Child Support Liens as De Facto Super‑Priority Claims to Foreclosure Surplus: Commentary on Alaska USA Federal Credit Union v. The Sayer Law Group, P.C.

I. Introduction

This Alaska Supreme Court decision resolves a high‑stakes conflict between private judgment creditors and the State’s child support enforcement machinery over surplus funds from a nonjudicial foreclosure sale. The case squarely presents the question: when a property owner owes both a private judgment and child support arrears, and both judgments have been reduced to recorded liens, who is paid first from foreclosure surplus?

The petitioner, Alaska USA Federal Credit Union (“Alaska USA”), held an earlier‑recorded judgment lien against Troy Lewis. The State of Alaska, through the Department of Revenue’s Child Support Services Division (“CSSD”), held a later‑recorded child support lien and, after the foreclosure sale, issued a child support withholding order. The trustee under the deed of trust, The Sayer Law Group, P.C. (“Sayer Law”), held surplus proceeds from the foreclosure sale of real property owned by Troy and Shanda Lewis and was faced with conflicting claims to those funds.

Two distinct statutory mechanisms were at issue:

• AS 25.27.250 – CSSD’s authority to issue withholding orders to third parties holding property “due, owing, or belonging” to a child support obligor, with stated priority over other “legal process.”
• AS 25.27.230 – CSSD’s authority to record child support liens that function as judgment liens and a powerful prohibition in subsection (d) against transferring property subject to such liens absent a release or waiver.

Against this specialized child support framework stood the more general creditor‑rights regime:

• AS 09.30.010–.020 – creation and priority of judgment liens; earlier recording generally means higher priority.
• AS 34.20.080(f) – the order in which surplus proceeds from a nonjudicial foreclosure must be distributed among subordinate lienholders and the trustor.

The core legal issues were:

1. Whether CSSD’s withholding order under AS 25.27.250 could attach to foreclosure surplus funds encumbered by prior judgment liens, by treating those funds as property “due, owing, or belonging” to the obligor.
2. Whether AS 25.27.230(d)’s prohibition on transferring property subject to a child support lien applies to nonjudicial foreclosure surplus distributions, and if so, whether this effectively gives CSSD’s lien priority over earlier‑recorded judgment liens.

The district court and superior court sided with CSSD, primarily on the basis of the withholding order’s supposed statutory priority. The Alaska Supreme Court affirmed, but on a different, narrower ground: it held the withholding order ineffective in these particular circumstances, and instead relied on AS 25.27.230(d) to give CSSD’s lien effective priority over other judgment liens with respect to foreclosure surplus.

II. Summary of the Opinion

Justice Pate, writing for a unanimous court, reached three main conclusions:

1. Withholding order ineffective in this context. A child support withholding order under AS 25.27.250 can compel a third party to transfer only property that is “due, owing, or belonging” to the obligor. Because the foreclosure surplus was insufficient to satisfy both Alaska USA’s and CSSD’s liens, none of the surplus belonged to Troy Lewis; it was entirely subject to the competing liens. Consequently, CSSD’s withholding order had no legal effect on that surplus, and AS 25.27.250(i)’s priority clause never came into play.
2. CSSD liens “travel” from the real estate to the surplus. Alaska USA’s judgment lien and CSSD’s child support lien both attached to the real property before the foreclosure. When the property was sold, those liens were extinguished as against the realty but automatically attached to the surplus proceeds, which functioned as a “substitute res” for the equity of redemption.
3. AS 25.27.230(d) applies in nonjudicial foreclosures and effectively gives CSSD’s lien priority over competing judgment liens. When a person (here, Sayer Law as trustee) has possession of property subject to a recorded CSSD lien and actual notice of that lien, AS 25.27.230(d) prohibits transferring that property unless CSSD waives/releases the lien or a court/administrative decision orders release. This prohibition applies to judgment lienholders in nonjudicial foreclosure surplus distributions, including those with earlier‑recorded liens. Thus, Sayer Law was statutorily barred from paying Alaska USA from the surplus until after CSSD’s lien had been satisfied.

The Court:

• Affirmed the judgment in favor of CSSD and Sayer Law.
• Explicitly did not decide whether AS 25.27.230(d) similarly displaces the priority of purchase‑money security interests like mortgages or deeds of trust (e.g., Wells Fargo’s deed of trust, which had already been paid in full and was not contested).
• Did not reach constitutional due process challenges raised by Alaska USA, because the withholding order was deemed inapplicable.

