by Eric H. Lindquist, Esq.
Eric H. Lindquist, P.C., L.L.O.
USFN Member (NE)

The Nebraska Legislature recently amended the Nebraska Trust Deeds Act which governs non-judicial foreclosures relating to the priority and distribution of surplus trustee’s sale proceeds and requiring payment of attorney fees and costs incurred by the trustee.

The amendment to Neb. Rev. Stat. §76-1011, which becomes effective on or about August 27, 2021, provides that the payment of attorney’s fees and costs incurred by the trustee in connection with distribution of the proceeds of the trustee’s sale shall be deducted from the sale proceeds prior to the payment of junior trust deeds, mortgages, or other lien holders. Entitlement to such attorney fees exists irrespective of whether an interpleader action was required to be filed by the trustee in order to distribute such sale proceeds. In addition, the amendment clarifies the priority for distribution of trustee’s sale proceeds as follows:

(a)    First, the proceeds shall be applied to the costs and expenses of exercising the power of

sale, including the payment of the trustee’s fees actually incurred not to exceed the amount which may be provided for in the trust deed;

(b)    Second, the proceeds shall be applied to payment of the obligation secured by the trust deed;

(c)     Third, the proceeds shall be applied to the payment of junior trust deeds, mortgages, or other lienholders; and

(d)    Fourth, the balance of proceeds, if any, shall be applied to the person or persons legally entitled to any remaining proceeds.

This amendment to Nebraska’s Trust Deeds Act does not require any changes to non-judicial foreclosures but clarifies the practices trustees have regularly followed in Nebraska for many years.

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August 2021 e-Update