How co-owners should handle mortgage payoffs and repair costs before splitting sale proceeds

Detailed Answer

This answer explains how co-owners in Nevada can require documentation (mortgage statements, payoff figures, repair receipts, etc.) before dividing proceeds from a sale of jointly owned real property. It uses general Nevada law principles and practical steps you can take. This is educational information only and not legal advice.

What matters legally before proceeds are divided?

When jointly owned property is sold — whether by agreement between owners or after a court-ordered partition — the sale proceeds are distributed after valid liens and priorities are satisfied. In Nevada, a mortgage or deed of trust that is recorded against the property remains a lien on the property and must generally be paid from the sale proceeds or otherwise cleared before owners can split the remaining money.

Key legal points:

Liens and recorded encumbrances are paid from sale proceeds in priority order. Owners cannot divide proceeds without addressing mortgages and other liens first.
Who signed the mortgage matters. If only one co-owner signed the mortgage, the lender’s claim is still a lien on the property; the other co-owner may not be personally liable to the lender but the lien still reduces sale proceeds.
Contributions for mortgage payments, taxes, insurance, repairs or improvements can affect how net sale proceeds are equitably divided. Nevada courts in partition or accounting disputes will consider who paid what and whether payments were necessary to preserve value.

Can you legally require the other co-owner to produce mortgage statements and repair receipts?

Yes — in practical and legal ways:

If the co-owners are cooperating, include a written condition in any sale agreement that each owner produce mortgage payoff statements, lien releases, and documentation of out‑of‑pocket repairs or improvements before any distribution. A written agreement that spells out deadlines and required documentation is enforceable contractually.
If the co-owner refuses to cooperate, you can request documents informally in writing and threaten litigation or mediation. If that fails, you can file a partition action in Nevada district court. In a partition action the court can order an accounting and require production of relevant documents and receipts as part of resolving how proceeds should be divided. See Nevada’s statutes governing partition actions: Nevada Revised Statutes, Chapter 40 (Partition) — https://www.leg.state.nv.us/NRS/NRS-040.html.
The court can adjust distributions to account for mortgage payments, extraordinary repairs, or improvements. That adjustment is equitable: the court examines records and may give credit to a co-owner who paid mortgage installments, taxes, or necessary repairs that preserved or increased the property’s value.

What types of documents you should demand

Current mortgage payoff statement or payoff demand from the lender showing principal, interest, fees, and per‑diem interest.
Recorded deed(s), deed of trust(s), or other recorded liens (search the county recorder’s office).
Receipts, invoices, canceled checks, or credit card records for repairs and improvements (labor and materials), including contractor estimates and permits if applicable.
Proof of who paid property taxes, insurance premiums, homeowners association dues, and utility bills during the ownership period.
Any written agreements between co-owners about contributions, improvements, or how proceeds will be divided.

How a Nevada court typically resolves disputes about contributions and credits

In a partition/accounting, Nevada courts apply equitable principles. The court will usually:

Determine and pay valid liens from sale proceeds (mortgages, recorded judgments, tax liens).
Order an accounting of payments made by each co-owner for mortgage installments, taxes, insurance, repairs, and improvements.
Allow credits to a co-owner who made necessary payments that preserved or enhanced the property, subject to proof (receipts, bank records, invoices). Unreasonable or cosmetic expenditures that did not benefit all owners may not be fully credited.
Divide any remaining net proceeds according to ownership shares, after adjustments for credits and debits shown by the accounting.

Practical example (hypothetical)

Two co-owners (A and B) own a rental house as tenants in common. Only A signed the mortgage originally, but both used the house. A paid the lender for two years and also paid for a new roof. B paid no mortgage installments but claims not liable to the lender because B’s name is not on the mortgage.

At sale, A should produce payoff statements showing the outstanding mortgage balance; both should produce receipts for repairs and taxes. If B refuses, A can file a partition with an accounting request. The court will likely order the mortgage paid from sale proceeds and may give A credit for mortgage payments and the roof cost if A proves payment and if the roof was necessary or increased value. The remainder is then split according to each owner’s interest after credits.

Statutes and where to look

Partition and accounting procedures are governed by Nevada law. For statutory guidance see Nevada Revised Statutes, Chapter 40 (Partition): https://www.leg.state.nv.us/NRS/NRS-040.html. For general rules on recording conveyances and liens, search Nevada Revised Statutes, Chapter 111: https://www.leg.state.nv.us/NRS/NRS-111.html.

Helpful Hints

Request documents in writing. A dated written request creates a record you can use in court or mediation.
Order a title/lien search from the county recorder or a title company to identify all recorded encumbrances before sale.
Get lender payoff demands directly from the lender if possible. Payoff letters are the surest way to establish the mortgage amount to be deducted from proceeds.
Keep originals or certified copies of receipts and canceled checks; bank statements can corroborate payments.
If the other owner refuses to cooperate, consider mediation before filing a lawsuit — it’s faster and cheaper. If mediation fails, a partition action can compel production of records and provide an accounting.
Consider a temporary escrow arrangement for disputed proceeds. An escrow agent can hold disputed funds pending resolution so neither party can spend the money prematurely.
Consult a Nevada attorney about filing a partition and an accounting petition to protect your rights if negotiations break down.

Disclaimer: This article provides general information about Nevada law and is not legal advice. It does not create an attorney-client relationship. For advice tailored to your facts, consult a licensed Nevada attorney.