III. Statutory Framework and Factual Setting

A. The factual sequence

• December 2010 – Deed of trust on the Lewis property recorded, later assigned to Wells Fargo (2015).
• January 2017 – Alaska USA records a judgment lien against Troy Lewis.
• September 2017 – CSSD records a child support lien under AS 25.27.230(d), after Lewis accrues child support arrears.
• December 2017 – Sayer Law, as trustee for Wells Fargo, commences nonjudicial foreclosure.
• April 2018 – Foreclosure sale for $168,000:
  • Wells Fargo’s deed of trust is paid in full.
  • Surplus of $34,590.31 remains.
• Post‑sale – Sayer Law notifies Alaska USA, CSSD, and Lewis that surplus will be paid in order of priority.
  • Alaska USA claims $38,783.68.
  • CSSD claims $22,186.56 (arrears plus ongoing support).
  • Troy Lewis claims any residue.
• Initial trustee view – Sayer Law initially plans to pay Alaska USA, as holder of the first recorded judgment lien.
• CSSD objection – CSSD sends a letter invoking AS 25.27.230(d), asserting its lien must be paid first, then issues a withholding order under AS 25.27.250 demanding $25,428.20.
• Distribution – Sayer Law pays CSSD enough to satisfy its lien, then tenders the remaining $9,162.11 to Alaska USA, which refuses the payment and sues.

B. The key statutes

1. General judgment lien and foreclosure priority

• AS 09.30.010 – A recorded judgment becomes a lien on the debtor’s non‑exempt real property in that recording district.
• AS 09.30.020 – Priority among judgment liens is determined by recording date: earlier recording generally means higher priority.
• AS 34.20.080(f) – Distribution of nonjudicial foreclosure sale proceeds:
  1. First, to costs and to pay the foreclosed deed of trust (the beneficiary, here Wells Fargo).
  2. Second, to “persons who held, at the time of the sale, recorded interests in the property that were subordinate to the foreclosed deed of trust,” in order of priority of those recorded interests. (AS 34.20.080(f)(2))
  3. Third, any remaining surplus to the trustor/owner, if still the owner at time of sale. (AS 34.20.080(f)(3))

2. CSSD’s enforcement tools

a. Withholding orders – AS 25.27.250

• Subsection (c): CSSD may issue a withholding order when it “has reason to believe” that a person “is in possession of personal property of any kind that is due, owing, or belonging to the obligor.”
• Subsection (f): The person served must withhold that property and deliver it to CSSD.
• Subsection (i): A withholding order “has priority over all other attachments, executions, garnishments, or other legal process brought under state law against the same property unless otherwise ordered by the court.”

b. Child support liens – AS 25.27.230

• Subsection (a): CSSD must assert a lien when an obligor is in arrears; lien may attach to real or personal property.
• Subsection (c): The lien is effective on the date of recording.
• Subsection (f): The lien “is a judgment lien” enforceable by execution under AS 09.35.
• Subsection (d): The central provision:

  Whenever a lien has been recorded under this section and there is in the possession of any person, political subdivision, or department of the state having actual notice of the lien any property that may be subject to the lien, that property may not be paid over, released, sold, transferred, encumbered, or conveyed unless (1) CSSD issues a written release/waiver; or (2) a hearing officer or the superior court orders release of the lien (no debt, or debt satisfied).

This language is broad: it is triggered when (1) there is a recorded CSSD lien; (2) someone with actual notice is in possession of property “that may be subject to the lien”; and (3) that person proposes to transfer or otherwise dispose of that property.

