How Hawaii Law Treats Mortgage, Property Taxes, and Carrying Costs When You Sell Joint Property

Short answer: Sometimes — but not automatically. If you paid the mortgage, property taxes, or other carrying costs while property was jointly owned, you may be able to recover those payments or receive a credit against the sale proceeds. Recovery depends on the ownership arrangement, any written agreements, the nature of the payments (necessary maintenance vs. improvements), whether you sought contribution from co-owners, and whether a court becomes involved.

Detailed answer

Start here: what matters is whether the property was owned solely by you, owned jointly (joint tenants or tenants in common), or owned as part of a marriage or business. The rules differ by relationship.

1. If you were sole owner

If the title was only in your name, you control the sale and the proceeds. Payments you made for mortgage, taxes, insurance, or repairs simply reduce the mortgage balance (if you paid the lender) or were part of your ongoing cost of ownership. You don’t “add” those costs back to proceeds when you sell — they were expenses of ownership. However, mortgage payments that reduced principal increased your equity; that equity is reflected in sale proceeds.

2. If you owned with others (co-owners)

When two or more people own without a written agreement allocating payment responsibility, Hawaii law generally treats co-owners as sharing rights to possession and obligations to share necessary expenses. Key points:

• Mortgage payments: Most mortgages are obligations to the lender, not between co-owners. If you alone paid the mortgage, you did reduce the loan balance and thus increased the equity in the property. That increased equity does not automatically become your separate property. Instead, you typically have a right to seek contribution from the other co-owners for their share of the payments. A court in an accounting or partition can order reimbursement or a credit for amounts paid by one co-owner that benefited all.
• Property taxes and necessary carrying costs (insurance, HOA dues, reasonable repairs): These are generally considered necessary costs of ownership. If one co-owner pays them, that person usually can demand contribution from the others for their proportional shares.
• Improvements vs. repairs: Money spent on necessary repairs and maintenance is more likely to be fully reimbursable. Money spent on capital improvements (adding a pool, major remodel) may increase the property’s value; the paying owner may be entitled to either reimbursement or an allowance for the added value, but courts often offset recovery by any increase in value and by depreciation.

In practice, co-owners often handle this by:

• Agreeing in writing on division of expenses or credits before a sale;
• Keeping receipts and accounting records for all payments;
• Asking for contribution while the property is still jointly owned. If a co-owner refuses, the paying owner can seek a formal accounting.

3. If the property sale follows a divorce, probate, or a tenancy in common partition

Court proceedings often include an accounting step. In divorce property division or probate distributions, the court may order reimbursement for necessary expenses paid by one party. In a partition action (court-ordered sale or division of jointly owned real estate), Hawaii courts can order an accounting, reimbursements, or credits so that the share of the sale proceeds reflects contributions and necessary expenses paid by one owner for the benefit of all.

Typical outcomes you can expect in Hawaii

• If you paid mortgage principal that reduced the joint loan balance, you may be credited for the equity increase attributable to that principal reduction.
• If you paid taxes, insurance, HOA dues, or necessary repairs, you can usually claim contribution from co-owners or seek a credit at sale.
• If you made major improvements, you may get either reimbursement or compensation tied to how much those improvements increased the sale price, less any depreciation.
• Absent agreement, the remedy is often an equitable accounting or a court-ordered distribution that credits the paying co-owner.

Practical steps to protect your position

1. Keep detailed records. Save mortgage statements, canceled checks, receipts for taxes, insurance, repairs, and communications with co-owners.
2. Get written agreements. Before spending large sums, get co-owners to sign an agreement about how payments will be treated at sale.
3. Request contribution early. Put co-owners on notice that you expect reimbursement or credit—send a written demand and keep proof of delivery.
4. Consider escrow or title-company handling at sale. If co-owners cannot agree, a purchase escrow can hold sale proceeds while parties sort out claims or while a partition action proceeds.
5. Talk to a Hawaii real estate attorney. An attorney can explain rights under local law, help prepare formal accounting claims, and, if needed, file a partition action or a claim in family court.

Example (hypothetical)

Two siblings own a house as tenants in common. One sibling has been paying the mortgage, property taxes, and homeowner’s insurance for three years because the other lives elsewhere and did not contribute. When they sell, the sibling who paid these costs can ask for a share of the sale proceeds that reflects reimbursement for those payments. If they cannot agree, a Hawaii court in a partition or accounting action can determine how much credit the paying sibling should receive before dividing the remainder.

When to get legal help in Hawaii

Talk to an attorney if:

• Co-owners refuse to contribute or dispute the amount owed;
• You face a divorce, probate, or partition where the property is an asset to be divided;
• Large sums were spent on improvements and parties disagree about credit or reimbursement;
• Title or mortgage obligations complicate dividing proceeds.

Helpful hints

• Document everything: mortgage and tax payments, receipts for repairs, and communications about expense sharing.
• Prefer written agreements. Oral promises are harder to enforce in court.
• Ask the title company for the payoff statement when selling to confirm mortgage balance and how mortgage payments affected equity.
• Keep improvement records separate from routine maintenance to simplify accounting later.
• Consider mediation before suing. Mediation is faster and less expensive than court and often resolves credit disputes.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. I am not a lawyer. Laws and outcomes vary by situation. For advice tailored to your facts, consult a licensed Hawaii attorney.