Pub. 11 2016-2017 Issue 3

September/October 2016 25 Extraordinary Service for Extraordinary Members. Collateral Unaffected by the Nebraska Trust Deeds Act T HE NEBRASKA TRUST DEEDS ACT PROVIDES CERTAIN benefits and imposes certain restrictions on creditors exercising rights in a deed of trust. Exercise of the power of sale allowed under a deed of trust is signifi- cantly more efficient than judicial foreclosure of a mortgage. However, with the benefit of efficiency comes the burden of specific rules regarding notice, limitations on deficiency amount, and abbreviated statute of limitations following sale. In three recent decisions, Nebraska courts limited the application of the Nebraska Trust Deeds Act. Specifically, the courts refused to extend the burdens and protections of the act to a creditor’s exercise of rights in secondary collateral. The result is an increased benefit to creditors. In 2008, the Nebraska Court of Appeals first limited the application of the act. The question presented to the court in Boxum v. Munce was simple: What is the liability, if any, of a guarantor following expiration of the statute of limitations set out in the act? The act provides a three-month statute of limitations on filing an action to enforce the underlying obligation (in most cases a promissory note) following a trustee’s sale. In Boxum the lender, being time barred from suit on the underlying obligation, brought an action against its guarantor. The court refused to extend the act’s abbreviated statute of limitations to a suit on the guaranty finding: “[I]t is not a suit to collect a deficiency on the obligation secured by the foreclosed trust deed, but, rather, it is a suit to collect on a separate and different contract—the Munces' guaranty.” The Supreme Court in Mutual of Omaha Bank v. Murante confirmed the Boxum court’s jurisprudence. The Murante decision found that the act’s protections regarding the defi- ciency amount do not extend to a guarantor. Under the act, a creditor’s remedy in a deficiency action is limited to the Gregory S. Frayser, Cline Williams Wright Johnson & Oldfather LLP  Deeds Act — continued on page 26