How can I get my share of the net proceeds after the partition sale of a co-owned house? (TX) | Texas Partition Actions | FastCounsel
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How can I get my share of the net proceeds after the partition sale of a co-owned house? (TX)

Detailed Answer: How to get your share of the net proceeds after a partition sale in Texas

Short answer: After a Texas court orders a partition sale, the court or its appointed officer (commissioner/receiver/sheriff) sells the property, pays sale costs and any secured liens, and then the remaining money (the net proceeds) is distributed to the co‑owners according to the court’s judgment. To get your share you must identify the court order and distribution, confirm lien and cost deductions, provide any required paperwork to the clerk or receiver, and — if distribution is delayed or contested — ask the court to enter an order directing payment.

How partition sales work under Texas law

When co‑owners cannot agree to divide or sell property, any co‑owner can file a partition action. Texas law authorizes partition by sale if division in kind is impractical. The court issues an order that directs sale procedures, fee payment, and distribution of sale proceeds. For the statutes governing partition, see Texas Property Code, Chapter 23: https://statutes.capitol.texas.gov/Docs/PR/htm/PR.23.htm.

Step‑by‑step: getting your net proceeds

  1. Confirm the final judgment and distribution order. Obtain a certified copy of the final partition judgment and any subsequent orders that specify how proceeds are to be divided. The judgment controls who gets what share.
  2. Check where the sale funds are held. After closing, funds may be held by the clerk of the court (in the court registry), by the appointed commissioner/receiver, or by the title company/closing agent. The sale paperwork or the court’s administrative docket entry will show who holds the funds.
  3. Review the settlement statement (closing statement). This itemizes gross sale price, commissions, closing costs, taxes, mortgages, liens, and other encumbrances. The net proceeds equal gross sale price minus approved deductions.
  4. Confirm payoff of liens and costs with priority in mind. Secured creditors (mortgages, tax liens) and court‑approved sale costs are paid first from the proceeds. The remainder is distributed according to ownership shares or the court order. If you suspect creditors were not properly paid, raise that issue with the court before distribution.
  5. Provide identification and any required forms. The clerk or closing agent may require a signed release, identification, and a completed IRS Form W‑9 (for issuing 1099s). If the clerk will issue a check, confirm the payee name and how you want to receive funds (check, wire).
  6. Request an order directing distribution if funds stall. If the holder of the funds refuses to release them despite a judgment, file a motion in the partition case asking the court to direct the clerk/receiver/title company to pay you the amount ordered. The court can enter a distribution order and a writ of execution if needed.
  7. Enforce the judgment if a co‑owner or third party interferes. If a co‑owner withholds a required signature or refuses to cooperate, you can ask the court to enforce the judgment, hold the party in contempt, or order alternative relief. If funds were paid improperly, you can seek a corrective order.

Common issues and how to handle them

  • Disputed contributions or credits among co‑owners: The court may allow credits (for mortgage payments, repairs, or taxes paid by one co‑owner) before distribution. Keep receipts and proof of payments. If the judgment didn’t address credits, you may need a separate court proceeding to resolve contribution claims.
  • Liens you did not know about: Recorded liens attach to proceeds. Verify title and lien payoffs shown on the closing statement; if a lien remains, notify the court immediately.
  • Funds in court registry: If proceeds sit in the court registry, you must file a motion and proposed order asking the court to direct distribution to the entitled parties. The clerk will act only on court orders or on agreed releases signed by all parties.

Practical checklist: documents and contacts to gather

  • Certified copy of the partition judgment and any distribution orders
  • Closing statement / HUD‑1 / ALTA settlement statement showing gross sale and deductions
  • Title commitment or title policy and lien payoff statements
  • Photo ID and completed W‑9 (for tax reporting)
  • Proof of any payments you made on the property (mortgage, taxes, repairs) if you will claim a credit
  • Contact info for the court clerk, receiver/commissioner, title company, and closing agent

When to get lawyer help

Consider hiring an attorney if:

  • The sale proceeds are being withheld or misapplied;
  • Liens or creditor claims dispute your share;
  • Co‑owners contest the distribution or claim credits not addressed by the judgment;
  • You need to compel a sale or enforce the judgment.

An attorney can file the necessary motions, handle contested accountings, and represent you at hearings to obtain a distribution order.

Tax and reporting notes

Proceeds from the sale may create capital gains or other tax consequences. The closing agent or title company may issue Form 1099‑S or other tax forms. Consult a tax professional about reporting sale proceeds and calculating gain or loss.

Example (hypothetical)

Suppose three co‑owners each own one‑third of a house. The court orders sale and the house sells for $300,000. After a $18,000 mortgage payoff, $12,000 in commissions and closing costs, and $2,000 in taxes, the net proceeds are $268,000. Each co‑owner’s gross share is $89,333.33, but if one co‑owner proved they paid $5,000 in repairs pre‑sale and the judgment allowed a credit, that co‑owner’s check would be adjusted accordingly. To receive the money, each co‑owner provides ID and a W‑9; the clerk issues checks pursuant to the court order.

Where to find the law

Texas governs partition actions in the Property Code. See Texas Property Code, Chapter 23: https://statutes.capitol.texas.gov/Docs/PR/htm/PR.23.htm. For local procedures, contact the district clerk where the partition case was filed.

Helpful Hints

  • Get a certified copy of the final judgment — it is the document the clerk will follow.
  • Ask for the closing/settlement statement immediately after sale to verify deductions.
  • Check the county clerk or court docket for any post‑sale orders affecting distribution.
  • Keep receipts of any payments you made relating to the property; ask the court for credit if the judgment allows.
  • If funds are in the court registry, file a simple motion and proposed order asking for distribution to you per the judgment.
  • Request written confirmation (check stub or court order) when the clerk or receiver disburses your funds.
  • Talk to a tax advisor about 1099s and capital gains reporting.
  • If you face obstruction or improper withholding, consider quicker relief such as an emergency motion to compel distribution or to hold a party in contempt.

Disclaimer: This article explains general Texas law principles about partition sales and distribution of proceeds. It is for informational purposes only and does not constitute legal advice. You should consult a licensed Texas attorney about your specific situation.

The information on this site is for general informational purposes only, may be outdated, and is not legal advice; do not rely on it without consulting your own attorney.