Can a co-tenant take out a home equity loan or refinance inherited property without my approval under South Dakota law?

Short answer: Generally, a co-tenant can apply for a loan using only their own undivided interest, but a mortgage or refinance signed by one co-tenant alone will only encumber that co-tenant’s interest in the property — not your entire ownership — unless you joined in the loan or deed. That said, a recorded mortgage or deed can create practical problems for the other co-owners (clouded title, foreclosure risks, or sale complications). South Dakota law gives you remedies such as asking a court for partition, quiet title, or injunctive relief. You should consult a South Dakota real estate or probate attorney promptly to protect your rights.

Detailed answer — what happens and what your rights are

1. Types of co-ownership and why it matters

When you inherit property with someone else, you most often hold it as tenants in common (each owner has an undivided share). The exact rights can depend on the deed language or the probate distribution. Key point: each tenant in common has the right to their share and may usually deal with their own share, but that right is limited in what it can affect.

2. Can one co-tenant mortgage or refinance the whole property?

No — a single co-tenant cannot bind another co-tenant’s ownership interest by taking out a loan alone. If a co-tenant signs a mortgage or refinance document without your signature, that lender obtains a lien only on the interest actually conveyed by the signing co-tenant. Practically, lenders usually require all owners’ signatures to create a mortgage on the full property, because a lender wants to secure the entire fee simple title. If the lender accepts only one owner’s signature, the lender’s security is limited to that owner’s fractional interest.

3. What happens if the other co-tenant records a mortgage or deed anyway?

Recording a mortgage or deed can cloud title and create a recorded encumbrance that shows up on title searches. Even though the mortgage may not encumber your undivided interest, it can:

Make it harder to sell or refinance the property without resolving the recorded lien.
Lead to a foreclosure action that targets the mortgagor’s interest and could ultimately force sale of the entire property through a partition or foreclosure sale depending on the remedy pursued by the lender or co-owner.
Result in claims against the signing co-tenant for fraud or unauthorized dealing if they misrepresented ownership to the lender or creditors.

4. What remedies are available under South Dakota law?

Common remedies include:

Quiet title action: Seek a court order clarifying ownership and removing unlawful or improperly recorded claims from the title.
Partition action: You can ask the court to partition the property (physically divide it if feasible) or order sale and distribute proceeds among co-owners. South Dakota courts have statutory procedures for partition and distribution. See the South Dakota Codified Laws for actions related to partition and remedies: https://sdlegislature.gov/Statutes/Statutes.
Injunction or temporary restraining order: If a co-tenant tries to sell or remove equity, you may seek immediate court intervention to stop transfers while the dispute is resolved.
Claims against the co-tenant: If the co-tenant acted fraudulently, secretly encumbered the property, or otherwise violated fiduciary-like duties (in some inherited-property scenarios), you may have a tort or equitable claim for damages or rescission of the encumbrance.
Title insurance and lender coordination: If you have title insurance, notify the title company. If a lender recorded a mortgage against only one owner’s interest, the title company or lender may help resolve the cloud depending on policies and the lender’s knowledge.

5. How lenders typically handle inherited/co-owned property

Most lenders require all owners to join a refinance or new mortgage to get enforceable claims on the full property. If the lender relaxed that policy, it usually did so because it accepted a limited lien or because some form of signature or power of attorney was presented. If you suspect misrepresentation to a lender, that is an important fact to raise with counsel.

6. Practical consequences and timelines

Recorded documents can cause fast practical effects:

Title searches will show recorded mortgages or deeds almost immediately.
If a mortgagee starts foreclosure, response deadlines and statutory notice periods apply — act quickly or you can lose rights. South Dakota statutes govern foreclosure procedures and timing; you can review statutory foreclosure requirements at the South Dakota Legislature’s site: https://sdlegislature.gov/Statutes/Statutes.

What you should do right away

Obtain a copy of the recorded deed(s) and any recorded mortgage or deed of trust from the county register of deeds (public records).
Order a title search or title report to identify who signed what and the order of recorded interests.
Contact the lender (if any) to confirm the scope of the mortgage and how it was presented to them.
Do not sign any documents or agree to terms without legal advice.
Consult a South Dakota real estate or probate attorney immediately — especially if you receive foreclosure notices or see the property listed for sale.

Helpful Hints

Keep documentation: save the original deed, probate paperwork, letters, emails, and any recorded instruments.
Check the county recorder/registrar: recorded mortgages and deeds are public records. Verify dates and parties on the recorded documents.
Act quickly if you receive foreclosure notices — statutory deadlines can be short and missing a deadline may limit remedies.
Ask the lender whether they required all co-owners to sign and whether they relied on any power of attorney or affidavit; that information can reveal defects in the mortgage’s enforceability against your interest.
Consider alternative dispute resolution — mediation can resolve co-tenant disputes faster and cheaper than litigation in some cases.
Remember taxes and insurance: even if another co-tenant places a lien, you still need to address property taxes and insurance to avoid further liens or penalties.

Relevant South Dakota resources

South Dakota Legislature — Statutes (search partition, foreclosure, mortgages, probate): https://sdlegislature.gov/Statutes/Statutes

County Register of Deeds — for recorded deeds and mortgages (search your county’s official site)

Final notes and next steps

While a co-tenant can attempt to encumber only their interest, recorded loans or deeds can create serious complications that affect all owners. Your best next steps are to get the recorded documents, order a title search, and consult a South Dakota real estate or probate attorney immediately to evaluate whether to pursue quiet title, partition, injunctive relief, or other remedies.

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