Detailed answer

This FAQ explains when and how mortgage payments, property taxes, homeowners insurance, HOA fees, utilities, and repair costs (collectively called “carrying costs”) can affect the amount you receive when a property is sold under Maryland law. I will cover common ownership situations and practical steps to claim a credit or reimbursement. This is general information and not legal advice.

1. Which ownership situation matters?

• Tenants in common: Each co-owner owns a fractional share. When the property is sold, co-owners normally split net proceeds according to shares. A co-owner who paid more than their share of carrying costs can often seek an accounting and a credit or reimbursement for those payments. Courts hearing partition actions or private settlements can award adjustments to reflect out-of-pocket payments that preserved or increased the property’s value.
• Joint tenants or tenancy by the entirety (spouses): Joint-tenancy rights (including right of survivorship) generally govern ownership. In a divorce, marital property rules apply and the court uses equitable distribution principles to divide assets — including credits for separate funds used to pay carrying costs. For tenancy by the entirety between spouses, divorce or equitable distribution proceedings determine division of proceeds.
• Probate or estate sales: If the property is sold after an owner’s death, estate administrators must account for encumbrances and may reimburse an estate or an heir for necessary expenses paid to preserve the property before sale.

2. What kinds of payments can be credited?

Common categories and how courts typically treat them:

• Mortgage principal payments: Principal payments reduce the mortgage balance and therefore increase owners’ equity. If one co-owner used separate funds to pay down principal, courts commonly treat those payments as increasing that owner’s equity and may credit them when dividing proceeds.
• Mortgage interest: Interest is a cost of carrying the debt. Courts are less likely to treat interest as increasing equity, but may allow reimbursement if the paying co-owner can show it was reasonable and necessary to preserve the property (for example, to avoid foreclosure) and the other co-owners benefited.
• Property taxes, insurance, HOA fees, utilities: These are carrying expenses that maintain the property’s marketability. Courts and buyers often treat necessary, documented payments as reimbursable or as items that reduce the distributable proceeds before shares are computed.
• Repairs and improvements: Routine repairs needed to preserve the property (e.g., fixing a roof leak) are more likely to be reimbursed than cosmetic upgrades — although a court may treat an improvement that increased sale value as an investment deserving reimbursement or contribution to proceeds.

3. Practical examples (hypotheticals)

Example A — Tenants in common:

Two unrelated co-owners (50/50) sell a house. Net sale proceeds after paying off the mortgage and closing costs are $100,000. One co-owner paid $10,000 of mortgage principal in the year before sale and $2,000 in property taxes and $1,000 in emergency repairs from personal funds. If the other owner made no payments, a court or agreement may credit the paying owner roughly $13,000 (principal + taxes + repairs) before splitting remaining proceeds. That owner would then receive about $63,000 vs. $37,000 for the other owner, subject to precise accounting.

Example B — Married couple in divorce:

Spouses own a home as marital property. One spouse paid the mortgage from separate inheritance funds. In equitable distribution, the court may (but is not required to) credit that spouse for the separate funds used to pay equity-increasing principal. The outcome depends on the court’s valuation, contributions, and the division factors the judge considers.

4. Rules of thumb Maryland courts use

• Document everything: receipts, cancelled checks, bank statements, invoices, and proof that payments came from your account or separate funds.
• Distinguish principal vs. interest: principal increases equity; interest is an expense. Courts commonly treat principal payments more favorably when awarding credits.
• Show benefit to the property: payments that prevented foreclosure, kept the property insured, paid taxes, or preserved value are more likely to be reimbursed.
• Get a formal accounting in a partition or family law proceeding if co-owners do not agree.

5. Where to raise these claims in Maryland

If co-owners cannot agree, you can ask a Maryland court for relief:

• Partition action (sale and division among co-owners) — a request for an accounting and allocation of expenses can be part of this action.
• Divorce / equitable distribution — raise claims for reimbursement or credit during asset division.
• Probate or estate administration — present claims to the personal representative if you paid expenses preserving the estate’s property.

Maryland Courts offer self-help information about family and property matters: Maryland Courts — Real Property Self-Help and Maryland Courts — Family Law Self-Help. For Maryland statutes and searching the law, you can use the Maryland General Assembly site: mgaleg.maryland.gov.

6. Documentation and proof you should collect

• Cancelled checks, bank or credit-card statements showing payments.
• Receipts and invoices for repairs and services.
• Mortgage statements showing principal vs. interest portions of payments.
• Tax bills and proof of payment.
• HOA statements, insurance invoices, and proof of payment.
• Any written agreements between co-owners about who pays what.

7. How to ask for a credit or reimbursement

1. Try to negotiate with co-owners first. Present your documentation and propose an accounting or adjustment before sale.
2. If negotiation fails, file a partition action (tenants in common) or raise the issue in divorce or probate proceedings.
3. Ask the court for a detailed accounting of rents, profits, taxes, mortgage payments, and other expenses, and for an equitable credit or reimbursement where appropriate.

8. Common pitfalls

• Failing to document payments — undocumented claims are hard to win.
• Assuming interest payments are treated like principal — they generally are not.
• Not considering lender priorities — the mortgage must be paid off at closing; reimbursements occur from the net proceeds or by court order.

Because outcomes depend on the facts and the type of proceeding, consider consulting a Maryland attorney if large sums or contentious disputes are involved. You can find local counsel through the Maryland State Bar Association or the Maryland Courts’ lawyer referral resources.

Disclaimer: This article is educational only and is not legal advice. For advice about your specific situation, consult a licensed Maryland attorney.

Helpful Hints

• Keep a dedicated folder for all property-related payments and correspondence; digital copies are fine if legible.
• Separate mortgage payments into principal and interest when you tally contributions.
• Request a mortgage amortization or payment history from the lender to prove principal reduction.
• If you plan to pay carrying costs and want credit later, get a written agreement from co-owners when possible.
• Before selling, get an estimate of net proceeds so you can see how reimbursements would change distributions.
• For contested matters, consider an accountant or real-estate attorney to prepare an accounting you can present to the court or mediator.