IV. Precedents and Authorities Cited

A. Child support enforcement cases and policy

• State, Dep’t of Revenue, Child Support Enf’t Div. v. Deleon, 103 P.3d 897 (Alaska 2004) – Cited for the overarching purpose of AS 25.27: “ensuring that parents meet their support obligations.” This case underscores that child support statutes are remedial and aimed at protecting children’s economic security.
• Koss v. Koss, 981 P.2d 106 (Alaska 1999) – Cited for the breadth of CSSD’s administrative enforcement powers under AS 25.27, reinforcing that CSSD is not a typical creditor but a state agency wielding exceptional tools to secure child support.
• Ralston v. State, Child Support Enf’t Div. ex rel. Wall, 728 P.2d 635 (Alaska 1986) – Quoted for legislative intent “to enhance the efforts of those persons who seek to enforce the payment of child support obligations.” This case is the primary authority on the strong pro‑enforcement legislative policy behind child support remedies.
• State, Dep’t of Revenue, Child Support Enf’t Div. v. Leitch, 999 P.2d 782 (Alaska 2000), and State, Dep’t of Revenue, Child Support Enf’t Div. v. Allsop, 902 P.2d 790 (Alaska 1995) – These cases highlight the “broad authority and power” and “exceptional degree of power” CSSD has to collect from delinquent parents, backing the court’s willingness to interpret AS 25.27.230(d) expansively.

Collectively, these precedents justified treating AS 25.27.230(d) as a deliberate legislative departure from normal creditor priority rules, rather than an oversight.

B. Foreclosure, liens, and the “substitute res” concept

• Adams v. FedAlaska Fed. Credit Union, 757 P.2d 1040 (Alaska 1988) – Holds that foreclosure of a deed of trust cuts off interests junior to that deed of trust. The Court uses Adams to restate that both Alaska USA’s and CSSD’s liens, as junior to Wells Fargo’s deed of trust, were terminated as interests in the real property at the time of sale.
• Burnett, Waldock & Padgett Invs. v. C.B.S. Realty, 668 P.2d 819 (Alaska 1983) – Confirms that land purchased at a deed of trust sale remains subject to prior encumbrances but not to those imposed after the deed of trust was executed, reinforcing the baseline priority structure around deeds of trust.
• Gutchen v. Gabriel, 49 P.3d 223 (Alaska 2002) – Recognizes that a judgment lien creates a property interest enforceable in rem against the encumbered property, not merely a personal claim. This supports treating Alaska USA’s lien and CSSD’s lien as property interests that can attach to proceeds.
• Brooks v. R & M Consultants, Inc., 613 P.2d 268 (Alaska 1980) – Clarifies that certain statutory liens (there, mechanic’s liens) are not created until recorded. The Court uses Brooks by analogy to emphasize the importance of recording for judgment lien effectiveness.
• Reynolds v. Sisco Group, Inc., 70 P.3d 388 (Alaska 2003) – Addressed when property “belongs” to a debtor for garnishment; property encumbered by a perfected security interest may not “belong” to the debtor to the extent of the secured claim. The Court relies on this conceptual framework in concluding that surplus proceeds encumbered by existing liens were not “due, owing, or belonging” to Lewis for purposes of a withholding order.

The Court further relies on Restatement (Third) of Property: Mortgages § 7.4, and secondary authority, to adopt the “substitute res” principle: once real property is sold in foreclosure, any surplus represents the former equity of redemption, and liens that attached to the real estate now attach to the surplus. This doctrinal move is crucial: it is what puts the foreclosure surplus within the reach of both Alaska USA’s and CSSD’s liens.

C. Statutory interpretation: general/specific canon and anti‑surplusage

• Nat’l Bank of Alaska v. State, Dep’t of Revenue, 642 P.2d 811 (Alaska 1982) – The lower courts had applied the “general/specific” canon, citing this case, to conclude that AS 25.27.250(i) (specific priority for withholding orders) overrides the general lien priority statute (AS 09.30.020) and foreclosure distribution statute (AS 34.20.080(f)(2)). The Supreme Court ultimately sidesteps this by holding AS 25.27.250 inapplicable, but the canon remains relevant in the background.
• Johnson v. State, Dep’t of Corr., 380 P.3d 653 (Alaska 2016) – Cited for the anti‑surplusage canon: courts must assume the legislature intended every statutory provision to have independent “purpose, force, and effect.” This canon plays a major role in rejecting Alaska USA’s narrow reading of AS 25.27.230(d), which would have left that subsection with almost no work to do.

D. Other authority: Thomas v. Joseph P. Casteel Trust

Alaska USA cited Thomas v. Joseph P. Casteel Trust, 496 P.3d 403 (Alaska 2021), asserting that CSSD had a “longstanding governing policy” of not participating in nonjudicial foreclosures and that this policy reflected an understanding that AS 25.27.230(d) does not apply in that context. The Court rejected this characterization:

• Thomas did not interpret AS 25.27.230 at all.
• The passing description that CSSD “declined to participate” in that foreclosure under its policy was too thin a reed to support a binding interpretation of the statute.
• Whatever CSSD’s former policy might have been, statutory text and purpose—not internal policies—govern.

