Detailed Answer

This FAQ explains how sale proceeds get divided after a court-ordered partition sale of real property in Texas. This is an educational overview only and not legal advice. For statute language on partition procedure in Texas, see the Texas Property Code, Chapter 23: Texas Property Code, Chapter 23.

1. Who owns what: determining each co-owner’s share

The court first determines each co-owner’s ownership interest. Texas co-owners commonly hold property as:

Tenants in common — each owner has a distinct fractional share (e.g., 60%/40%).
Joint tenants with right of survivorship — ownership may pass by survivorship rather than by share allocation.
Community property (married couples) — the law presumes a 50/50 community share unless deeds or agreements show otherwise.

The deed, title records, and any written agreements control. If the records are unclear, the court will examine evidence (deeds, contribution history, agreements) to fix each owner’s share.

2. Court sale versus partition in kind

When physical division (partition in kind) is practical and fair, the court may divide the land rather than sell it. If physical division is impractical or would greatly reduce value, the court orders a sale and divides the proceeds. Texas law authorizes partition and sale procedures; see Chapter 23 of the Texas Property Code: https://statutes.capitol.texas.gov/Docs/PR/htm/PR.23.htm.

3. How sale proceeds are distributed — priority order

After a partition sale, the court or the appointed commissioner follows a priority sequence when distributing sale proceeds. The typical order is:

Costs and expenses of the sale and partition proceeding (appraiser/commissioner fees, advertising, court costs, title work, closing costs).
Payment of liens and encumbrances that attach to the property (mortgages, tax liens, judgment liens) in their order of priority. Valid, recorded liens are generally paid from proceeds before distribution to owners.
Reimbursement for amounts a co-owner advanced that the court deems liens or enforceable claims (for example, payment of property taxes or mortgage payments for which a lien exists or a court orders contribution).
The remaining balance is distributed among co-owners according to their determined ownership interests, subject to any court-ordered adjustments for inequitable contributions or allowances for improvements, waste, or rents and profits.

4. Adjustments among co-owners

The court can adjust the plain fractional split when fairness requires it. Common adjustments include:

Credit for a co-owner who paid more than their share of mortgages, taxes, insurance, or necessary repairs.
Debiting a co-owner responsible for waste or damage.
Reimbursement for improvements paid by one co-owner that increase the property’s value if the court finds an equitable basis for repayment.

These adjustments require proof (receipts, cancelled checks, accountings) and a court finding that the adjustment is equitable.

5. Example (hypothetical)

Three people own a lot as tenants in common: A (50%), B (30%), C (20%). The court orders a sale for $300,000. The property has a mortgage of $60,000 (first lien) and sale/closing costs of $15,000.

Step-by-step:

Pay mortgage: $60,000
Pay sale/closing costs: $15,000
Remaining proceeds: $225,000
Distribute according to shares: A gets 50% ($112,500), B gets 30% ($67,500), C gets 20% ($45,000), unless a co-owner successfully proves they should receive credit or a deduction for contributions or liabilities.

6. Common complications

These factors often complicate distribution:

Unrecorded agreements that affect shares. A private agreement may govern, but the court will require proof.
Intervening creditors or liens recorded after the co-owners acquired the property.
Claims for reimbursement by a spouse claiming separate property contributions against community property.
Tax consequences — sale may trigger capital gains tax; consult a tax professional.

7. What you can do as a co-owner

If you are a co-owner facing a partition sale:

Gather title documents, deeds, mortgage statements, receipts for taxes, insurance, repairs, and records of any agreements about ownership shares.
Object in the partition case if you believe the sale price is unfair or the proposed distribution ignores valid credits or liens.
Ask the court for an accounting that shows sale proceeds, lien payoffs, and specific distributions before the court approves final disbursement.
Consider settlement with co-owners (buyout, agreed division) to avoid sale costs and delay.

8. Where to read the law

Texas partition rules and procedure are in the Texas Property Code, Chapter 23. Read the chapter here: Texas Property Code, Chapter 23 — Partition.

Disclaimer

This article explains general principles under Texas law and uses hypothetical examples. It is educational only and not legal advice. Laws change and each case depends on its facts. For advice about your situation, consult a licensed Texas attorney.

Helpful Hints

Check the deed and title report first — they usually state each owner’s recorded share.
Record and organize receipts for taxes, mortgage payments, repairs, and improvements to support reimbursement claims.
If possible, negotiate a buyout or negotiated partition in kind to save time and costs.
Remember liens recorded against the property will usually be paid from sale proceeds before owner distributions.
Ask the court for a clear accounting and a written order specifying how the proceeds will be allocated before disbursement.
Consult a Texas-licensed lawyer early if disputes over shares, credits, or liens arise — deadlines and procedures matter.