Detailed Answer
In Minnesota, a partition action does not wipe out existing mortgages. Any lien on the property stays attached until it is paid off or otherwise satisfied. Under Minn. Stat. § 559.04, when the court orders a sale, it directs how proceeds must handle encumbrances. The sale buyer receives title free of liens, but the mortgage lender retains a right to payment from the sale proceeds.
During a partition-by-sale, the court first orders payment of mortgage balances, taxes and sale costs. See Minn. Stat. § 559.04. Next, the remaining funds go to pay any other liens and expenses. Finally, the net proceeds distribute among co-tenants according to their ownership shares under Minn. Stat. § 559.09. Each co-tenant receives a pro rata share unless the court adjusts for unequal contributions.
If the court orders a partition-in-kind (physical division), the mortgage stays with each parcel. The co-tenant receiving an encumbered piece must either assume the debt or reimburse others for their share of mortgage payments. Under Minn. Stat. § 559.21, a co-tenant who pays more than their fair share of a mortgage may seek contribution from the others. This ensures each party bears their agreed-upon portion of debt service.
Overall, existing mortgage obligations play two roles: they reduce the gross sale proceeds and they allocate payment responsibility when dividing property. Understanding these rules helps co-tenants plan for payoff figures and negotiate fair credit for mortgage contributions.
Helpful Hints
- Review the current mortgage statement to confirm the payoff amount before filing a partition.
- Obtain a professional appraisal to determine property value and estimate net proceeds.
- Discuss payment responsibilities and reimbursement formulas with co-tenants in writing.
- Consider mediation to agree on mortgage credit adjustments and avoid court delays.
- Consult an attorney for precise calculations and to draft agreements reflecting any contributions.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For guidance on your specific situation, consult a licensed attorney in Minnesota.