Thus Thomas is explicitly deemed not controlling on the scope of AS 25.27.230(d).

V. The Court’s Legal Reasoning

A. Step 1: Liens extinguished as to the real estate, but re‑attach to the surplus

The Court first clarifies the status of interests post‑foreclosure:

• Before the sale, Wells Fargo’s deed of trust was senior; Alaska USA’s and CSSD’s judgment liens were junior.
• Upon foreclosure and sale:
  • Junior interests in the land (including Alaska USA’s and CSSD’s liens, and the Lewis’s ownership interest) were terminated, consistent with Adams and AS 34.20.080(i).
  • However, any surplus proceeds represent what is left of the equity of redemption after the deed of trust is paid.
  • Under the Restatement and persuasive authority, this surplus functions as a “substitute res,” and liens that attached to the real property now attach to the surplus, in the same relative order.

Therefore, at the moment the trustee held the surplus funds:

• Alaska USA had a lien interest in the surplus (earlier recorded judgment lien).
• CSSD had a lien interest in the surplus (later recorded child support lien, statutorily deemed a judgment lien).
• Troy Lewis retained only a contingent interest: if, and only if, the surplus exceeded the total of all liens, he would be entitled to the remainder.

B. Step 2: Why CSSD’s withholding order under AS 25.27.250 was ineffective

CSSD’s withholding order can only reach property that is “due, owing, or belonging to the obligor.” The Court asks: at the time the order was issued, did any portion of the surplus fit that description with respect to Troy Lewis?

The answer is no, because:

• The total surplus was $34,590.31.
• The combined amounts secured by Alaska USA’s and CSSD’s liens ($46,934.77, excluding interest) exceeded that surplus.
• Accordingly:
  • The surplus was entirely encumbered by the judgment liens.
  • Lewis would only have a right to any surplus if the surplus exceeded the total of all encumbering liens—here, it did not.
  • Thus, no portion of the surplus was actually “due” or “owing” to him, nor did it “belong” to him in any net sense.

The Court emphasizes that the phrase “due, owing, or belonging” in AS 25.27.250 is not coextensive with any conceivable property interest. It does not include the mere possibility of a contingent equity interest that will never materialize because existing liens absorb the entire asset. The withholding order, therefore, had nothing to operate on.

Because there was no property “due, owing, or belonging” to Lewis in Sayer Law’s possession:

• AS 25.27.250(f) did not require Sayer Law to deliver any funds under the withholding order.
• AS 25.27.250(i)’s priority language over other “attachments, executions, garnishments, or other legal process” is never triggered, because it presupposes a valid, operative withholding order attached to property of the obligor.

This reasoning allowed the Court to:

• Reject the lower courts’ reliance on AS 25.27.250(i) as the basis for CSSD’s priority;
• Avoid deciding how AS 25.27.250(i) would interact with AS 34.20.080(f) and AS 09.30.020 in a case where property was due or owing to the obligor; and
• Avoid Alaska USA’s constitutional arguments premised on the withholding order.

C. Step 3: Interpreting AS 25.27.230(d) and its effect on judgment lien priority

1. Applicability of AS 25.27.230(d) to nonjudicial foreclosure surplus

The Court then turns to AS 25.27.230(d), which is triggered when:

1. “a lien has been recorded” under AS 25.27.230;
2. a person (or political subdivision or state department) has actual notice of the lien; and
3. that person has possession of “any property that may be subject to the lien.”

Under these conditions, the property “may not be paid over, released, sold, transferred, encumbered, or conveyed” unless CSSD furnishes a written waiver/release or a court/administrative decision orders release. Applied here:

• CSSD’s lien was properly recorded in September 2017.
• Sayer Law had actual notice of the lien (CSSD’s letter explicitly asserted it against the surplus).
• The surplus funds, to which the CSSD lien attached, were in Sayer Law’s possession.

Thus, by the statute’s plain terms, Sayer Law was prohibited from transferring those surplus funds unless:

• CSSD issued a written release or waiver; or
• a court/administrative decision released the lien (due to absence or satisfaction of the debt).

No such release occurred. Thus, Sayer Law could not lawfully transfer property subject to CSSD’s lien—i.e., could not pay Alaska USA from the surplus—until CSSD’s lien was satisfied.

