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Building Block Enters. LLC v. State Bank and Trust Co.

The trial court's ruling that the bank was not required to confirm the foreclosure sale of property securing a defaulted loan before pursuing an action for deficiency judgment against the guarantor constituted an erroneous advisory opinion.

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Building Block Enterprises, LLC and Waheed Malik appeal the declaratory judgment granted to State Bank and Trust Company in this action relating to efforts to collect a defaulted loan. After Building Block defaulted on the loan, which Malik had guaranteed, State Bank, as successor to the original lender, pursued an action in state court to recover the outstanding loan amount. It also foreclosed on the property securing the note. It conducted two nonjudicial foreclosure sales, because the first took place before the assignment of the loan to State Bank had been recorded. We hold that State Bank never consummated its successful bid at the first nonjudicial foreclosure sale of the property securing the loan because the transfer of the borrower’s right of possession and its equity of redemption to the bank as the foreclosure sale purchaser never occurred. We therefore affirm the trial court’s ruling that this sale was not completed. We also affirm the ruling that the later nonjudicial foreclosure sale was valid. Finally, we reverse the superior court’s ruling that State Bank was not required to confirm the foreclosure sale before pursuing an action for a deficiency judgment against Malik. This ruling amounted to an advisory opinion since State Bank did, in fact, file a confirmation petition, which is pending in superior court.

Building Block borrowed more than $1.4 million from Security Bank of North Metro and executed a deed to secure debt, pledging certain property as security for its obligation under the note. Malik guaranteed the obligation.

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