Detailed Answer

Short version: When you sell real property in South Dakota, mortgage balances and secured liens are normally paid from the sale proceeds at closing before owners split the remaining money. Property taxes and many typical carrying costs (insurance, HOA dues, utilities) are often prorated or handled at closing, but whether you can recover extra carrying costs you personally paid depends on ownership, any written agreements, and whether you are resolving the issue in a sale between co-owners, a partition action, or a divorce. You should keep receipts and documentation and consider negotiating a written settlement or asking a court for equitable contribution if parties cannot agree.

How closing normally treats mortgage, taxes, and liens

At a sale closing, the title company or closing agent typically uses the gross sale proceeds to pay off any recorded mortgages and other liens that have priority. Property taxes (and sometimes special assessments) are usually prorated between buyer and seller so each pays the portion for the time they owned the property. Those payments and lien payoffs occur before net proceeds are distributed to owners. That means you normally will not have to “include” mortgage principal in your claimed share — the mortgage is satisfied first out of the sale money.

When you can recover carrying costs you paid

Recovering non-lien carrying costs you personally paid (examples: mortgage payments you made while another co-owner lived in the home, insurance, maintenance, utilities, or property taxes you advanced) depends on the relationship and the facts:

Co-owners with an agreement: If co-owners (including nonmarried partners) have a written agreement allocating expenses or repayment on sale, the agreement controls. Get the written terms enforced at settlement or in court.
Sale between co-owners without an agreement: South Dakota courts may allow an owner who paid necessary expenses to claim reimbursement from sale proceeds through an equitable accounting or contribution claim. Courts look at fairness, who benefited, and the parties’ conduct. Documentation matters.
Partition actions: If co-owners cannot agree and one files to partition the property, a court may order sale and decide equitable adjustments for payments one owner made. The court can award reimbursement for necessary expenditures that preserved value or reduced lien exposure.
Divorce and marital property: In a divorce, the family court divides marital property equitably. The court considers contributions and may credit one spouse for mortgage payments, taxes, or maintenance they paid using separate funds or on behalf of the marriage. How the court treats these payments depends on whether they are marital or separate property and on the facts of the case.

Typical priorities and practical effect

Secured mortgage and recorded liens are paid first from sale proceeds.
Closing commonly prorates property taxes and HOA dues so each party pays their share up to closing.
Unsecured carrying costs (repairs, utilities, insurance paid personally) are not automatically reimbursed by the buyer or by the closing agent; recovery depends on agreement or court order.

Steps to protect your right to reimbursement

Keep written records and receipts for mortgage payments, taxes, insurance, maintenance, and utilities you paid.
Review title and payoff statements at closing to confirm mortgages and liens are being satisfied.
Ask for prorations and credits in the settlement statement (HUD-1/Closing Disclosure) so taxes and HOA dues are addressed.
If you expect reimbursement from co-owners, get a written agreement or ask the closing agent to reflect agreed credits in the net distribution instructions.
If parties cannot agree, consider negotiating a mediated settlement. If that fails, consult an attorney about filing a partition action, or asserting equitable contribution in a civil or family court proceeding.

Hypothetical examples (to illustrate)

Example A — Two siblings co-own a rental; one pays the mortgage and property taxes for two years. At sale, the closing pays off the mortgage. The sibling who advanced payments can try to show the court or the other sibling that an equitable credit is due for the net benefit, supported by records.

Example B — In a divorce, one spouse used separate inheritance funds to pay the mortgage during the marriage. The court will review whether that created a credit or required reimbursement when dividing property.

Where to look for rules and more information

South Dakota statutory and case law governs property division, partition, and family law matters. For the state’s codified laws, see the South Dakota Legislature site: https://sdlegislature.gov/Statutes/. Specific court decisions and local court rules can further affect outcomes.

When to talk to an attorney

Consult an attorney if:

Co-owners disagree about who gets what from sale proceeds.
One party advanced large sums and wants a formal accounting or court order.
You are divorcing and need to divide real property and credits for payments made.
A lender, IRS, or tax assessor claims unpaid amounts that could affect net proceeds.

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

Helpful Hints

Gather proof: bank statements, canceled checks, loan payoff statements, tax receipts, invoices for repairs, and HOA billing history.
Get the settlement statement (Closing Disclosure) early and review line items for mortgage payoff and prorations.
If you expect reimbursement, ask for written agreement before closing and include credits in the closing instructions.
Keep communications in writing; emails and signed letters help later if there is a dispute.
Consider mediation before filing a lawsuit — it’s faster and often cheaper than court.
Be aware that unsecured personal payments (like utilities or cosmetic repairs) are harder to recover unless they preserved or increased property value.