How will sale proceeds be divided among co-owners after a partition sale in New Mexico?

Short answer: After a court orders a partition sale in New Mexico, the sale proceeds are used first to pay liens, mortgages, property taxes, and the costs of the sale (including court costs and any attorney fees the court awards). Anything left is distributed to the co-owners according to their ownership interests (or after any court-ordered adjustments for contributions or equitable claims).

Detailed answer — how distribution usually works under New Mexico law

The court follows a few basic steps to convert the property into cash and distribute the proceeds. The exact procedure and priorities can vary with the facts, but the usual sequence is:

Determine ownership shares. The court first determines each co-owner’s legal interest. Co-owners may hold as tenants in common (each has a divisible share) or as joint tenants (right of survivorship). The court examines deeds, contracts, and recorded documents to decide percentages or legal status.
Satisfy secured liens and taxes out of the proceeds. Liens that attach to the property (mortgages, recorded judgment liens, unpaid property taxes) have priority and are paid from the sale proceeds. A mortgage recorded against the property must be paid or provided for from the sale before owners receive money. Local property tax liens are typically paid first. (See the New Mexico Legislature website for the statutory scheme that governs liens and priority: https://www.nmlegis.gov.)
Deduct costs of sale and court-ordered costs. The court deducts expenses directly related to the partition and sale. These commonly include court filing fees, costs of a court-ordered appraisal, broker or auction fees, closing costs, repairs required for sale, and any costs the court orders one party to pay. The court also may award reasonable attorney fees or costs to a party in certain circumstances and those awards reduce the proceeds as ordered.
Credit for advances, contributions, or reimbursements. If a co-owner paid mortgage payments, property taxes, insurance, or made significant improvements that benefited the property, the court can allow credits or adjustments before final distribution. The court’s accounting can reduce or increase a co-owner’s final share to reimburse contributions, subject to proof and equitable considerations.
Distribute remaining funds by ownership interest (adjusted by any credits). After paying liens, sale costs, and any court-allowed credits or awards, the court distributes the remaining balance to co-owners based on their legal percentage interests (unless the court orders a different split for equitable reasons). If a co-owner’s interest is subject to a separate lien (for example, a judgment against that co-owner), the creditor may reach that co-owner’s share.

Practical priorities — who gets paid first?

Tax liens and special assessments (often top priority)
Recorded mortgages and recorded liens against the property
Sale costs: broker, appraisal, repairs, closing costs
Court costs and any attorney fees the court orders
Remaining balance: distributed to owners per interest, adjusted for credits or liens on individual owners’ shares

How equitable claims and credits can change distribution

The court in a partition action has equitable powers. That means:

If one owner paid the mortgage for several years or advanced money to preserve the property, the court may order reimbursement or an offset against that owner’s share.
If one owner made material improvements that increased the property’s value, a court may give that owner credit for the reasonable value of those improvements, if proven.
If co-owners agree before the sale to a buyout or an adjusted sharing formula, the court often implements that agreement.

Hypothetical example (simple numbers)

Three co-owners own a house as tenants in common in these percentages: A = 50%, B = 30%, C = 20%. The court orders sale and the gross sale price is $300,000.

Outstanding mortgage and liens: $120,000 (paid from proceeds)
Sale costs (broker, closing, repairs, court fees): $20,000 (paid next)
Net remaining: $300,000 − $120,000 − $20,000 = $160,000
Assuming no special credits or adjustments, A receives 50% of $160,000 = $80,000; B receives 30% = $48,000; C receives 20% = $32,000.

If B had paid $10,000 in taxes that preserved the property and the court grants B reimbursement, that $10,000 would be paid to B before or as part of the division, reducing the amounts available to A and C proportionally or by the method the court orders.

Common complications to expect

Unrecorded agreements between owners may be hard to enforce without proof.
Creditors with recorded liens on the property are paid before owners take their shares.
A creditor with a judgment against an individual co-owner may levy that co-owner’s distributed share after distribution.
Disputes over who paid what (mortgage, taxes, improvements) often require an accounting and evidence (bank records, cancelled checks, receipts).
If the court orders partition in kind (rare for small parcels or homes), the physical division can change value allocations and require offsets or payments between owners.

What you should do now if you face a partition sale in New Mexico

Collect deeds, title documents, mortgage statements, tax bills, insurance invoices, and receipts for repairs or improvements—these documents support ownership shares and credit claims.
Check the county recorder’s office for recorded liens and mortgages affecting the property.
Consider whether co-owners can agree on a buyout or sale terms to avoid a contested court sale.
Ask an attorney familiar with New Mexico partition law to review your situation and, if necessary, represent you in court so the accounting of costs and credits is handled properly.
Visit the New Mexico Legislature website for statutory information and to identify specific statutes relevant to partition actions: https://www.nmlegis.gov

Where to look in New Mexico law

Partition actions are governed by New Mexico civil procedure and property law. The New Mexico Legislature website and the New Mexico courts’ websites provide statutes and procedures. For statutory text and updates, start at the New Mexico Legislature site: https://www.nmlegis.gov

Helpful hints

Keep good records. Documentation of payments and improvements is often decisive in getting credits.
Act quickly if you think someone will seek partition; early negotiation can avoid costly litigation.
Remember liens travel with the property; paying off mortgages before a sale can increase owner distributions, but make sure payoffs are properly documented.
If you are the sole mortgage payer but not the sole title owner, ask your attorney how to present that claim to the court for reimbursement.
Consider mediation or settlement—courts often encourage resolution and it can preserve more value for owners.

Disclaimer: This article explains general principles of New Mexico law for educational purposes only. It is not legal advice and does not create an attorney–client relationship. For advice about your specific situation, consult a licensed New Mexico attorney.