33-812

33-812. Disposition of proceeds of sale

A. The trustee shall apply the proceeds of the trustee's sale in the following
order of priority:

1. To the costs and expenses of exercising the power of sale and the sale,
including the payment of the trustee's fees and reasonable attorney fees actually
incurred.

2. To the payment of the contract or contracts secured by the trust deed.

3. To the payment of all other obligations provided in or secured by the trust deed
and actually paid by the beneficiary before the trustee's sale.

4. To any condominium association or planned community association as defined in
chapter 9 or 16 of this title that had a subordinate lien as provided by law, even if the
trustee intends to deposit the balance pursuant to subsection C of this section. The
trustee may pay an association's lien on receipt of a written claim and shall be
discharged from any liability for any payment made in good faith. The trustee may inquire
as to the existence of a lien if there is a recorded declaration on the property without
regard to whether a lien has been recorded. Any person who is an applicant or respondent
pursuant to subsection H of this section may require the condominium association or
planned community association to prove its entitlement to any funds received from the
trustee. An association that demonstrates that the amount it received from the trustee
was proper in all material respects is entitled to an award of its reasonable attorney
fees and court costs against the applicant or respondent who contested the payment. If
the applicant or respondent against whom the association's award is entered is entitled
to excess proceeds of the sale, the award of attorney fees and costs shall be payable
from those excess proceeds.

5. To the junior lienholders or encumbrancers in order of their priority as they
existed at the time of the sale. After payment in full of all sums due to all junior
lienholders and encumbrancers as of the date of the sale and excluding any postsale
attorney fees, payment shall be made to the trustor, except that if the trustor has sold
or transferred the property to another owner before the trustee's sale, payment shall be
made to the person who is the owner of record at the time of the trustee's sale.

B. After application of the proceeds pursuant to subsection A, paragraphs 1, 2 and
3 of this section, if there are additional proceeds to be distributed, the trustee,
within fifteen days of the completion of the trustee's sale, shall mail by first class
mail and by certified or registered mail, postage prepaid, to all known addresses a
notice of any excess proceeds to the trustor as of the date of the recording of the
notice of sale. The trustee may deduct the costs of mailing the notice of excess proceeds
from the additional proceeds.

C. In the trustee's discretion and instead of any one or more of the applications
specified in subsection A of this section, the trustee may elect to deposit the balance
of the proceeds with the county treasurer in the county in which the sale took place
pending an order of the superior court in the county. On deposit of the balance of the
monies and after complying with subsection D of this section, the trustee shall be
discharged from all responsibility for acts performed in good faith according to this
chapter. The county treasurer shall reject any deposit that does not comply with
subsection D of this section.

D. If the trustee elects to deposit the balance of the sale proceeds as prescribed
by subsection C of this section, the trustee as plaintiff shall commence a civil action
in the superior court in the county in which the sale occurred. The action shall name the
applicable county treasurer as the defendant, but the county treasurer has no obligation
to respond to the complaint or appear in the action. The trustee shall mail by certified
or registered mail, with postage prepaid, a conformed copy of the complaint that displays
the filing stamp of the court clerk to the county treasurer and all persons, other than
the beneficiary, who are entitled to notice pursuant to section 33-809 and to any other
person known by the trustee to have an interest of record in the property at the time of
the sale. The conformed copy shall be mailed to all known addresses for those persons who
are required to receive notice pursuant to this subsection. The trustee shall incorporate
in or attach to the complaint:

1. A copy of any one of the following:

(a) The trustee sale guarantee and all amendments or endorsements obtained by the
trustee.

(b) The title search used by the trustee in connection with the trustee's sale of
the subject property and all amendments or endorsements obtained by the trustee.

(c) A detailed description of the liens and encumbrances used by the trustee in
connection with the trustee's sale of the property.

2. A copy of the list of the persons and each of the known addresses to which the
complaint will be mailed.

3. A detailed description of any disbursements made by the trustee pursuant to this
section.

4. A narrative description of the liens and encumbrances as shown in the trustee's
sale guarantee, title report or detailed description, including an analysis of the
apparent priority of potential claimants. The trustee shall not be liable for any error
in the narrative description or analysis.

E. The trustee may withhold from the proceeds of the sale a reasonable trustee's
fee and reasonable attorney fees actually incurred and the costs of filing the complaint,
depositing the proceeds and mailing the notices.

F. Upon filing the complaint and filing the subsequent certificate of mailing for
the complaint with the certified mailing receipts of the addressees, the trustee as
plaintiff is discharged without prejudice from the proceedings.

G. Any person with a recorded or other legal interest in the property at the time
of the sale may apply for the release of the proceeds by filing an application for
distribution in the civil action that was filed by the trustee pursuant to subsection D
of this section. The applicant shall mail postage prepaid by any form of mail that
requires a signed and returned receipt a copy of the application to the county treasurer
and all persons at each of the addresses named on the list of persons that is
incorporated in or attached to the complaint and to any other address of the persons that
is known to or ascertained by the applicant or the applicant's agent. The mailing of the
application to each interested party shall occur within three business days after the
filing of the original application with the court. On return of the signed receipt or
the undelivered or unclaimed original envelope, the applicant shall file with the court
an affidavit that states that the application was mailed to the person and that the
application was either:

1. Received, as evidenced by the receipt. The applicant shall attach to the
affidavit a copy of the receipt.

2. Not received, as evidenced by the returned envelope. The applicant shall attach
to the affidavit a copy of the original unopened and undelivered or unclaimed returned
envelope. If the returned envelope was marked with a new forwarding address, within ten
business days after receipt of the original returned envelope the applicant shall:

(a) Send by certified mail a copy of the application to the new forwarding address.

