N.C. Ct. of App.: Townsend v. Watts- Partition Sale and Affect on Lienholders

Summary: Siblings, Townsend and Simmons owned real property as tenants in common. Townsend brought suit seeking a partition sale of the property, naming Simmons the lienholder, Citimortgage and the City of Greensboro, as defendants. After the trial court found that due to the size and nature of the property actual partition of the property could not be made without injury to the parties and ordered a partition sale. The property, despite having a tax value of $160,000.00, sold at the partition sale for $2,500.00. The Court of Appeals upheld the partition sale, finding that the clerk of court had made findings, based on the previous failed sales history, neighboring house values and condition of the property, sufficient to support the $2,500.00 value. Further, however, the Court of Appeals rejected the argument by Simmons that the sale would cause her irreparable harm, as the property was sold subject to the liens of the City of Greensboro and Citimortgage. Instead, the Court of Appeals held that as Greensboro and Citimortgage were named parties to the partition action, N.C.G.S. § 46-30 provides that “the purchaser takes the interests in the property that the lienholder had such that the lienholder loses its lien on the property.” Then “[i]ntending purchasers will likely bid more for property when they know they are getting a perfect title freed from all incumbrances the amount of which they probably do not know.” Holley v. White, 172 N.C. 77, 78, 89 S.E. 1061, 1062 (1916), Commentary: Boom. This is, at least for properties where there are co-owners, the solution to the problem of mortgage servicers declining to foreclose. In such circumstance, the co-owners should seek a partition sale of the property, name the Lienholder as parties to the partition sale, selling the property free and clear of all liens. For a copy of the opinion, please see: Townsend v. Watts- Partition Sale and Affect on Lienholders