[WSBARP] Partition of upside-down property - 3 questions

[Jeff Davis]

I don't have answers to these questions but attached is a helpful article
about the partition process.

 

Jeff Davis

 

From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Eric Nelsen
Sent: Monday, December 22, 2014 1:29 PM
To: WSBA Real Property listserve (wsbarp at lists.wsbarppt.com)
Subject: [WSBARP] Partition of upside-down property - 3 questions

 

Co-tenants have a parcel that probably won't sell for enough to pay off the
mortgage. Co-tenants disagree on what to do so the client is contemplating
(well, I am contemplating on behalf of client) whether partition could help.
Three questions:

 

1. It seems to me that once the property sells at auction, proceeds will go
to pay the mortgage, which won't be fully satisfied. But the buyer will take
free and clear of the mortgage, correct? So lender is left with suit for a
personal judgment as only recourse on the loan. (I know the practical
disadvantages for the client; I'm just thinking about the strict legal
effects.)

 

2. Say the client pays in some amount, to take care of the excess mortgage
balance at the time of sale, and avoids that problem. Would that payment be
justification for a compensatory judgment against the other co-tenant under
RCW 7.52.440
<http://app.leg.wa.gov/rcw/default.aspx?cite=7.52&full=true#7.52.440>  (the
owelty-for-unequal-partition statute)?

 

3. Client also has paid more on the property expenses in the past, so in an
accounting upon the partition, client should receive about $30,000 more than
the co-tenant. But there's no equity to divide--so does client get a
judgment against the co-tenant under RCW 7.52.440? Or does the accounting
action under a partition only allow for adjusting division of net proceeds?

 

Sincerely,

 

Eric C. Nelsen

SAYRE LAW OFFICES, PLLC

1320 University St

Seattle WA  98101-2837

phone 206-625-0092

fax 206-625-9040

 

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