Baskurt v. Beal

Supreme Court of Alaska · 2004 · Property

101 P.3d 1041 (2004)

Updated July 23, 2026

PropertyForeclosureDeeds of Trustforeclosure salevoidable salegross inadequacy of pricefair market valuedeed of trust

Facts

Annette Beal acquired two adjoining but legally separate parcels that were secured by a single deed of trust covering both parcels and providing that default on either note would trigger default under the other. In 1994 she paid off one of the two notes, leaving only the debt on the second parcel, and by 1999 she owed $26,780.81 on that remaining obligation. After default, the trustee foreclosed on both parcels together and sold them at public auction for $26,781.81, one dollar over the remaining debt. The trial court found that either parcel alone likely would have generated enough to satisfy the debt and set the sale aside.

Issue

Whether a foreclosure sale under a deed of trust should be set aside as voidable when the property sells for a grossly inadequate price and the trustee sells both parcels together rather than only one parcel that likely would have satisfied the debt.

Rule

Mere inadequacy of price ordinarily is not enough by itself to set aside a foreclosure sale. But a sale is voidable if the price is so grossly inadequate as to shock the conscience and raise a presumption of fraud or unfairness, or if a low price is coupled with irregularities in the sale procedures. In deciding whether to invalidate the sale, courts compare the foreclosure price to the property's fair market value at the time of sale, and a trustee under a deed of trust has a duty to take reasonable and appropriate steps to avoid sacrifice of the debtor's property and to act impartially toward both trustor and beneficiary.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Spokane, Dana Ortiz owned three legally separate adjoining lots subject to one deed of trust securing a remaining debt of $38,000. At default, the trustee sold all three lots together at a nonjudicial foreclosure sale for $39,000, even though evidence showed one lot alone likely would have brought enough to satisfy the debt; the three lots had a fair market value of about $240,000 at the time of sale.

If Dana sues to set aside the sale, what is the strongest basis for relief?

Explanation. A foreclosure sale may be set aside as voidable when a grossly inadequate price is coupled with an irregularity in the foreclosure process. The trustee owes duties to act impartially and take reasonable steps to avoid sacrifice of the debtor's property. The majority rejected a flat rule requiring parcel-by-parcel sales, but held that selling all parcels together can be unreasonable when one parcel likely would have satisfied the debt. Here, $39,000 against $240,000 is grossly inadequate, and selling all three lots in bulk supports invalidation.