Bulletin: NE2012007

Dear Associates:

This is a reminder that, when insuring the interest arising under a trust deed/deed of trust in Nebraska, it is important to verify that the instrument itself actually provides for the power of sale.

Section 76-1005, Neb. Revised Statutes, requires that the power of sale be “expressly provided for in the trust deed.”

The absence of a power of sale provision in an instrument would negate the lender’s ability to foreclose nonjudicially in the event of a default, and to have to bear the added expense of a judicial foreclosure.

When asked to insure a new trust deed/deed of trust, either in a refinance or purchase transaction, the instrument itself must be examined to confirm the presence of a power of sale provision.

When asked to insure a title derived from a nonjudicial sale, agents should examine the underlying instrument to ensure that the power of sale provision is present.

In either instance, appropriate curative action must be required, or a relevant exception added to the commitment/policy. By way of example, such curative action could be a requirement that the instrument be redrafted or reexecuted, or judicial foreclosure be undertaken by the lender.

Also, please be reminded that a title insurance agent or agency does not have authority under Nebraska law to act as a trustee on a Nebraska trust deed/deed of trust, or to exercise the power of sale.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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