Opinion ID: 1423733
Heading Depth: 3
Heading Rank: 4

Heading: Negative Equity.

Text: The trial court found: There exist four (4) lots in Anchorage, known as the MacKentie properties. The court accepts the parties' stipulated value of $114,500. There exist outstanding mortgages of $138,797.85. In addition, there is debt associated with the property in the amount of $6,500. This money is owed to Kenai Supply and Young Contracting. Thus, there exists a negative equity of $30,887. The trial court also assigned a negative value to Span-Alaska of $5,818. As a general rule Alaska courts consider marital debt in valuing the marital estate. Mack v. Mack, 816 P.2d 197, 199 (Alaska 1991). For example, we set aside a property division and remanded with instructions to not only consider all marital assets but to clearly identify all debts incurred by the parties in determining the overall division in Burcell v. Burcell, 713 P.2d 802, 805 (Alaska 1986). See also Burgess, 710 P.2d at 421-23 (considering one spouse's assumption of joint debts as a factor in dividing marital assets and accounting for the mortgage in valuing the home). Zero valuation of negative equity is the exception. Mack, 816 P.2d at 199. In Mack, we held that it was only the peculiar nature of the nonrecourse debt, which allowed the party to default without incurring a loss, that justified the trial court's decision to ignore the negative equity of real property. Id. at 199-200. The parties stipulated to the value of the MacKentie lots. The trial court recognized existing debt on the property in valuing it. The trial court's valuation of the MacKentie lots is supported by the record. Span-Alaska presents a different problem. However, we need not reach the issue of whether the valuation of Span-Alaska should fall under an exception to the general valuation method as was the case in Mack. In March 1988 the Span-Alaska liabilities totaled $60,000. By the time of trial the debt had been paid. It is precisely because the trial court valued Span-Alaska at the time of the parties' separation that the question of its negative equity arises. As discussed in section B above, the Span-Alaska valuation must be remanded for redetermination and written findings of fact consistent with Ogard.