Detailed Answer
When a foreclosure sale or tax sale generates more money than needed to satisfy liens, the extra amount becomes surplus proceeds. Under Alaska law, a court or foreclosing party must hold those funds for the former owner of record. If the owner of record died before the sale and the property bore only the deceased spouse’s name, the surplus proceeds become part of the decedent’s estate.
1. Identifying the Correct Claimant
Alaska Statute AS 9.45.563 directs courts to distribute surplus proceeds to the mortgagor or the mortgagor’s successors in interest. When the mortgagor is deceased, the personal representative of the estate steps into the mortgagor’s shoes. If no personal representative exists, heirs can assert their right through probate filings or an affidavit of heirship.
2. Filing a Claim Through Probate
To claim surplus funds, the personal representative must open an estate. Under AS 13.20.010 and AS 13.20.020, the court issues letters testamentary or letters of administration. The representative then files a petition in the court handling the foreclosure or tax sale, submits certified letters, a death certificate, and any notices required by the foreclosing entity.
3. Distributing to Heirs or Beneficiaries
Once the estate receives the surplus proceeds, the personal representative distributes them under Alaska’s intestate succession rules or under the terms of a will. If the decedent died without a will, the court follows AS 13.12.310:
- If a surviving spouse has no surviving descendants or parents of the decedent, the spouse inherits the entire estate.
- If the decedent left descendants (children, grandchildren), the spouse inherits half the estate and the descendants divide the other half per stirpes.
- If the decedent left no descendants but was survived by parents, the spouse receives two-thirds and parents share one-third.
Helpful Hints
- Begin probate in the Alaska court where the decedent lived at death.
- Gather a certified death certificate and letters of administration or testamentary.
- File a petition with the foreclosing party or court within any applicable deadlines (often two years after sale).
- Prepare an affidavit of heirship if no personal representative exists.
- Consult a probate attorney when multiple heirs or complex family situations arise.