Disclaimer: This article is for educational purposes only and does not constitute legal advice.
Detailed Answer
Partition Procedure under Vermont Law
In Vermont, co-owners may seek a judicial partition pursuant to 12 V.S.A. Chapter 159 (12 V.S.A. Chapter 159). A court can order the property sold and the proceeds divided among co-owners according to their fractional interests.
Mortgage Liens and Recording Priority
Existing mortgages encumber the entire parcel and remain attached in a partition sale. Vermont’s recording act follows a race-notice system. Under 27 V.S.A. § 1202, a recorded mortgage has priority over later claims (27 V.S.A. § 1202), and § 1204 outlines how lien priority applies (27 V.S.A. § 1204).
Application in a Partition Sale
When the court orders a sale, the clerk applies proceeds in this order:
- Pay off recorded mortgages and other liens by priority.
- Deduct sale costs, advertising, and court fees.
- Distribute remaining funds to co-owners based on their ownership percentages.
If a co-owner holds a separate, properly recorded mortgage on the property, that lien attaches to their portion of the proceeds.
Co-Owner Contributions and Credits
The court may adjust distributions if one co-owner proves they paid more than their share of mortgage installments, taxes, or significant improvements. Co-owners should present receipts or bank records to request equitable credits.
Practical Considerations
Before filing a partition, co-owners often negotiate buyouts or mediation to avoid the costs and delays of litigation. Voluntary agreements can preserve more value than a forced sale.
Helpful Hints
- Check the local Registry of Deeds for mortgage recordings and liens before a partition action.
- Compile records of mortgage payments, tax bills, and improvement costs to support any credit claims.
- Consider mediation or settlement discussions to agree on sale terms and distribution methods.
- Consult an attorney early to understand your rights under 12 V.S.A. Chapter 159 and to draft any necessary agreements.
- Record any new liens or agreements before initiating partition to secure priority in distribution.