Detailed Answer
In Tennessee, a partition action lets co-owners force the sale or physical division of jointly owned property. Existing mortgages create liens that attach to the property until paid off. Under Tenn. Code Ann. § 29-28-106 (source), a court-ordered sale must satisfy all recorded liens before distributing proceeds.
First, the court identifies all mortgages and lienholders. It orders the sale of the property, often at public auction. The sale generates gross proceeds. Next, the court applies those proceeds to:
- Mortgage payoffs in priority order based on recording dates. Priority follows Tennessee’s recording act (Tenn. Code Ann. § 66-24-101 – source).
- Outstanding property taxes and special assessments.
- Court costs and expenses of sale (e.g., auctioneer fees, advertising).
The court then allocates the net proceeds among co-owners according to their ownership interests. For example, if two owners each hold a 50% share, they each receive half of the remaining funds. If one co-owner has independently advanced funds to reduce the mortgage balance, the court may grant that co-owner equitable credit before dividing the net proceeds.
Helpful Hints
- Collect title reports to identify all liens and their priorities.
- Work with a title company or attorney to confirm mortgage balances before filing for partition.
- Consider negotiating a payoff with mortgage holders to streamline the sale process.
- Keep detailed records of any payments made toward liens to claim credits in court.
- Explore an in-kind partition (dividing the land) if it avoids a costly sale.
Disclaimer: This article is for informational purposes only. It does not constitute legal advice. Consult a licensed attorney for advice on your specific situation.