Detailed Answer

Short answer: In New Jersey, when a court orders a partition sale, the net sale proceeds are normally divided among the co-owners according to each owner’s legal interest in the property (their ownership share). The court first pays liens, mortgages, sale costs, taxes, and court-ordered allowances, then distributes what remains in proportion to the owners’ recorded or proven shares, with possible equitable adjustments for payments, improvements, rents, or waste.

What a partition sale is and who can start it

A partition action asks the court to divide titled real property when co-owners cannot agree whether to divide the land or sell it and split the proceeds. Any co-owner (tenant in common or joint tenant) may file a partition petition in the Superior Court. The court may order physical division (partition in kind) or a sale with proceeds divided among the owners (partition by sale).

Step-by-step: how New Jersey courts divide sale proceeds

1. Determine ownership shares. The starting point is each co-owner’s legal interest. That usually comes from the deed(s) or recorded document that created the ownership (for example, 50/50, 60/40, etc.). If the deed is ambiguous, the court will decide shares based on the evidence.
2. Pay liens and secured debts. Mortgages and other valid liens that attach to the property are paid from the sale proceeds in priority order. If a lien survives the sale, the net amount distributed will be reduced accordingly.
3. Subtract sale and court costs. Reasonable costs of sale (real estate commissions, broker fees, advertising, referee’s fees, auction costs) and court costs are deducted before distribution.
4. Adjust for taxes, assessments, and outstanding bills. Unpaid property taxes, municipal assessments, and necessary charges related to the property are paid from the proceeds.
5. Account for equitable credits and charges. The court may give credits or charge owners for certain items before splitting the balance. Typical adjustments include:
   • Credits for money one co-owner paid for mortgage payments, taxes, or necessary repairs on behalf of all co-owners.
   • Reimbursement claims for contributions to improvements that increased property value (if proven and equitable).
   • Charges or offsets for waste or damage caused by a co-owner.
   • Allocation of rents or profits collected from the property during the pendency of the action (someone who collected rents may owe an accounting to others).
6. Divide the remaining proceeds proportionally. After the items above are handled, the remaining net proceeds are distributed according to the owners’ shares. For example, if Owner A holds 60% and Owner B holds 40%, and $100,000 remains after costs and liens, A receives $60,000 and B receives $40,000, subject to any court-ordered credits or offsets.
7. Special situations: buyout and credits. If one co-owner buys the property at the court-ordered sale, the purchase price is applied and the buyer receives title; the buyer’s payment is then credited into the distribution. If a co-owner has advanced funds for mortgages or taxes, the court may require other co-owners to reimburse that co-owner out of the proceeds before final split.

Common adjustments New Jersey courts consider

• Proof of who paid mortgage, insurance, taxes, or utilities during ownership.
• Proof of any improvements and whether they added measurable value (and whether the cost should be credited).
• Evidence of misuse or waste by one co-owner that reduced value.
• Liens, which take priority over owners’ shares and will reduce distributions.

Practical example (hypothetical)

Three people own a property as tenants in common: Alice 50%, Bob 30%, and Carol 20%. The court orders a sale. Sale price net of commissions and closing costs is $300,000. A mortgage payoff of $80,000 and unpaid taxes of $5,000 are paid from proceeds. That leaves $215,000. During the litigation Bob paid $6,000 for necessary repairs and collected $4,000 in rents, which the court finds should be credited to him. After crediting Bob $2,000 net (6,000 paid minus 4,000 rents), the remaining distributable balance is $213,000. The court then divides that amount according to ownership: Alice gets 50% ($106,500), Bob gets 30% ($63,900) after his credit adjustment, and Carol gets 20% ($42,600).

How to protect your position before and during a partition

Gather documentation: deeds, mortgage statements, proof of payments (taxes, mortgage, insurance), receipts for repairs or improvements, leases or rent records, and any agreement among co-owners. Present clear evidence to the court to support claims for credits or offsets.

Where to find New Jersey resources

New Jersey courts provide self-help information about partition and property actions. For general procedural guidance and forms, see the New Jersey Courts website: https://www.njcourts.gov (search for “partition” or “real property” in the self-help section). For details about liens, mortgage priorities, and related rules consult the New Jersey statutes and court practice guides or speak with a New Jersey attorney.

When to get an attorney

A partition can involve complex title questions, lien priorities, and equitable claims for credits or contributions. If the amounts at stake are significant, if parties dispute ownership shares, or if there are multiple liens or improvement claims, consult a New Jersey real property attorney as soon as possible. An attorney can prepare evidence, negotiate a buyout, or represent you at sale and distribution hearings.

Disclaimer: This article explains general New Jersey law and is for educational purposes only. It is not legal advice. For advice about your specific situation, consult a licensed attorney in New Jersey.

Helpful Hints

• Confirm ownership shares by pulling the deed from the county recording office or the title report.
• Collect receipts for any payments you made for mortgage, taxes, insurance, repairs, or improvements.
• Track rent or income from the property and keep bank records that show who received or paid funds.
• Keep copies of all communications about the property, including offers to buy, buyout proposals, and settlement offers.
• Consider mediation or voluntary buyout before filing a partition action — courts often allow settlement and buyouts to avoid sale costs.
• Ask the court for an accounting if a co-owner collected rents or failed to pay mortgage or tax obligations.
• Be prepared for an appointed referee or master to manage the sale and prepare the final accounting for distribution.
• If you think one co-owner has caused waste or diminished value, document that conduct thoroughly — the court can adjust distributions for waste.