutz, 14 Neb. App. 884, 719 N.W.2d 731 (2006).