Detailed Answer
When co-owners of real property in Mississippi file a partition action, the court may order the property sold and the proceeds divided. Existing mortgage obligations on the property play a key role in determining how sale proceeds are distributed among the parties.
1. Court-Ordered Sale and Deposit of Proceeds
Under Mississippi Code § 95-11-1, if physical division of the land is not practical, the chancery court orders a public sale. The clerk of the court collects the sale proceeds and holds them in trust pending distribution to creditors and co-owners (Miss. Code § 95-11-1).
2. Satisfaction of Mortgage Liens
Before any co-tenant receives a share, all valid liens against the property—including first and second mortgages—must be paid out of the proceeds. Mississippi Code § 95-11-19 governs the application of sale proceeds to encumbrances:
“The proceeds shall be applied first to the satisfaction of all liens and encumbrances according to their priority, and the remainder shall be divided among the parties in interest…” (Miss. Code § 95-11-19).
3. Priority of Liens
Liens are paid in the order they were recorded. A first mortgage recorded before a second mortgage must be paid in full before any junior lien receives payment. If the sale price is insufficient to pay all liens, junior lienholders may receive nothing, and co-owners receive proceeds only after all liens and sale costs are satisfied.
4. Division Among Co-Owners
Once the court clerk applies the proceeds to costs, taxes, and mortgages, the remaining balance is divided among the co-owners according to their ownership interests. For example, if three co-tenants each hold an equal one-third interest, they split the net proceeds equally, unless the court adjusts shares based on contributions or inequities (Miss. Code § 95-11-25).
5. Hypothetical Example
Imagine Alice and Bob own land as tenants in common, each with a 50% interest. A first mortgage of $80,000 exists. The court orders a sale at $150,000. After paying off the $80,000 mortgage and $5,000 in sale costs, $65,000 remains. Alice and Bob each receive $32,500.
Disclaimer: This article provides general information about Mississippi partition law. It is not legal advice. Consult a licensed attorney for guidance specific to your situation.
Helpful Hints
- Obtain a title report before filing for partition to identify mortgages and liens.
- Review the recording dates of all encumbrances to determine lien priority.
- Consider mediation to agree on sale terms and avoid contested litigation costs.
- Calculate remaining proceeds after lien satisfaction to estimate your potential share.
- Consult a chancery clerk for procedural deadlines and required filings.