Rhode Island — Handling Mortgages, Taxes, and Carrying Costs When Selling Joint Property | Rhode Island Partition Actions | FastCounsel
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Rhode Island — Handling Mortgages, Taxes, and Carrying Costs When Selling Joint Property

August 12, 2025 5 min read

Splitting sale proceeds from jointly owned real estate in Rhode Island

Detailed answer — how carrying costs, mortgages, and taxes are handled

When co-owners sell real property in Rhode Island, the money that comes in at closing is not simply split evenly without adjustment. Two separate rules are important:

  • Legal liens (mortgages, recorded tax liens, mechanic’s liens) that attach to the property are paid from the sale proceeds first.
  • After lienholders are paid, co-owners or the court may require an accounting so that owners who advanced payments to preserve or maintain the property can seek reimbursement or credit against the remaining proceeds.

Key points explained:

1) Mortgages and other recorded liens

Mortgages and properly recorded liens are debts against the property. Under Rhode Island practice, the closing agent or title company pays those liens from the sale proceeds before owners split what remains. The presence of a mortgage does not depend on who signed the deed; it depends on whether the mortgage is recorded against the parcel. In other words, the lender’s payoff gets priority over owner distributions.

2) Property taxes and municipal liens

Unpaid property taxes typically create a tax lien on the property. Those liens must ordinarily be satisfied out of sale proceeds at closing. The municipal collection and enforcement process is governed by Rhode Island tax law; check the Title 44 statutes for details about tax liens and collection procedures: Rhode Island General Laws, Title 44 (Taxation).

3) Carrying costs paid by one owner (mortgage payments, insurance, repairs, HOA fees)

If one co-owner paid more than his or her “share” of carrying costs (for example, continued to make mortgage payments, paid property taxes, insurance, or major repairs to prevent loss of value), that owner may be entitled to reimbursement or credit.

How that works in practice:

  • If co-owners have a written agreement (partnership agreement, buy‑sell, or co-ownership agreement) that specifies how advances are handled, the written agreement controls.
  • If there is no agreement, Rhode Island courts in partition or equity actions typically require an accounting. Courts can award contribution, reimbursement, or an equitable lien for necessary payments that preserved the property’s value. See Rhode Island’s partition statutes for how courts handle disputes over jointly owned real property: Rhode Island General Laws, Title 34 — Partition of Real Property.
  • Payments that benefitted the property (necessary mortgage payments to avoid foreclosure, taxes to avoid tax sale, repairs that preserved marketability) are more likely to be credited than payments that were purely optional or excessive.

4) Example (hypothetical)

Two unmarried co-owners own a house. Sale price at closing: $300,000. Mortgage payoff: $100,000. Delinquent property taxes lien: $2,000. Closing costs and realtor fees: $18,000. One owner, Sam, paid the monthly mortgage and insurance for two years after the other owner moved out, advancing $12,000 beyond Sam’s 50% share. After the closing pays the mortgage, taxes, and closing costs, the remaining net proceeds are divided. Sam can ask for an accounting and request credit or reimbursement for the $12,000 he advanced if a court finds those payments were necessary to protect the property’s value. If the co-owners instead had a signed agreement saying no reimbursements would be made, that agreement usually governs.

5) Divorce and equitable distribution

If the sale happens in a divorce, Rhode Island’s equitable distribution rules apply. The Family Court will divide marital property and consider contributions and debts when allocating proceeds. See Rhode Island General Laws on domestic relations for statutory guidance: Rhode Island General Laws, Title 15 (Domestic Relations).

6) Practical limits and defenses

  • Court will not always fully reimburse voluntary or luxury expenditures that did not protect or enhance the property.
  • If a co-owner made payments that also covered living benefits (for example, paid mortgage and lived in the property), the court may account for the benefit received when calculating reimbursement.
  • Timing matters — a prompt demand for accounting and documentation strengthens a reimbursement claim.

Steps to protect your right to reimbursement or credit

  1. Keep detailed records and receipts for mortgage payments, taxes, insurance, repairs, and HOA fees you pay.
  2. Keep all bank records and canceled checks; request copies of payoff statements from the lender and tax authorities.
  3. Ask for a written accounting from the co-owner(s) and from the closing agent showing liens, payoffs, and net proceeds.
  4. If there is a dispute, consider a partition or accounting action in Rhode Island Superior Court; partition statutes describe the court’s authority to divide and account for jointly owned property: R.I. Gen. Laws, Title 34 — Partition.
  5. If the sale happens as part of a divorce, raise the payment and contribution issues with your attorney or the Family Court under Rhode Island’s domestic relations statutes: R.I. Gen. Laws, Title 15.

Helpful hints

  • Before selling, pull the title report or pay‑off statements so you know which liens will be paid from proceeds.
  • Get a closing statement (HUD‑1/Closing Disclosure). It shows exactly how proceeds were used and what remains to be divided.
  • Create a written co‑ownership agreement if you plan to own property together; it prevents later disputes about advances and reimbursements.
  • Keep records of communications with co‑owners about payments and repairs (emails, letters, text messages).
  • Talk to a Rhode Island real estate attorney if you expect a dispute — an attorney can demand an accounting, advise on equitable liens, and explain how state statutes and case law apply to your facts.

Where to look in Rhode Island law

General references you can review online:

Disclaimer: This article explains general legal principles under Rhode Island law for educational purposes only. It is not legal advice, and it does not create an attorney-client relationship. For guidance about a specific situation, consult a licensed Rhode Island attorney.

The information on this site is for general informational purposes only, may be outdated, and is not legal advice; do not rely on it without consulting your own attorney.