Delaware — Can a Co-Owner Be Required to Provide Mortgage Statements and Repair Receipts Before Dividing Sale Proceeds?

How this works in Delaware (plain language)

If two or more people co-own real estate, each owner normally has a right to a proportionate share of the sale proceeds. However, that “share” is net of the property’s debts and of any amounts one owner can prove they paid on behalf of the property (for example, mortgage payments, repair bills, taxes, or necessary improvements).

Before you divide the proceeds, you should know three things:

• What mortgages or other liens exist and the current payoff amounts;
• Which co-owner actually paid mortgage installments, taxes, insurance, or repair costs; and
• Whether there is any agreement (written or verbal) allocating who pays what or who gets credited for payments or improvements.

Mortgage liens and recorded encumbrances attach to the property and generally must be paid out of sale proceeds in order of priority. Contributions by one co-owner (for mortgage payments, repairs, or taxes) can often be credited against that co-owner’s share, but the co-owner seeking credit must document those expenditures with statements, pay-off letters, receipts, cancelled checks, or other reliable proof.

What Delaware law and courts say (overview and where to look)

Partition and accounting disputes among co-owners are routinely handled by Delaware courts. Equitable remedies — including an accounting of contributions and judicial partition — are available when co-owners disagree. For general Delaware property law, see the Delaware Code, Title 25 (Property): https://delcode.delaware.gov/title25/.

The Court of Chancery and other Delaware courts resolve equitable disputes about contributions, credits, and the fair division of proceeds. For the Court of Chancery (information about equitable relief and accounting), see: https://courts.delaware.gov/chancery/.

Key points drawn from Delaware practice:

• Mortgage payoffs and recorded liens generally must be satisfied from sale proceeds before owners split the balance.
• A co-owner who paid mortgage installments, property taxes, insurance, or repair bills can typically seek reimbursement or a credit, but must document the payments.
• If co-owners cannot agree about credits, the court can require an accounting and decide who gets credit and how the sale proceeds are allocated.

Practical steps you can take now

1. Send a written request to the co-owner asking for mortgage statements, payoff letters, repair receipts, cancelled checks, invoices, and any written agreements about contributions. Keep a copy of your request.
2. Ask the lender for an official payoff statement. A lender will usually provide a payoff letter that shows the exact amount to satisfy the mortgage.
3. Collect and preserve evidence of your own payments (bank records, cancelled checks, wire receipts, credit-card statements, invoices, contractor receipts).
4. Consider an escrow sale. If the parties disagree about credits, an escrow agent can hold sale proceeds while the parties negotiate or a court resolves disputes.
5. If the co-owner refuses to cooperate, consider filing a partition action or a petition for an accounting in the Delaware courts so a judge can order document production and allocate proceeds fairly.

How courts typically allocate credits for mortgage payments and repairs

Courts look for objective evidence. Typical outcomes include:

• Mortgage payoffs: Payoff letters or lender statements will reduce the gross sale proceeds to satisfy the lender before owners split the remainder.
• Mortgage installments paid by one co-owner: If one owner paid more than their share of mortgage payments, taxes, or insurance, the paying owner may get a credit against the sale proceeds if they can prove the payments.
• Repairs and improvements: Ordinary repairs necessary to maintain the property often generate reimbursement claims. Major improvements that increase value can also produce credits or shared increase in value, but courts will examine whether the expenditures were authorized and whether they truly add value.
• Unauthorized spending: If a co-owner made unnecessary or extravagant expenditures without the others’ agreement, the court may deny full reimbursement (or limit credit).

What to expect if you go to court

If you file a partition or accounting action, the court can:

• Order discovery (document production) so the co-owner must provide mortgage statements, receipts, and other proofs;
• Order an accounting of payments and contributions;
• Order the property sold and direct how the net proceeds are distributed, after paying valid liens and crediting proven contributions; and
• Award costs or attorney fees in limited circumstances.

Hypothetical example

Suppose A and B own a house 50/50. A made several mortgage payments and paid $6,000 in roof repairs. B refuses to supply receipts. A can:

1. Ask the lender for payoff statements and ask the contractor for receipts.
2. Send a written demand to B for proof of B’s payments and any agreements.
3. If B still refuses, file a petition for partition or an accounting. The court can compel documents, confirm the mortgage payoff amount, decide whether A’s $6,000 is reimbursable, and then order the sale and split the net proceeds after credits.

Helpful Hints

• Make written requests and keep copies — courts prefer documented attempts to resolve disputes.
• Obtain lender payoff letters yourself as early as possible — lenders will provide official payoff amounts for a fee or on request.
• Preserve receipts, bank statements, cancelled checks, and contractor invoices to support any reimbursement claim.
• Consider mediation to avoid court — it can be faster and cheaper than litigation for co-owner disputes.
• Use escrow for sale closings when ownership disputes exist; an escrow agent can hold proceeds until issues are resolved.
• Talk to a Delaware attorney if the other co-owner refuses to cooperate — a lawyer can file for discovery or a partition/accounting action to compel production and resolution.