(1) Documents required. Whenever a holder of an evidence of debt declares a violation
of a covenant of a deed of trust and elects to publish all or a portion of the property
therein described for sale, the holder or the attorney for the holder shall file the
following with the public trustee of the county where the property is located:
(a) A notice of election and demand signed and acknowledged by the holder
of the evidence of debt or signed by the attorney for the holder;
(b) The original evidence of debt, including any modifications to the original
evidence of debt, together with the original indorsement or assignment thereof, if
any, to the holder of the evidence of debt or other proper indorsement or
assignment in accordance with subsection (6) of this section or, in lieu of the
original evidence of debt, one of the following:
(I) A corporate surety bond in the amount of one and one-half times the face
amount of the original evidence of debt;
(II) A copy of the evidence of debt and a certification signed and properly
acknowledged by a holder of an evidence of debt acting for itself or as agent,
nominee, or trustee under subsection (2) of this section or a statement signed by
the attorney for such holder, citing the paragraph of section 38-38-100.3 (20) under
which the holder claims to be a qualified holder and certifying or stating that the
copy of the evidence of debt is true and correct and that the use of the copy is
subject to the conditions described in paragraph (a) of subsection (2) of this section;
or
(III) A certified copy of a monetary judgment entered by a court of
competent jurisdiction;
(c) The original recorded deed of trust securing the evidence of debt and any
original recorded modifications of the deed of trust or any recorded partial releases
of the deed of trust, or in lieu thereof, one of the following:
(I) Certified copies of the recorded deed of trust and any recorded
modifications of the deed of trust or recorded partial releases of the deed of trust;
or
(II) Copies of the recorded deed of trust and any recorded modifications of
the deed of trust or recorded partial releases of the deed of trust and a certification
signed and properly acknowledged by a holder of an evidence of debt acting for
itself or as an agent, nominee, or trustee under subsection (2) of this section or a
signed statement by the attorney for such holder, citing the paragraph of section
38-38-100.3 (20) under which the holder claims to be a qualified holder and
certifying or stating that the copies of the recorded deed of trust and any recorded
modifications of the deed of trust or recorded partial releases of the deed of trust
are true and correct and that the use of the copies is subject to the conditions
described in paragraph (a) of subsection (2) of this section;
(d) A combined notice pursuant to section 38-38-103; except that the
combined notice may be omitted with the prior approval of the public trustee;
(e) A mailing list;
(f) Any affidavit recorded pursuant to section 38-35-109 (5) affecting the
deed of trust described in paragraph (c) of this subsection (1), which affidavit shall
be accepted by the public trustee as modifying the deed of trust for all purposes
under this article only if the affidavit is filed with the public trustee at the same
time as the other documents required under this subsection (1);
(f.5) If there is a loan servicer of the evidence of debt described in the notice
of election and demand and the loan servicer is not the holder, a statement
executed by the holder of the evidence of debt or the attorney for such holder,
identifying, to the best of such person's knowledge, the name of the loan servicer;
(g) A statement executed by the holder of an evidence of debt, or the
attorney for such holder, identifying, to the best knowledge of the person executing
such statement, the name and address of the current owner of the property
described in the notice of election and demand; and
(h) Repealed.
(2) Foreclosure by qualified holder without original evidence of debt,
original or certified copy of deed of trust, or proper indorsement. (a) A qualified
holder, whether acting for itself or as agent, nominee, or trustee under section 38-38-100.3 (20), that elects to foreclose without the original evidence of debt
pursuant to subparagraph (II) of paragraph (b) of subsection (1) of this section, or
without the original recorded deed of trust or a certified copy thereof pursuant to
subparagraph (II) of paragraph (c) of subsection (1) of this section, or without the
proper indorsement or assignment of an evidence of debt under paragraph (b) of
subsection (1) of this section shall, by operation of law, be deemed to have agreed
to indemnify and defend any person liable for repayment of any portion of the
original evidence of debt in the event that the original evidence of debt is presented
for payment to the extent of any amount, other than the amount of a deficiency
remaining under the evidence of debt after deducting the amount bid at sale, and
any person who sustains a loss due to any title defect that results from reliance
upon a sale at which the original evidence of debt was not presented. The indemnity
granted by this subsection (2) shall be limited to actual economic loss suffered
together with any court costs and reasonable attorney fees and costs incurred in
defending a claim brought as a direct and proximate cause of the failure to produce
the original evidence of debt, but such indemnity shall not include, and no claimant
shall be entitled to, any special, incidental, consequential, reliance, expectation, or
punitive damages of any kind. A qualified holder acting as agent, nominee, or
trustee shall be liable for the indemnity pursuant to this subsection (2).
