Detailed Answer
When co-owners in Missouri cannot agree on dividing real property, one owner may file a partition action under RSMo § 512.250 et seq. Any existing mortgage on the property remains a valid lien and must be satisfied from the sale proceeds before distributing funds to the co-owners. Missouri law treats mortgages as encumbrances that “follow the land” into a partition sale fund.
Here’s how the process works:
- Court Orders Sale: Under RSMo § 512.260, the circuit court directs a public sale of the property. The sale brings in gross proceeds.
- Payment of Liens and Costs: From the gross proceeds, the court pays:
- Sale expenses (commissions, advertising)
- Property taxes and assessments
- Mortgage liens in priority order (first-recorded mortgages first)
- Distribution of Net Proceeds: After satisfying liens and costs, the remaining balance—known as the net proceeds—goes to the co-owners. The court distributes it according to each owner’s legal share in the property as established in the petition or by agreement. See RSMo § 512.270.
- Deficiency Claims: If the sale proceeds are insufficient to cover the full mortgage balance, the mortgagee may seek a deficiency judgment against the debtor-owner for the unpaid balance, subject to Missouri’s deficiency statutes.
Hypothetical example: Two siblings each own 50% of a house. A mortgage of $100,000 is recorded. The court orders a sale, and the property fetches $150,000. After $5,000 in sale costs and $100,000 mortgage payoff, the net $45,000 is split equally, giving each sibling $22,500.
Disclaimer: This article is for informational purposes only and does not provide legal advice. Consult a qualified attorney to discuss how Missouri law applies to your specific situation.
Helpful Hints
- Verify lien priority by checking the recording dates in the county recorder’s office.
- Ask the court for an itemized accounting of sale costs and lien payoffs.
- Consider whether co-owners want to bid jointly at sale to retain the property.
- If you worry about a deficiency, discuss potential negotiations or bankruptcy options with counsel.
- Keep up with property taxes to avoid senior tax liens that get paid before mortgages.