Detailed Answer
Under Wisconsin law, partition actions by sale are governed by Wis. Stat. § 842.01 et seq. (https://docs.legis.wisconsin.gov/statutes/statutes/842). When co-owners cannot physically divide property, the court orders a sale. Existing mortgage obligations remain attached as liens on the property and follow strict priority rules.
At a partition sale, the court distributes proceeds in this order:
- Costs of sale (court costs, appraisal fees, commissions)
- Satisfaction of liens and mortgages by priority (senior mortgages first, junior mortgages next)
- Any remaining balance divided among co-owners according to their ownership shares
Mortgage liens survive a partition sale. Once the property is sold, the sale proceeds serve as the substitute “res” for the original property. Mortgagees receive payment from those proceeds. If sale proceeds are insufficient to satisfy a mortgage, the mortgagee may pursue a deficiency judgment against the debtor under Wis. Stat. § 846.03 (https://docs.legis.wisconsin.gov/statutes/statutes/846).
Example Hypothetical:
Alice and Bob co-own a parcel—Alice holds 60%, Bob holds 40%. A single mortgage of $100,000 encumbers the property. The court orders a partition sale, and the property sells for $130,000. After $5,000 in sale costs, $125,000 remains. The lender is paid $100,000. The $25,000 balance is split: Alice receives $15,000 (60%) and Bob $10,000 (40%).
Helpful Hints
- Verify all liens and mortgage amounts before sale.
- Understand that senior liens always get paid before junior liens.
- Sale costs—appraisal, legal and commission fees—reduce net proceeds.
- If proceeds don’t cover a mortgage, the lender may seek a deficiency judgment.
- Consider negotiating a buyout or private sale to avoid court costs.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney about your specific situation.