37-255

37-255. Sale of or mortgage or other lien on
interest of lessee or holder of certificate of purchase

A. The interest of the holder of any certificate of purchase of state land, or any
lease or permit on state land, shall be subject to sale, mortgage or other lien to the
same extent as patented land, without prejudice to the state. A contract of sale,
mortgage or other lien affecting any certificate of purchase, lease or permit on state
land shall not become effective unless a copy of the document is filed with the state
land department. When filed, no assignment of the certificate of purchase, lease or
permit affected shall be made without notice to and the consent of all parties.

B. Upon foreclosure of a contract of sale, mortgage or other lien filed with the
department as provided in subsection A of this section, the department shall assign the
instrument in question to the party entitled to the instrument, if all taxes, rent and
assessment payments are current.

C. If a cancellation or assignment order is issued pursuant to section 37-247,
37-281.04 or 37-289, the cancellation or assignment order shall not become final until
any foreclosure action by a party registered with the department as a mortgagee or other
lienholder of the purchaser's interest or the lessee's interest is finally resolved, if
the mortgagee or lienholder does both of the following:

1. Within thirty days of the date of issuance of a notice of default, files written
notice with the department of its intent to proceed with a foreclosure action.

2. Within one hundred twenty days of the date of issuance of a notice of default,
has commenced either a foreclosure action in court or a nonjudicial foreclosure of a deed
of trust, and has provided the department with a certified copy of the complaint or other
document that officially commences the foreclosure process, and thereafter prosecutes the
foreclosure with reasonable diligence.

D. If a default notice has been sent to a purchaser pursuant to section 37-247,
subsection A or to a lessee pursuant to section 37-289, subsection A, and the purchaser
or lessee thereafter applies to assign the certificate of purchase or lease to a
mortgagee or lienholder registered with the department, before the date a cancellation or
assignment order becomes final and conclusive, the department shall approve the
assignment if all taxes, purchase payments, rent and assessment payments are current and
subject to the written consent of any other mortgagees or lienholders of record.

E. On proof that a lessee or purchaser has rejected a lease or certificate of
purchase in a bankruptcy proceeding, the department shall issue a lease or certificate of
purchase to the registered mortgagee or other lienholder in order of priority on
application by the mortgagee or other lienholder within thirty days after the rejection
if all taxes, purchase payments, rent and assessment payments are current. Any lease or
certificate of purchase that is issued pursuant to this subsection shall be for the
remaining term and on the same conditions and priority as the rejected lease or
certificate of purchase.