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<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>I’m a little late on this thread,
but that’s what retirement will do for you. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>No, partition doesn’t give you the
ability to sell free and clear of liens, receivership or bankruptcy can.
Underwater property presents a nice challenge. Evaluate whether 1) your client
is at risk of owing a deficiency to a lender, 2) your client could get hit with
the tax bill for phantom income, and 3) whether your client could actually
collect anything from co-owner after getting judgment on an accounting. For 1 –
letting the property go to non-judicial foreclosure may be preferable. For 2 –
again, non-judicial foreclosure is a better option. If the answer to 3 is
yes, then the rest of it may be worth the expense of litigation through to a
judgment on an accounting. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>I dealt with several under-water
properties in partitions. In one case one side was not at risk on the mortgage,
so I deeded 100% of the property to the other party. On another, where the
circumstances made it reasonable that the party who wanted to keep the house
would be able to enhance the value and refinance, I deeded to that party on an
Order which gave them 18 months to refinance or we would be back to square one.
<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>Rebecca Wiess<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>Retired<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
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<p class=MsoNormal><b><font size=2 face=Tahoma><span style='font-size:10.0pt;
font-family:Tahoma;font-weight:bold'>From:</span></font></b><font size=2
face=Tahoma><span style='font-size:10.0pt;font-family:Tahoma'> wsbarp-bounces@lists.wsbarppt.com
[mailto:wsbarp-bounces@lists.wsbarppt.com] <b><span style='font-weight:bold'>On
Behalf Of </span></b>Eric Nelsen<br>
<b><span style='font-weight:bold'>Sent:</span></b> Monday, January 05, 2015
4:37 PM<br>
<b><span style='font-weight:bold'>To:</span></b> WSBA Real Property Listserv<br>
<b><span style='font-weight:bold'>Subject:</span></b> Re: [WSBARP] Partition of
upside-down property - 3 questions</span></font><font size=3
face="Times New Roman"><span style='font-size:12.0pt;font-family:"Times New Roman"'><o:p></o:p></span></font></p>
</div>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color="#1f497d" face=Calibri><span
style='font-size:11.0pt;color:#1F497D'>I sent this out shortly before Christmas
and got a few helpful answers, but I'm sending it around again hoping that
someone might have some insight into #1. I haven't seen case law confirmation
that a partition sale at auction sells free and clear of mortgages, and I don't
know if it's actually true.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color="#1f497d" face=Calibri><span
style='font-size:11.0pt;color:#1F497D'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color="#1f497d" face=Calibri><span
style='font-size:11.0pt;color:#1F497D'>Bob Ordal suggested the revamped
receivership statutes as an alternative to partition, and that explicitly
provides for sale "free and clear of liens." It's a great idea and I'm
looking into that, but I do still wonder if anyone has seen partition used in a
similar fashion.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color="#1f497d" face=Calibri><span
style='font-size:11.0pt;color:#1F497D'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color="#1f497d" face=Calibri><span
style='font-size:12.0pt;color:#1F497D'>Sincerely,<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color="#1f497d" face=Calibri><span
style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color="#1f497d" face=Calibri><span
style='font-size:12.0pt;color:#1F497D'>Eric<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color="#1f497d" face=Calibri><span
style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color="#1f497d" face=Calibri><span
style='font-size:12.0pt;color:#1F497D'>Eric C. Nelsen<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color="#1f497d" face=Calibri><span
style='font-size:12.0pt;color:#1F497D'>SAYRE LAW OFFICES, PLLC<o:p></o:p></span></font></p>
<p class=MsoNormal><st1:Street w:st="on"><st1:address w:st="on"><font size=3
color="#1f497d" face=Calibri><span style='font-size:12.0pt;color:#1F497D'>1320
University St</span></font></st1:address></st1:Street><font size=3
color="#1f497d"><span style='font-size:12.0pt;color:#1F497D'><o:p></o:p></span></font></p>
<p class=MsoNormal><st1:place w:st="on"><st1:City w:st="on"><font size=3
color="#1f497d" face=Calibri><span style='font-size:12.0pt;color:#1F497D'>Seattle</span></font></st1:City><font
size=3 color="#1f497d"><span style='font-size:12.0pt;color:#1F497D'> <st1:State
w:st="on">WA</st1:State> <st1:PostalCode w:st="on">98101-2837</st1:PostalCode></span></font></st1:place><font
size=3 color="#1f497d"><span style='font-size:12.0pt;color:#1F497D'><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color="#1f497d" face=Calibri><span
style='font-size:12.0pt;color:#1F497D'>phone 206-625-0092<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color="#1f497d" face=Calibri><span
style='font-size:12.0pt;color:#1F497D'>fax 206-625-9040<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color="#1f497d" face=Calibri><span
style='font-size:11.0pt;color:#1F497D'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color="#1f497d" face=Calibri><span
style='font-size:11.0pt;color:#1F497D'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color="#1f497d" face=Calibri><span
style='font-size:11.0pt;color:#1F497D'><o:p> </o:p></span></font></p>
<div>
<div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'>
<p class=MsoNormal><b><font size=2 face=Tahoma><span style='font-size:10.0pt;
font-family:Tahoma;font-weight:bold'>From:</span></font></b><font size=2
face=Tahoma><span style='font-size:10.0pt;font-family:Tahoma'> wsbarp-bounces@lists.wsbarppt.com
[mailto:wsbarp-bounces@lists.wsbarppt.com] <b><span style='font-weight:bold'>On
Behalf Of </span></b>Eric Nelsen<br>
<b><span style='font-weight:bold'>Sent:</span></b> Monday, December 22, 2014
1:29 PM<br>
<b><span style='font-weight:bold'>To:</span></b> WSBA Real Property listserve
(wsbarp@lists.wsbarppt.com)<br>
<b><span style='font-weight:bold'>Subject:</span></b> [WSBARP] Partition of
upside-down property - 3 questions<o:p></o:p></span></font></p>
</div>
</div>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'>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:<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'>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.)<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'>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 <a
href="http://app.leg.wa.gov/rcw/default.aspx?cite=7.52&full=true#7.52.440">RCW
7.52.440</a> (the owelty-for-unequal-partition statute)?<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'>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?<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face=Calibri><span style='font-size:12.0pt'>Sincerely,<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face=Calibri><span style='font-size:12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face=Calibri><span style='font-size:12.0pt'>Eric
C. Nelsen<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face=Calibri><span style='font-size:12.0pt'>SAYRE
LAW OFFICES, PLLC<o:p></o:p></span></font></p>
<p class=MsoNormal><st1:Street w:st="on"><st1:address w:st="on"><font size=3
face=Calibri><span style='font-size:12.0pt'>1320 University St</span></font></st1:address></st1:Street><font
size=3><span style='font-size:12.0pt'><o:p></o:p></span></font></p>
<p class=MsoNormal><st1:place w:st="on"><st1:City w:st="on"><font size=3
face=Calibri><span style='font-size:12.0pt'>Seattle</span></font></st1:City><font
size=3><span style='font-size:12.0pt'> <st1:State w:st="on">WA</st1:State>
<st1:PostalCode w:st="on">98101-2837</st1:PostalCode></span></font></st1:place><font
size=3><span style='font-size:12.0pt'><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face=Calibri><span style='font-size:12.0pt'>phone
206-625-0092<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face=Calibri><span style='font-size:12.0pt'>fax
206-625-9040<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'><o:p> </o:p></span></font></p>
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