How can a former spouse or survivor assert entitlement to surplus funds following the owner’s death or divorce?

Detailed Answer

When a property owned by an individual is sold in a nonjudicial foreclosure in Alaska, any sale proceeds remaining after satisfying liens, fees, and costs are called surplus funds. A former spouse or the decedent’s survivor may have a right to those funds if they held a legal interest in the property at the time of foreclosure. Below is an overview of how to assert that right under Alaska law.

1. Understanding Surplus Funds Under Alaska Law

Under Alaska Statute § 09.45.090, a trustee conducting a power-of-sale foreclosure must distribute sale proceeds in this order:

1. Pay the sums due under the deed of trust.
2. Pay all reasonable costs and expenses of the sale.
3. Pay any junior lienholders in order of their recording dates.
4. Distribute any remaining surplus funds to the person entitled to them (AS 09.45.090).

2. Who Is “Entitled” to Surplus Funds?

• Record owner of the property at the time of foreclosure (mortgagor or trustor).
• Co-owners who held title (including spouses, partners).
• Junior lienholders if their claims survived after paying senior liens.
• Heirs or devisees if the owner died before the foreclosure sale.

3. Steps for a Former Spouse

1. Confirm your ownership interest. Review the recorded deed or trust documents. If your name still appears on title, you likely hold an interest.
2. Gather proof: divorce decree, property settlement agreement, recorded quitclaim deed or other instrument showing your retained interest.
3. Contact the trustee. Identify the foreclosure trustee (check the sale notice) and send a written request for the surplus funds. Include copies of your documentation.
4. File a claim within one year. If the trustee does not disburse funds within one year of the sale, the funds escheat to the state (AS 09.45.090(c)).
5. Consider a court proceeding. If the trustee disputes your entitlement, you can file a special proceeding in Alaska Superior Court to determine the surplus distribution. Seek local counsel if needed.

4. Steps for a Survivor (Heir or Devisee)

1. Obtain authority to act for the estate. If the owner died before sale, open a probate or small estate summary matter under the Alaska Probate Code (AS 13.16).
2. Gather evidence of your status. Provide a certified copy of the death certificate, will (if any), letters testamentary or letters of administration.
3. Submit a claim to the trustee. Send a written claim along with your probate documents to the trustee handling the foreclosure sale.
4. Meet the one-year deadline. An unclaimed surplus escheats to the state after one year (AS 09.45.090(c)).

5. If You Miss the Deadline: Unclaimed Property

If you fail to claim your surplus funds within one year, the trustee must remit them to the Alaska Department of Revenue’s Unclaimed Property Program. You can search and claim funds at:

https://treasury.dor.alaska.gov/programs/unclaimed-property

Helpful Hints

• Record any deed or other ownership documents promptly after divorce or property settlement.
• Keep certified copies of divorce decrees, wills, death certificates, and probate letters.
• Note the foreclosure sale date to track the one-year claim deadline.
• Send claims to the trustee by certified mail to create a paper trail.
• Consult a local attorney if the trustee contests your claim or if multiple claimants emerge.