2. Why the Court rejects Alaska USA’s narrow reading of AS 25.27.230(d)

Alaska USA argued that a literal reading of AS 25.27.230(d) would produce:

• An “absurd result”: granting CSSD absolute super‑priority over even earlier recorded purchase‑money deeds of trust, such as Wells Fargo’s.
• Therefore, it contended AS 25.27.230(d) should be limited to:
  • Unencumbered property, or
  • Property encumbered only by liens junior to CSSD’s lien.

The Court responds in several steps:

1. No need to reach the deed‑of‑trust issue.
   • Wells Fargo was not a party; its deed of trust was satisfied and uncontested.
   • CSSD explicitly limited its claim to the surplus funds, not the mortgage payoff.
   • The Court therefore expressly declines to decide whether AS 25.27.230(d) could ever displace the priority of a purchase‑money deed of trust.
2. Alaska USA’s construction would render AS 25.27.230(d) superfluous.
   • If AS 25.27.230(d) applied only to unencumbered property or property with only junior encumbrances, ordinary lien priority rules (AS 09.30.020 and AS 34.20.080(f)(2)) would already ensure CSSD’s priority by virtue of recording order.
   • In such a scenario, AS 25.27.230(d) would add nothing to CSSD’s rights; it would be a dead letter.
   • Invoking the anti‑surplusage canon, the Court refuses to attribute such redundancy to the legislature.
3. Text and purpose support a broader reading.
   • The statute is written without limitation to “legal process” or specific kinds of transfers—it covers any payment, release, sale, transfer, encumbrance, or conveyance of property subject to a CSSD lien by a person with actual notice.
   • The legislative purpose, as recognized in Ralston and Deleon, is to “enhance” enforcement of child support obligations; granting CSSD a strong position against competing judgment creditors directly serves that goal.

On this reading, AS 25.27.230(d) operates as a statutory brake on the normal flow of payments to judgment creditors when property is encumbered by a CSSD lien. It does not rewrite AS 34.20.080(f)(2) wholesale; it carves out a specific pause and redirection for child support debts.

3. Effect on priority among judgment liens

The Court then explains how AS 25.27.230(d) interacts with AS 34.20.080(f)(2):

• AS 34.20.080(f)(2) still requires a trustee to distribute surplus proceeds to “recorded interests” in order of priority—but only where transfer is not otherwise prohibited by law.
• AS 25.27.230(d) is such a prohibition:
  • Where a CSSD lien has attached to the surplus and the trustee has notice, the trustee may not transfer those funds to other judgment lienholders until CSSD’s lien is satisfied or formally waived/released.
  • Once CSSD’s lien is satisfied, the statutory prohibition is lifted, and the trustee can then distribute any remaining surplus following ordinary priority rules (AS 34.20.080(f)(2), AS 09.30.020).

Thus, functionally, CSSD’s lien obtains effective priority over other judgment liens—even if those liens were recorded earlier—because it must be paid first to “unlock” the surplus for further distribution.

The Court candidly acknowledges that this interpretation “aligns with the apparent legislative objective of promoting the collection of child support,” even though it disrupts “well‑established expectations of priority for satisfaction” among judgment creditors.

D. Step 4: Waiver and CSSD’s alleged duty to object to the sale

Alaska USA argued that even if AS 25.27.230(d) could apply, CSSD waived its rights by not attending or objecting to the foreclosure sale after receiving notice. The Court rejects this argument:

• CSSD took affirmative action to protect its lien as to the surplus: it sent a letter to Sayer Law asserting its lien against the surplus and invoking AS 25.27.230(d).
• AS 25.27.230(d) imposes no textual duty on CSSD to appear or object at the foreclosure sale itself. Its protection is triggered when someone with actual notice holds property subject to the lien and proposes to transfer it.
• The passing observation in Thomas about CSSD’s policy of “declin[ing] to participate” in a different foreclosure is not a binding rule and does not create conditions for waiver.

Accordingly, CSSD did not waive its rights under AS 25.27.230(d), and Sayer Law remained bound by its statutory non‑transfer obligation.

