Detailed Answer
This answer explains, in plain language, how money from a court-ordered partition sale is divided among co-owners of real property in Alaska. It uses simple hypotheticals to show typical steps a court follows. This is educational information only and is not legal advice.
How the court decides each owner’s share
When a court orders a partition sale in Alaska, the judge does three main things before distributing proceeds:
- Determine each owner’s legal interest in the property (for example, each owner’s percentage share).
- Pay debts and liens that have priority against the property (mortgages, tax liens, costs of sale).
- Make equitable adjustments (for example, credits for payments made by one co-owner for taxes, mortgage, repairs, or for improvements), if the evidence supports them.
Who owns what. The court looks first at how title was held and any written agreements (deed language, partnership documents, or a co-ownership agreement). If the deed shows percentage interests, the court generally uses those percentages. If the deed shows joint tenancy without percentages, the court usually treats the owners as holding equal shares unless convincing evidence shows otherwise.
Priority liens and encumbrances. Liens that attach to the property (for example, a mortgage or a property tax lien) are paid from the sale proceeds before dividing the remainder among owners. If a lien is only against one owner personally and not recorded against the property, it generally does not get paid from the sale proceeds.
Costs of partition and sale. Reasonable costs and expenses of the partition action and sale (court costs, appraisal fees, advertising and broker fees, and the costs to prepare the property for sale) are paid out of the gross sale proceeds before distribution to owners.
Reimbursements and equitable credits. The court can order reimbursements or credits to reflect outlays by a co-owner that benefited the property, such as property tax payments, mortgage payments, necessary repairs, or documented improvements. The court weighs what is fair under the circumstances and can award credit against that owner’s share.
Step-by-step example (hypothetical numbers)
Facts (hypothetical): Three co-owners hold property. Ownership per deed: Alice 50%, Bob 30%, Carmen 20%. The property sells at auction for $300,000.
- Gross sale price: $300,000
- Mortgage recorded against the property: $50,000 (paid first)
- Sale costs (broker, closing, court costs): $15,000
- Net proceeds available to distribute = $300,000 − $50,000 − $15,000 = $235,000
- Distribute according to ownership shares:
- Alice (50%): $117,500
- Bob (30%): $70,500
- Carmen (20%): $47,000
If, for example, Bob had paid the property taxes and the court finds those payments were necessary and directly benefited the property, the court might give Bob a credit before final distribution (e.g., $2,000 credit), reducing the amount others receive or increasing Bob’s share accordingly.
Special issues the court commonly resolves
- Unequal contributions: If one owner paid the mortgage or made major improvements, the court may award that owner a reimbursement or a larger share to be fair.
- Claims against a particular owner: A creditor’s judgement against one co-owner generally does not automatically take the entire property, but a recorded judgment lien can attach to that owner’s interest and be paid from the owner’s share of the proceeds.
- Partition in kind vs. sale: If the court can divide the land practically (partition in kind), each owner may get a physical portion. If that is impractical, the court orders sale and proceeds distribution.
- Costs advanced by one owner: Courts often reimburse reasonable advances (taxes, insurance) from sale proceeds before dividing the remainder.
How to prepare if you are a co-owner facing partition
Gather documents and records demonstrating ownership and expenses you paid related to the property: deeds, mortgage statements, tax receipts, repair bills, insurance premiums, and any written co-ownership agreements. Be prepared to show whether you made payments that benefited the property and whether any liens exist against the property.
Where to find Alaska law and court forms
Alaska’s legislature website (https://www.akleg.gov) provides access to Alaska statutes and can be used to locate the statutory provisions that govern partition and liens. Local court websites and self-help centers list forms and procedures for filing a partition action in the relevant Alaska superior court.