Detailed Answer
In Virginia partition actions, mortgage obligations remain secured by the property. When co-owners cannot agree on dividing real estate, one may file a court-ordered partition under Virginia Code §§ 8.01-92 to 8.01-110. If the court finds in favor of partition by sale, it orders a public auction. The sale proceeds must first satisfy all liens—including existing mortgages—before distributing any surplus to co-owners.
1. Survival of Mortgage Liens
Virginia Code § 8.01-96 makes clear that liens on the land are not cut off by partition. Instead, they attach to the proceeds of sale. See Va. Code Ann. § 8.01-96.
2. Priority and Payment Sequence
The court clerk or commissioner overseeing the sale must apply the proceeds in this order:
- Costs of sale (advertising, auctioneer or commissioner fees).
- Senior mortgage liens, paid in order of recordation.
- Junior mortgages and other recorded encumbrances.
- Any remaining balance is divided among co-owners according to their ownership interests.
Virginia follows a “first in time, first in right” rule for recorded liens. See Va. Code Ann. § 55-55 for lien priority.
3. Hypothetical Example
Suppose Alice and Bob co-own a parcel subject to a $200,000 mortgage recorded in 2020 and a $50,000 second mortgage recorded in 2021. They pursue a partition by sale and the court sells the property for $300,000. After $5,000 in sale costs, the court pays the 2020 lender $200,000, then the 2021 lender $50,000. The remaining $45,000 distributes to Alice and Bob based on their shares (e.g., 50/50 yields $22,500 each).
Key Point: Mortgage liens survive partition and must be paid from sale proceeds before owners receive any funds.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Helpful Hints
- Obtain a comprehensive title search to identify all recorded liens before filing for partition.
- Request up-to-date payoff statements from each mortgage lender.
- Evaluate whether an in-kind partition (dividing land into parcels) is feasible to avoid sale costs.
- Consider negotiating a private buyout to handle lien payments outside of court.
- Consult a qualified attorney to review complex lien priorities or multiple encumbrances.