How North Dakota law treats mortgage, property tax, and carrying-cost payments when real estate is sold

This FAQ explains, in plain language, when you can recover mortgage payments, property taxes, and other carrying costs from the proceeds of a sale of real property in North Dakota. It covers common situations (co-owners who are not married, and divorcing spouses) and describes practical steps to protect your rights. This is educational information only and is not legal advice.

Detailed answer

Basic rule: lien holders and net proceeds

When real property is sold, the sale proceeds first pay any liens and closing costs. That means the mortgage lender (or other secured creditor) is paid from sale proceeds before any owner receives money. After liens and closing costs are paid, the remaining money (the net proceeds) is divided among the owners according to their legal ownership interests or the court’s order.

If you are a co-owner (tenants in common or joint tenants)

For co-owners who are not married, the starting point is the owners’ agreed shares. If ownership is 50/50, each owner normally receives half of the net proceeds after liens and closing costs are satisfied. However, one co-owner who paid more than his or her share of carrying costs (mortgage payments, taxes, insurance, maintenance) can often seek reimbursement or an accounting from the other co-owner(s).

Specific outcomes depend on the facts: whether the payments were required, whether the paying owner has documentation, whether the payments came from separate funds, and whether the other owner verbally or in writing agreed to contribution. If owners cannot agree, a court can resolve the claim—either in a partition action (ask the court to sell the property and divide proceeds) or by a separate civil claim for contribution or unjust enrichment.

If the property is sold in a divorce (dissolution of marriage)

North Dakota uses equitable division for marital property. In divorce, courts divide marital property fairly, not necessarily equally. A spouse who paid mortgage, taxes, or other carrying costs may be entitled to reimbursement or a credit, depending on whether the property is marital or separate, the source of the payments, and other equitable factors.

For example, if one spouse used separate funds to pay down a mortgage on jointly owned real estate, the paying spouse may ask the court to reimburse that contribution or to give a credit when dividing proceeds. The court evaluates all relevant factors—duration of marriage, contributions to the marriage, economic circumstances, and any written agreements between the spouses.

How courts typically treat these payments

• Mortgage payments: Payments that reduced the loan balance generally increase the payer’s equity in the property. If the mortgage is paid out of sale proceeds, the payer’s extra contributions may justify a credit or reimbursement claim against the other co-owner(s) or the marital estate.
• Property taxes and insurance: If taxes and insurance were billed to the property and prorated at closing, a buyer usually reimburses the seller for the seller’s portion up to closing. Among co-owners or spouses, payments of taxes and insurance can justify an accounting or contribution claim if one party paid more than their share.
• Repairs and maintenance: Necessary repairs and maintenance that preserve value are more likely to be reimbursed than voluntary improvements. Major improvements may increase sale price, and reimbursement may be treated differently (e.g., as an increase to the payer’s equity or as part of the proceeds available for distribution).

Practical examples

Example 1 — Two non-married co-owners:

Sam and Lee own a house as tenants in common (50/50). Sam paid the mortgage for two years while Lee was unable to pay. When they sell, the mortgage lender is paid out of the sale price; the remaining net proceeds are divided 50/50 unless Sam gets a court-ordered reimbursement. Sam can ask Lee to reimburse half of the mortgage payments made on Lee’s behalf, but Sam must show records of the payments and prove Lee benefited. If Lee refuses, Sam can file a partition action or a claim for contribution.

Example 2 — Divorce:

In a divorce, if one spouse used separate inheritance funds to pay off part of the mortgage on the family home, the court may treat that payment as a claim for reimbursement to the extent it increased that spouse’s separate-property interest. The exact remedy depends on whether the house is classified as marital property and the court’s equitable considerations.

Timing and practical effects at closing

At a real estate closing, payoffs to mortgage lenders and lienholders are standard. Buyers and closing agents usually prorate property taxes and prepaid items so no owner bears expenses for periods after sale. If you expect a reimbursement from a co-owner, document the claim before closing and, if possible, obtain a written agreement allocating proceeds or credit. Without an agreement, you may need a court to enforce your claim after the sale.

How to make a claim or protect your right to reimbursement

1. Keep detailed records: canceled checks, bank statements, mortgage payoff statements, invoices for taxes, insurance, and repairs.
2. Get a written agreement: if practicable, get co-owners to sign a written allocation of proceeds or repayment plan before sale.
3. Ask for an accounting: request a full accounting of payments and contributions from the co-owner or the spouse.
4. If needed, file a court claim: in a partition action, the court can order sale and determine each owner’s share; in divorce, raise reimbursement claims in the property division process.
5. Talk to a lawyer early: an attorney can evaluate whether your payments create a right to reimbursement (equitable lien, constructive trust, or a contribution claim) and advise on timing and likely outcomes.

Relevant North Dakota resources

North Dakota statutes and court resources do not always use one uniform label for these claims, but useful state resources include the North Dakota Century Code and the North Dakota court self-help resources:

• North Dakota Century Code (statutes): https://www.legis.nd.gov/cencode
• North Dakota Courts — self-help and family law pages: https://www.ndcourts.gov/legal-resources/self-help

Helpful Hints

• Document everything: payments, dates, and any agreements. Records are the strongest proof.
• Understand liens first: lenders are paid from sale proceeds before owners split the remainder.
• Insist on a closing statement: review the HUD-1 or Closing Disclosure to see lien payoffs and prorations clearly.
• Ask for written acknowledgements: if a co-owner agrees to reimburse you, get it in writing and, if possible, recorded.
• Consider mediation: disputes over reimbursement often resolve faster and cheaper in mediation than in court.
• Consult an attorney for partition or divorce: timing, statute of limitations, and the right claim (accounting, contribution, equitable lien) affect success.
• When divorcing, raise contribution/reimbursement issues early in pleadings so the court can address them in the property division process.

Disclaimer: This article explains general legal principles under North Dakota law and is for informational purposes only. It is not legal advice. For advice about your specific situation, consult a licensed North Dakota attorney.