(b) File a second affidavit of mailing with the court.

(c) Mail a copy of the second affidavit to all parties indicating that the
application was mailed to the forwarding address.

(d) Continue service of the application pursuant to this paragraph until the
original, unopened and undelivered envelope is returned without any forwarding address.

H. When mailing to all known addresses of a business or financial institution with
an interest of record in the property, the trustee or applicant shall only be required to
mail to the primary address of the business or financial institution as recorded with the
corporation commission.

I. Any person who receives the application or who claims a right to the proceeds
may file a response to the application within forty-five days of the latest mailing of
the application. The person filing a response shall mail a copy of the response to each
applicant. Within ten calendar days from the date the response is mailed, an applicant
may file with the clerk and mail to each respondent a reply to the response. On
expiration of the time for filing a reply, an applicant shall provide the court with
postage prepaid business envelopes that are addressed to all persons who are entitled to
receive copies of the complaint pursuant to subsection D of this section. If an
association with a claim is not paid by the trustee pursuant to subsection A, paragraph 4
of this section and is required to file an application or response pursuant to this
subsection in order to recover proceeds, the association may request from the excess
proceeds of the sale an award of its reasonable attorney fees and costs incurred.

J. Except as provided in subsection L of this section, the court shall issue an
order to the county treasurer to release the proceeds deposited with the county treasurer
to the party entitled to receive them after applying the priorities prescribed by
subsection A of this section. On notice to all persons who have received a copy of the
complaint or who have filed a responsive pleading, the court may, and if there are
competing claims to the proceeds, the court shall, hold a hearing to determine
entitlement to the proceeds. Every applicant or respondent shall acknowledge the
existence of any apparent lien, encumbrance or interest that could have priority over the
applicant or respondent. If the court finds that a person other than an applicant or
respondent has a superior right to receive the proceeds, the court shall not issue an
order on the proceeds until one hundred eighty days from the date the complaint was
filed. At any time before the expiration of the one hundred eighty day period, an
applicant or respondent may move for a hearing to determine whether the claimed superior
right is valid or enforceable and whether the claim is entitled to receive priority over
the claim of the applicant or respondent. The motion shall set forth the specific facts
and evidence that support the applicant's or respondent's position and shall be mailed to
all persons who have received a copy of the complaint or filed a responsive pleading. If
a response is not filed within the one hundred eighty day period by the person found by
the court to have a superior right to receive the proceeds, the court shall enter an
order in favor of any applicant or respondent entitled to the proceeds. On release of the
proceeds, the county treasurer may assess and deduct from the proceeds a reasonable fee
not to exceed one hundred dollars for the treasurer's costs associated with the civil
action.

K. Within ninety days after completion of the sale, the trustee shall apply the
proceeds of the sale pursuant to subsection A of this section or shall deposit the
proceeds with the treasurer pursuant to subsection C of this section. If the trustee
fails to comply with this subsection, the trustee forfeits any entitlement to the fees
and costs prescribed in subsection E of this section and shall pay interest at the rate
provided for judgments pursuant to section 44-1201 from the date of completion of the
sale until the trustee complies with this subsection. Any person with a recorded or other
legal interest in the property at the time of the sale may commence a civil action
against the trustee for the trustee's failure to comply with this subsection. The court
may award the prevailing party its reasonable attorney fees and costs incurred in that
civil action.

L. Excess proceeds deposited with the county treasurer pursuant to subsection C of
this section are presumed abandoned if the monies remain with the treasurer for at least
two years from the date of deposit and there is no pending application for distribution.

M. Excess proceeds that are fifty dollars or less and that are presumed abandoned
under this section shall be transferred to the county general fund. No further
application for distribution by any applicant or claim by the department of revenue may
be made on these monies.

N. For all excess proceeds that are greater than fifty dollars and that are
presumed abandoned under this section, the county treasurer shall submit a report to the
department of revenue pursuant to section 44-307. The county treasurer may assess and
deduct from the proceeds a reasonable fee of not more than fifty dollars for the
treasurer's costs associated with reporting each deposit.

O. The county treasurer shall be discharged from all claims and responsibility for
acts performed in good faith pursuant to this chapter after remitting the presumed
abandoned excess proceeds to the department of revenue pursuant to section 44-308.

P. A claimant may enter into an agreement with a third party to pay for the
recovery of or for assistance in the recovery of excess proceeds on deposit with the
county treasurer. The agreement shall be in writing, signed by the claimant, and the
claimant's signature shall be acknowledged by a notary public or other person authorized
to accept an acknowledgment pursuant to section 33-511. Any agreement entered into
before the expiration of thirty days after the date the trustee's sale was held, but not
including the date of the sale, is void and unenforceable. Any fee or payment provided
for in an agreement shall be reasonable. The fee or payment shall be presumed to be
unreasonable and the obligation to pay the fee or payment is unenforceable if the fee or
payment agreed on exceeds two thousand five hundred dollars excluding attorney fees and
the costs of filing the claim and providing the statutorily required notices. Any person
seeking a fee or payment exceeding two thousand five hundred dollars may apply to the
court for additional compensation but the person has the burden of establishing that the
additional compensation is reasonable under the circumstances. This subsection does not
preclude a claimant from contesting the reasonableness of any fee or payment that is
provided for in an agreement for the recovery of or for assistance in the recovery of
excess proceeds.