Court Clarifies Tenant-In-Common Interest Subject to Garnishment

By: Barry White

There are a number of different ways that multiple parties can own real estate together. One way is as “tenants-in-common.” Tenants-in-common each own a separate undivided interest in the property. A recent Supreme Court of Wisconsin case decided what portion of a payment due tenants-in-common could be garnished to satisfy the debts of one of the owners.

In Prince Corp. v. Vandenberg, 2016 WI 49, decided June 23, 2016, four individuals owned property as tenants-in-common. The four tenants-in-common had sold the property on a land contract, and a final payment of $113,900 was about to be made under the land contract. However, one of the tenants-in-common had an outstanding judgment against him as well as outstanding tax warrants docketed by the Wisconsin Department of Revenue (DOR). The judgment creditor sought to garnish the entire $113,900 payment and the Department of Revenue ultimately got involved in the case claiming its tax warrants had priority over the other creditor’s judgment.

Ultimately, the Supreme Court determined that the DOR had priority and was entitled to garnish only that portion of the $113,900 that was owed to the individual with the tax warrants (not any portion of the $113,900 that was owed to the other three tenants-in- common). The court concluded that garnishment does not give the garnishor any greater rights than the debtor would have had. Thus, the DOR could only recover the debtor’s portion of the $113,900 payment (presumably one-fourth). While this result may seem obvious, it is worthwhile to note that Court of Appeals had held that the DOR was entitled to garnish the entire $113,900 payment. The Supreme Court reversed that decision noting, “any other result would prejudice the [other three tenants-in-common] by allowing the DOR to garnish a portion of [the] final payment that is not owed to [the debtor] but, rather, is owed to the [others] as the remaining three tenants-in-common.”

Learn more about this court decision.

 

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