Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
Detailed Answer
Under Nevada law, a partition action allows co-owners of real property to divide the property or force a sale when they cannot agree on its use. Mortgages and other liens remain attached to the property through a partition sale. The court supervises the sale and the distribution of proceeds under Nevada Revised Statutes (NRS) Chapter 40 (NRS 40.010–40.140).
1. Priority of Liens: Mortgages recorded before partition maintain their priority. Senior liens (earlier mortgages) must be paid in full from the sale proceeds before distributing any balance to co-owners. Junior liens (later mortgages or judgments) rank in order of their recording date and follow the same rule.
2. Sale Proceeds and Costs: At sale, the court clerk applies the proceeds first to sale costs (auctioneer fees, advertising, court costs) and then to satisfy outstanding mortgages and liens in priority order. See NRS 40.070(1).
3. Net Distribution: After all liens and costs are paid, the net balance is distributed to the co-owners according to their ownership interests (e.g., 50/50 split for two equal tenants in common). If a co-owner wishes to keep the property, they may buy out other interests by assuming or paying off the mortgage.
4. Redemption Rights: Nevada law does not provide a statutory redemption period following a partition sale. Once the sale occurs, co-owners cannot redeem the property unless they reach a private agreement before closing.
Hypothetical Scenario
Owners A and B each hold a 50% interest in a parcel with a $100,000 recorded mortgage. A partition sale yields $250,000. After $15,000 in sale costs, the mortgage is paid in full, leaving $135,000. Each owner then receives $67,500 (50% of the net proceeds).
Helpful Hints
- Verify lien priority by obtaining a title report.
- Estimate sale costs and mortgage balance before filing for partition.
- Consider negotiating a buyout to avoid public sale.
- Review NRS 40.070 for distribution rules (link).
- Consult a real estate attorney to review mortgage and lien implications.