## Facts

- Annette Beal acquired two adjoining but legally distinct parcels, financed by two promissory notes: Note A ($95,000) and Note B ($135,000).
- Both notes were secured by a single deed of trust covering both parcels and containing a cross-default clause.
- The deed of trust authorized the trustee to sell the property “either as a whole or in separate parcels” upon default.
- Beal paid off Note A in 1994 but later defaulted on the remaining balance of Note B in 1999 (about $26,780.81).
- The trustee conducted a nonjudicial foreclosure and sold both parcels together at a public sale.
- Sarah Baskurt and two partners purchased the property for $26,781.81 (one dollar over the remaining debt).
- The superior court found the combined fair market value of the two parcels to be about $225,000 and found that sale of either parcel alone would have satisfied the debt.
- The superior court set aside the sale as void and voidable; the purchasers appealed.

## Issues

1. Whether the trustee exceeded its authority by foreclosing on and selling both parcels together after Note A had been paid, rendering the sale void as to property not properly subject to the remaining indebtedness.
2. Whether the sale was voidable in equity because the price was grossly inadequate and the trustee failed to act reasonably by not selling the parcels separately when one parcel’s sale would have satisfied the debt.

## Decision

- The Alaska Supreme Court affirmed the judgment setting aside the foreclosure sale.
- The court agreed that the trustee’s actions were unauthorized at least in part, supporting a determination that the sale was void as to property improperly subjected to foreclosure for the remaining debt.
- The court also held that the sale was voidable because the purchase price (under 15% of fair market value) was grossly inadequate and was coupled with trustee conduct inconsistent with its duty to conduct the sale fairly and reasonably, including selling both parcels together despite the ability to satisfy the debt by selling fewer than all parcels.

## Legal Principles

- A deed-of-trust trustee’s contractual discretion in conducting a nonjudicial foreclosure sale is constrained by duties of fairness, good faith, and reasonable conduct toward both debtor and beneficiary.
- A sale may be set aside as void to the extent the trustee forecloses on property beyond the scope of its authority under the deed of trust as applied to the existing indebtedness.
- Mere inadequacy of price typically is insufficient to set aside a foreclosure sale, but a grossly inadequate price may justify equitable relief when combined with additional unfairness or irregularity in the sale process.
- When multiple parcels are sold under a deed of trust, selling all parcels together without reasonable justification—particularly where the debt could be satisfied by selling fewer than all—may constitute improper sale conduct supporting rescission.

## Conclusion

The Alaska Supreme Court upheld rescission of a nonjudicial deed-of-trust foreclosure sale because the trustee improperly subjected more property than necessary to foreclosure and, in any event, conducted a sale that produced a grossly inadequate price alongside unreasonable sale choices that unfairly sacrificed the debtor’s equity.


Baskurt v. Beal, 101 P.3d 1041 (Alaska 2004)