Yes, the court can cancel this sale. The sale was unfair for two main reasons. First, the price was 'grossly inadequate'—it was less than 15% of what the properties were actually worth, which is a ridiculously bad deal. Second, the person in charge of the sale has a duty to be fair to the property owner. Selling both properties to cover a small debt, when selling just one would have easily paid it off, was a big mistake and unfair to Annette. When you have a shockingly low price combined with a major procedural error, the sale is invalid.

Yes, the foreclosure sale should be canceled because the sale price of $26,781.81 was way too low. It was less than fifteen percent of the $225,000 that the property was probably worth based on what Annette paid for it in 1991. The extremely low price by itself might have been enough reason to cancel the sale. But the sale should also be canceled because the person in charge of it didn't do his job fairly. He should have tried to sell the two pieces of land separately, because selling just one of them would have probably gotten enough money to pay off what Annette owed. By selling them together, he didn't act fairly and try to protect Annette's interests like he was supposed to. Since the price was way too low and the person in charge didn't do his job right, the court was correct in canceling the sale.

—believing the property was "worth at least $250,000," brought cashier's checks totaling well over that amount to the foreclosure sale; they ultimately bid "$26, 781.81, one dollar over the remaining debt on the property."

In contrast, a foreclosure sale may be voidable due to "defects in the mechanics of the trustee's exercise of the power to foreclose."

The fact that the foreclosure purchase price... was less than fifteen percent of the sale price indicates that the gross inadequacy standard was met

Under AS 34.20. 070 a non-judicial foreclosure sale is conducted by a trustee who owes fiduciary duties to "both the trustor and the beneficiary

"Gross inadequacy is measured by reference to the fair market value of the property at the time of the sale

In this case, Baskurt made the opening and only bid for $26,781.81, a dollar over the remaining debt owed on the property, on behalf of the partnership.

"However, if the inadequacy of the sale price is (1) `so gross as to shock the conscience and raise a presumption of fraud or unfairness,'or (2) is coupled with other irregularities in the sale procedures, then invalidation of the sale may be justified

Many other courts have cited provisions of the Restatement favorably without formally adopting them.

—noting that the trustee has "the duty to take reasonable and appropriate steps to avoid sacrifice of the debtor's property and interest

The application of Alaska foreclosure statutes is a question of law, and we apply our independent judgment in reviewing such decisions

Yes. A foreclosure sale is voidable when a grossly inadequate price is combined with a significant irregularity in the sale process. The court found that the sale price of $26,781.10, which was less than 15% of the property's fair market value of $225,000, was grossly inadequate. This grossly inadequate price was coupled with a procedural irregularity: the trustee's breach of its fiduciary duty to the debtor, Annette Beal. A trustee owes a duty to both the lender and the debtor to take reasonable steps to avoid sacrificing the debtor's property. By selling both parcels in bulk when the sale of a single parcel would likely have satisfied the small remaining debt, the trustee failed to protect Beal's interests. This breach of duty, combined with the grossly inadequate price, justifies invalidating the foreclosure sale.

Yes, the foreclosure sale was voidable because the sale price of $26,781.81 was grossly inadequate, representing less than fifteen percent of the property's fair market value of approximately $225,000 based on the 1991 purchase price. The gross inadequacy of the sale price alone may have been sufficient to set aside the sale. However, the sale was also voidable because the trustee breached its fiduciary duty to the trustor, Annette Beal, by failing to take reasonable steps to protect her interests and avoid sacrificing her property. The trustee should have initially sold the parcels separately, as the sale of either parcel alone would likely have generated sufficient proceeds to satisfy the remaining debt. By selling the parcels together, the trustee unreasonably failed to act impartially and protect the debtor's interests. The coupling of the grossly inadequate sale price with the trustee's breach of fiduciary duty justified invalidating the sale.

Baskurt v. Beal

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