(b) In the event that a qualified holder or the attorney for the holder
commences a foreclosure without production of the original evidence of debt,
proper indorsement or assignment, or the original recorded deed of trust or a
certified copy thereof, the qualified holder or the attorney for the holder may
submit the original evidence of debt, proper indorsement or assignment, or the
original recorded deed of trust or a certified copy thereof to the officer prior to the
sale. In such event, the sale shall be conducted and administered as if the original
evidence of debt, proper indorsement or assignment, or the original recorded deed
of trust or a certified copy thereof had been submitted at the time of
commencement of such proceeding, and any indemnities deemed to have been
given by the qualified holder under paragraph (a) of this subsection (2) shall be null
and void as to the instrument produced under this paragraph (b).
(c) In the event that a foreclosure is conducted where the original evidence
of debt, proper indorsement or assignment, or original recorded deed of trust or
certified copy thereof has not been produced, the only claims shall be against the
indemnitor as provided in paragraph (a) of this subsection (2) and not against the
foreclosed property or the attorney for the holder of the evidence of debt. Nothing
in this section shall preclude a person liable for repayment of the evidence of debt
from pursuing remedies allowed by law.
(3) Foreclosure on a portion of property. A holder of an evidence of debt
may elect to foreclose a deed of trust under this article against a portion of the
property encumbered by the deed of trust only if such portion is encumbered as a
separate and distinct parcel or lot by the original or an amended deed of trust. Any
foreclosure conducted by a public trustee against less than all of the property then
encumbered by the deed of trust shall not affect the lien or the power of sale
contained therein as to the remaining property. The amount bid at a sale of less
than all of the property shall be deemed to have satisfied the secured indebtedness
to the extent of the amount of the bid.
(4) Notice of election and demand. A notice of election and demand filed
with the public trustee pursuant to this section shall contain the following:
(a) The names of the original grantors of the deed of trust being foreclosed
and the original beneficiaries or grantees thereof;
(b) The name of the holder of the evidence of debt;
(c) The date of the deed of trust being foreclosed;
(d) The recording date, county, book, and page or reception number of the
recording of the deed of trust being foreclosed;
(e) The amount of the original principal balance of the secured indebtedness;
(f) The amount of the outstanding principal balance of the secured
indebtedness as of the date of the notice of election and demand;
(g) A legal description of the property to be foreclosed as set forth in the
documents to be provided to the public trustee pursuant to paragraph (c) of
subsection (1) of this section;
(h) A statement of whether the property described in the notice of election
and demand is all or only a portion of the property then encumbered by the deed of
trust being foreclosed;
(i) A statement of the violation of the covenant of the evidence of debt or
deed of trust being foreclosed upon which the foreclosure is based, which
statement shall not constitute a waiver of any right accruing on account of any
violation of any covenant of the evidence of debt or deed of trust other than the
violation specified in the notice of election and demand;
(j) The name, address, business telephone number, and bar registration
number of the attorney for the holder of the evidence of debt, which may be
indicated in the signature block of the notice of election and demand; and
(k) A description of any changes to the deed of trust described in the notice
of election and demand that are based on an affidavit filed with the public trustee
under paragraph (f) of subsection (1) of this section, together with the recording
date and reception number or book and page number of the recording of that
affidavit in the records.
(5) Error in notice. In the event that the amount of the outstanding principal
balance due and owing upon the secured indebtedness is erroneously set forth in
the notice of election and demand or the combined notice, the error shall not affect
the validity of the notice of election and demand, the combined notice, the
publication, the sale, the certificate of purchase described in section 38-38-401,
the certificate of redemption described in section 38-38-402, the confirmation
deed as defined in section 38-38-100.3 (5), or any other document executed in
connection therewith.
(6) Indorsement or assignment. (a) Proper indorsement or assignment of an
evidence of debt shall include the original indorsement or assignment or a certified
copy of an indorsement or assignment recorded in the county where the property
being foreclosed is located.
(b) Notwithstanding the provisions of paragraph (a) of this subsection (6), the
original evidence of debt or a copy thereof without proper indorsement or
assignment shall be deemed to be properly indorsed or assigned if a qualified
holder presents the original evidence of debt or a copy thereof to the officer
together with a statement in the certification of the qualified holder or in the
statement of the attorney for the qualified holder pursuant to subparagraph (II) of
paragraph (b) of subsection (1) of this section that the party on whose behalf the
foreclosure was commenced is the holder of the evidence of debt.
