Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
Under Maine law, when co-owners seek to partition real estate, existing mortgage obligations remain attached to the property and must be addressed before any owner can receive proceeds from a sale. Maine recognizes two types of partition:
- Partition in Kind: The court divides the land into separate parcels. A co-owner who takes a parcel subject to the mortgage must continue paying the debt, unless parties agree otherwise.
- Partition by Sale: The court orders the property sold and distributes the net proceeds.
When the court orders a sale, Maine Rev. Stat. tit. 14, §6408 requires that sale costs and any valid liens, including mortgages, be satisfied first. Lien holders are paid in the order their interests were recorded. See Maine Rev. Stat. tit. 14, §6408. Mortgages run with the land and bind subsequent purchasers under Maine Rev. Stat. tit. 33, §481.
After paying those obligations, the clerk calculates each co-owner’s share based on their ownership interest. If one co-owner contributed more toward mortgage payments, that co-owner may claim a credit against their share under equitable principles.
In cases where the mortgage balance exceeds the sale price, co-owners may receive little or no net proceeds. Liens junior to the mortgage receive payment only if sufficient funds remain.
Helpful Hints
- Review your mortgage documents to determine the current balance and any prepayment penalties.
- Confirm lien priority by checking the recording dates in the county recorder’s office.
- Consider negotiating a buyout where one co-owner assumes the mortgage in exchange for equity credit.
- Ask the court about credits for parties who paid more than their share of the mortgage before sale.
- Consult an attorney to understand how equitable credits and legal fees might affect your net distribution.