At any time within three months after any sale of property under a trust deed, as hereinabove provided, an action may be commenced to recover the balance due upon the obligation for which the trust deed was given as security, and in such action the complaint shall set forth the entire amount of the indebtedness which was secured by such trust deed and the amount for which such property was sold and the fair market value thereof at the date of sale, together with interest on such indebtedness from the date of sale, the costs and expenses of exercising the power of sale and of the sale. Before rendering judgment, the court shall find the fair market value at the date of sale of the property sold. The court shall not render judgment for more than the amount by which the amount of the indebtedness with interest and the costs and expenses of sale, including trustee's fees, exceeds the fair market value of the property or interest therein sold as of the date of the sale, and in no event shall the amount of said judgment, exclusive of interest from the date of sale, exceed the difference between the amount for which the property was sold and the entire amount of the indebtedness secured thereby, including said costs and expenses of sale.

Annotations

1. General

2. Statute of limitations

1. General

This section provides a mechanism for creditors to recover a deficiency judgment for amounts still due and owing after a trustee's sale. First Nat. Bank North Platte v. Cardenas, 299 Neb. 497, 909 N.W.2d 79 (2018).

Under this section, a below fair market value sale would reduce the amount the creditor could recover in a deficiency action. But, depending upon the mathematics of the transaction, a below market sale would not necessarily be a total bar to a recovery of a deficiency. First Nat. Bank North Platte v. Cardenas, 299 Neb. 497, 909 N.W.2d 79 (2018).

An action to recover the balance due upon the obligation for which the trust deed was given as security does not include enforcement of liens upon or security interests in other collateral given to secure the same obligation. Doty v. West Gate Bank, 292 Neb. 787, 874 N.W.2d 839 (2016).

As used in this section, the language “as hereinabove provided” refers to the statutory procedures for trustee’s sale as set forth in the Nebraska Trust Deeds Act. First Nat. Bank of Omaha v. Davey, 285 Neb. 835, 830 N.W.2d 63 (2013).

The judicial foreclosure of a trust deed does not result in the “sale of property under a trust deed” as that language is used in this section. First Nat. Bank of Omaha v. Davey, 285 Neb. 835, 830 N.W.2d 63 (2013).

When a promissory note was secured by both a trust deed and a guaranty, this section applied to the promissory note, but did not apply to the guaranty. The guaranty was an independent contract, and the guaranty was not secured by a trust deed. Mutual of Omaha Bank v. Murante, 285 Neb. 747, 829 N.W.2d 676 (2013).

An order deciding fair market value of real estate for purposes of this section, which order determined that the fair market value was greater than the trustee’s sale price, was not a final, appealable order when the trial court did not resolve all affirmative defenses raised by the defendants or whether this section applied to guarantors of the underlying debt. Selma Development v. Great Western Bank, 285 Neb. 37, 825 N.W.2d 215 (2013).

The phrase "sale of property under a trust deed" contained in this section clearly refers to the exercise of the power of sale conferred by the trust deed upon the trustee pursuant to the statutory authority contained in section 76-1005. Bank of Papillion v. Nguyen, 252 Neb. 926, 567 N.W.2d 166 (1997).

The amount of a deficiency judgment is limited to the difference between the total indebtedness and the greater of the sale price or the fair market value. If the trial court finds no deficiency, the underlying obligation is satisfied. Pantano v. Maryland Plaza Partnership, 244 Neb. 499, 507 N.W.2d 484 (1993).

In determining the amount of deficiency under the Nebraska Trust Deeds Act, it is appropriate for a trial court to consider a tax lien in determining the fair market value of the property. Douglas Cty. Bank & Trust v. Stamper, 244 Neb. 226, 505 N.W.2d 693 (1993).

2. Statute of limitations

The 3-month statute of limitations under the Nebraska Trust Deeds Act does not bar a bank from foreclosing on the bank's remaining collateral. Doty v. West Gate Bank, 292 Neb. 787, 874 N.W.2d 839 (2016).

The 3-month statute of limitations set forth in this section does not apply to deficiency actions brought following the judicial foreclosure of a trust deed, but only to deficiency actions filed after the sale of property pursuant to the trustee’s power of sale. First Nat. Bank of Omaha v. Davey, 285 Neb. 835, 830 N.W.2d 63 (2013).

The obligation secured by a deed of trust, not the title to the security, determines applicability of the 3-month statute of limitations. Sports Courts of Omaha v. Meginnis, 242 Neb. 768, 497 N.W.2d 38 (1993).

A suit to collect on a contract that is from the foreclosed deed of trust is governed by the statute of limitations found in section 25-205, rather than the 3-month statute of limitations found in this section. Boxum v. Munce, 16 Neb. App. 731, 751 N.W.2d 657 (2008).

The 3-month statute of limitations in this section applies only when the suit for deficiency is on the obligation for which the foreclosed trust deed was given as security. Boxum v. Munce, 16 Neb. App. 731, 751 N.W.2d 657 (2008).