E. Step 5: Application to Sayer Law’s conduct

Putting the pieces together:

• As trustee, Sayer Law had a duty under AS 34.20.080(f)(2) to distribute surplus to holders of recorded interests.
• But, under AS 25.27.230(d), once Sayer Law had actual notice that the surplus was subject to a CSSD lien, it was prohibited from transferring that property to other judgment lienholders until CSSD’s lien was satisfied or released.
• By paying CSSD first from the surplus, then remitting the remainder to Alaska USA, Sayer Law complied with:
  • AS 25.27.230(d) (by ensuring no transfer occurred before satisfying CSSD’s lien), and
  • AS 34.20.080(f)(2) (by distributing the remaining surplus according to priority among remaining interests).

  Therefore, Sayer Law did not breach any fiduciary duty to Alaska USA, and Alaska USA’s claim for damages was properly rejected.

  VI. Simplifying the Complex Concepts

  A. Judgment lien vs. CSSD child support lien

  • Ordinary judgment lien (AS 09.30.010):
    • Created when a money judgment is recorded in the appropriate district.
    • Attaches to the debtor’s real property in that district.
    • Priority is normally “first in time, first in right” (AS 09.30.020).
  • CSSD child support lien (AS 25.27.230):
    • Also deemed a “judgment lien” enforceable by execution.
    • Can attach to both real and personal property (AS 25.27.230(a)), making it broader in scope.
    • Special powers:
      • Can be served on banks and third parties holding the obligor’s funds (AS 25.27.240).
      • Noncompliance can result in civil liability (AS 25.27.260(a)).
      • AS 25.27.230(d) imposes a prohibition on transfers by any person with actual notice who holds property subject to the lien.

  Thus, while labeled a “judgment lien,” the CSSD lien enjoys additional statutory protections that elevate its practical status above that of ordinary judgment creditors, particularly as to foreclosure surplus.

  B. Nonjudicial foreclosure and surplus distribution

  • Nonjudicial foreclosure in Alaska proceeds under a power of sale clause in a deed of trust, without a court judgment.
  • At sale:
    • The trust property is sold.
    • The deed of trust beneficiary (e.g., lender) is paid first from sale proceeds.
    • Any surplus is then allocated among junior lienholders and, if anything remains, returned to the owner.
  • Surplus as “substitute res”:
    • The equity the owner previously had in the property is transformed into cash (the surplus).
    • Liens that encumbered that equity “transfer” to the cash, maintaining their priorities.

  C. “Due, owing, or belonging”

  This phrase in AS 25.27.250 is narrower than it might appear:

  • If all of a person’s interest in an asset is swallowed by existing liens, then—even though the person once had an ownership interest—no net value is “due” or “owed” to that person.
  • Therefore, third parties holding such fully encumbered assets hold them for the benefit of lienholders, not the obligor.
  • Only when there is positive equity after accounting for all liens does property become “due, owing, or belonging” to the obligor for purposes of a withholding order.

  D. “Actual notice” under AS 25.27.230(d)

  To trigger the non‑transfer prohibition:

  • The person holding the property must have actual notice of the CSSD lien—not merely constructive notice from public recording.
  • This often occurs when CSSD directly notifies the holder (as via the letter to Sayer Law in this case).
  • Once actual notice exists, the holder faces statutory restrictions and potential liability for wrongful transfer.

  E. General vs. specific statutes

  Although the Supreme Court resolved the case on different grounds than the lower courts, the underlying interpretive principle is:

  • When a specific statute governs a particular subject (e.g., enforcement mechanisms and protections for child support debts), it often controls over more general statutes (e.g., generic judgment lien priority) that might otherwise apply.
  • Here, AS 25.27.230(d) is a specific provision designed to protect child support liens from dissipation of encumbered property, and it is treated as the operative rule in the foreclosure surplus context, overriding the ordinary operation of AS 09.30.020 and AS 34.20.080(f)(2) as to judgment liens.

  VII. Impact and Implications

  A. For judgment creditors and their counsel

  The decision significantly alters risk calculations for judgment creditors in Alaska:

  • Priority uncertainty. Even if a creditor records a judgment lien before CSSD records a child support lien, the creditor’s practical ability to collect from certain assets—especially foreclosure surplus—may be subordinated to CSSD’s rights.
  • Due diligence burden. Creditors and their attorneys must:
    • Check for recorded CSSD liens against a debtor’s property.
    • Recognize that if a CSSD lien exists, anyone holding proceeds (trustees, sheriffs, escrow agents) with actual notice may be statutorily barred from paying private lienholders before CSSD is satisfied.
  • Litigation strategy. In cases involving potential surplus (judicial or nonjudicial), creditors may need to:
    • Include CSSD as a party.
    • Seek court orders clarifying the extent of CSSD’s lien and whether any surplus remains after its satisfaction.

