Disclaimer: This article is for educational purposes only and does not constitute legal advice.
Detailed Answer
1. Partition Actions Under Pennsylvania Law
When co-owners cannot agree on property use, either may file a partition action under the Pennsylvania Partition Act (68 P.S. §§ 701–728). The court can order physical division if practical, but will usually order a public sale of the entire property and division of sale proceeds among co-owners.
2. Mortgages and Partition Sales
If the property is subject to one or more mortgages, any purchaser at the partition sale takes the property subject to existing liens (68 P.S. § 709). The sale proceeds must first satisfy the mortgage liens before distribution to co-owners.
3. Applying Proceeds to Mortgage Liens
At closing, the sale agent pays the mortgagee(s) the full payoff amounts. Pennsylvania law requires ranking lienholders by priority date: senior mortgage liens attach first, followed by junior liens (68 P.S. § 711). After satisfying all mortgages, the net proceeds go into the court’s registry for distribution.
4. Distribution Among Co-Owners
The court allocates net proceeds according to each owner’s share of ownership, as reflected in deeds or agreements. A co-owner whose interest was encumbered by a mortgage effectively receives a reduced share equal to their equity interest after mortgage pay-off.
5. Deficiency Judgments and Personal Liability
If sale proceeds do not cover the mortgage balance, the lender may pursue a deficiency judgment against the mortgagor co-owner under Pennsylvania’s mortgage laws. The partition action does not discharge personal liability for any deficiency.
6. Multiple Mortgages and Redemption Rights
When multiple mortgages exist, the court follows lien priority. Co-owners may have the right to redeem another’s interest by paying off a mortgage lien before sale, but this rarely occurs in practice. Any redemption must comply with statutory procedures and timing requirements.
Helpful Hints
- Understand your ownership share: Review deeds to confirm your percentage.
- Check for existing liens: Order a title search to identify mortgages or judgments.
- Anticipate sale costs: Court fees, advertising, and broker commissions reduce net proceeds.
- Monitor payoff statements: Confirm precise mortgage balances before sale to avoid surprises.
- Consult an attorney: Early guidance can help protect your equity and manage liability.