(7) Multiple instruments. If the evidence of debt consists of multiple
instruments, such as notes or bonds, the holder of the evidence of debt may elect to
foreclose with respect to fewer than all of such instruments or documents by
identifying in the notice of election and demand and the combined notice only those
to be satisfied in whole or in part, in which case the requirements of this section
shall apply only as to those instruments or documents.
(8) Assignment or transfer of debt during foreclosure. (a) The holder of the
evidence of debt may assign or transfer the secured indebtedness at any time
during the pendency of a foreclosure action without affecting the validity of the
secured indebtedness. Upon receipt of written notice signed by the holder who
commenced the foreclosure action or the attorney for the holder stating that the
evidence of debt has been assigned and transferred and identifying the assignee or
transferee, the public trustee shall complete the foreclosure as directed by the
assignee or transferee or the attorney for the assignee or transferee. No holder of
an evidence of debt, certificate of purchase, or certificate of redemption shall be
liable to any third party for the acts or omissions of any assignee or transferee that
occur after the date of the assignment or transfer.
(b) The assignment or transfer of the secured indebtedness during the
pendency of a foreclosure shall be deemed made without recourse unless
otherwise agreed in a written statement signed by the assignor or transferor. The
holder of the evidence of debt, certificate of purchase, or certificate of redemption
making the assignment or transfer and the attorney for the holder shall have no
duty, obligation, or liability to the assignee or transferee or to any third party for
any act or omission with respect to the foreclosure or the loan servicing of the
secured indebtedness after the assignment or transfer. If an assignment or transfer
is made by a qualified holder that commenced the foreclosure pursuant to
subsection (2) of this section, the qualified holder's indemnity under said subsection
(2) shall remain in effect with respect to all parties except to the assignee or
transferee, unless otherwise agreed in a writing signed by the assignee or
transferee if the assignee or transferee is a qualified holder.
(c) If an assignment or transfer is made to a holder of an evidence of debt
other than a qualified holder, the holder must file with the officer the original
evidence of debt and the original recorded deed of trust or, in lieu thereof, the
documents required in paragraphs (b) and (c) of subsection (1) of this section. An
assignee or transferee shall be presumed to not be a qualified holder, and as such,
shall be subject to the provisions of this paragraph (c), unless a signed statement
by the attorney for such assignee or transferee that cites the paragraph of section
38-38-100.3 (20) under which the assignee or transferee claims to be a qualified
holder is filed with the officer.
(9) Partial release from deed of trust. At any time after the recording of the
notice of election and demand but prior to the sale, a portion of the property may be
released from the deed of trust being foreclosed pursuant to section 38-39-102 or
as otherwise provided by order of a court of competent jurisdiction recorded in the
county where the property being released is located. Upon recording of the release
or court order, the holder of the evidence of debt or the attorney for the holder shall
pay the fee described in section 38-37-104 (1)(b)(IX), amend the combined notice,
and, in the case of a public trustee foreclosure, amend the notice of election and
demand to describe the property that continues to be secured by the deed of trust
or other lien being foreclosed as of the effective date of the release or court order;
except that the amended combined notice may be omitted with the prior approval
of the public trustee. The public trustee shall record the amended notice of election
and demand upon receipt. Upon receipt of the amended combined notice, if
provided by the holder or the attorney for the holder, the public trustee shall
republish and mail the amended combined notice in the manner set forth in section
38-38-109 (1)(b). If the amended combined notice was omitted pursuant to this
subsection (9), upon recordation of the amended notice of election and demand, the
public trustee shall supply an amended combined notice and shall then republish
and mail the amended combined notice in the manner set forth in section 38-38-109 (1)(b).
(10) Deposit. (a) The public trustee may require the holder or servicer to
make a deposit of up to five hundred dollars plus the amount of the fee permitted
pursuant to section 38-37-104 (1)(b)(I), at the time the notice of election and
demand is filed, to be applied against the fees and costs of the public trustee.
(b) The public trustee may allow the attorney for the holder or servicer or the
holder or servicer, if not represented by an attorney, to establish with the public
trustee one or more accounts, from which the public trustee may pay the fees and
costs of the public trustee in any foreclosure filed by the holder or the attorney for
the holder and through which the public trustee may transmit refunds or cures,
overbids, or redemption proceeds.