  B. For trustees, sheriffs, and escrow agents holding sale proceeds

  Entities that hold property or proceeds subject to recorded CSSD liens and who receive actual notice now operate under a :

  • They cannot safely rely solely on generic priority rules or instructions from lienholders.
  • They must:
    • Identify whether the property in their hands is subject to a CSSD lien.
    • Withhold transfer to other lienholders until they confirm either:
      • CSSD has been fully paid from the subject funds; or
      • CSSD has issued a written waiver/release; or
      • A court or administrative decision has ordered release of the lien.
  • Failure to comply may expose them to statutory liability under AS 25.27.260(a).

  C. For CSSD and child support recipients

  The ruling strengthens CSSD’s hand:

  • Enhanced collection leverage. Surplus from foreclosure sales—a potentially significant source of debtor equity—is effectively earmarked first for child support arrears before private judgment creditors can be paid.
  • Clarity of tools. The decision:
    • Confirms that liens under AS 25.27.230, not only withholding orders under AS 25.27.250, are a robust collection tool.
    • Clarifies the limits of withholding orders (no reach to property that does not, in net, belong to the obligor).

  D. For mortgage lenders and foreclosing beneficiaries

  Although the Court explicitly did not decide whether AS 25.27.230(d) can affect the priority of purchase‑money deeds of trust or mortgages, the opinion hints at possible legislative policy choices and ramifications:

  • Lenders have comfort that, at least in this case, the deed of trust beneficiary (Wells Fargo) was paid in full, and CSSD did not contest its priority.
  • The opinion includes a footnote suggesting that if the legislature disagrees with the Court’s construction, it may clarify the interaction between child support liens and prior mortgages, referencing other states that explicitly subordinate child support liens to prior recorded mortgages.
  • Given this, mortgage lenders may:
    • Monitor legislative developments in Alaska concerning statutory priority of child support liens.
    • Consider the possibility (however remote at present) that in future litigation CSSD or others might argue for broader priority over secured creditors, prompting the need for statutory clarification.

  E. Constitutional and policy considerations

  While the Court did not reach Alaska USA’s due process challenges, the opinion implicitly sketches a constitutionally safer path:

  • The withholding order, with its “priority over all other legal process,” could raise notice and process concerns if used to leapfrog private lienholders based on an ex parte administrative action.
  • By grounding CSSD’s priority in:
    • a recorded lien (providing public, constructive notice), and
    • a statutory transfer prohibition applying only when holders have actual notice,

  the Court rested its holding on mechanisms that more closely resemble traditional secured creditor practice and thus more comfortably fit within established due process norms.

  At the same time, the case underscores a policy judgment: child support obligations justify exceptional collection tools that can displace private creditors’ expectations. The Court largely views that as a legislative value choice embedded in AS 25.27.230, not a judicial innovation.

  VIII. Conclusion

  Alaska USA Federal Credit Union v. The Sayer Law Group, P.C. establishes a significant rule for Alaska’s law of judgment enforcement and foreclosure:

  • A CSSD child support withholding order under AS 25.27.250 cannot attach to foreclosure surplus that is fully absorbed by existing liens; such funds are not “due, owing, or belonging” to the obligor, so the withholding order is ineffective.
  • However, a CSSD lien under AS 25.27.230:
    • Attaches to the equity represented by foreclosure surplus as a “substitute res”; and
    • Triggers a broad statutory prohibition under AS 25.27.230(d) preventing any person with actual notice from transferring that property until the CSSD lien is satisfied, waived, or judicially released.
    • This prohibition effectively grants CSSD’s lien priority over competing judgment liens, including earlier‑recorded ones, at least in the context of nonjudicial foreclosure surplus distributions.

    The decision preserves the traditional priority of purchase‑money deeds of trust (without definitively ruling on their relationship to CSSD liens), maintains the basic structure of AS 34.20.080(f) among junior lienholders, and yet carves out a robust, legislatively grounded priority for child support enforcement. It sends a clear signal to creditors, trustees, and practitioners: in Alaska, when child support liens intersect with foreclosure surplus, child support comes first, and the statutory machinery of AS 25.27.230(d) must be carefully observed.