Disclaimer: I am not a lawyer. This article provides general information about Texas law and is not legal advice. For advice about your specific situation, consult a licensed Texas attorney.
Short answer
It depends on (1) who owns the property (community property vs. one person’s separate property), (2) whether a lender or tax lien must be paid at closing, and (3) whether you have a legal or contractual right to be reimbursed for carrying costs. In most sales the lender and tax liens are paid first from the sale proceeds, prorations are handled at closing, and ordinary carrying costs (insurance, utilities, maintenance) are not automatically added to one owner’s share unless an agreement or court order provides for reimbursement.
Why ownership matters (community vs. separate property)
Texas presumes property acquired during marriage is community property, but separate property belongs to the individual spouse who acquired it before marriage or by gift or inheritance. How proceeds are split depends on that classification. See Texas Family Code Chapter 3 for an overview of community property concepts: Texas Family Code, Chapter 3.
What happens at a typical real‑estate closing
- Mortgage and liens: Any outstanding mortgage and recorded liens (including some tax liens) are paid at closing out of the sale proceeds as required by the lender/title company. Those amounts reduce the gross sales proceeds before owners receive their shares.
- Property taxes: Taxes that are liens are generally paid or prorated at closing. If taxes are past due, the title company will typically require payment (or escrow) from the proceeds so the buyer receives clear title.
- Prorations: Current year property taxes, HOA dues, and other recurring items are usually prorated between buyer and seller on the closing statement. The seller commonly receives credit for prepaid items and pays for items that accrued during the seller’s ownership period.
- Carrying costs like utilities, repairs, insurance: These are not liened against the title and typically do not get paid automatically from sale proceeds unless the parties agreed otherwise or a court orders reimbursement.
Common fact patterns and how they are treated under Texas law
1) Routine sale by co‑owners (not divorce)
If co‑owners sell jointly, the closing statement (HUD/ALTA) shows payment of mortgages, liens, and prorations. After those amounts, the remaining net proceeds are split according to ownership shares (tenancy in common, joint tenancy, etc.). If one co‑owner paid extra carrying costs (insurance, utilities, repairs) and there is no prior agreement, that co‑owner may try to recover those costs by negotiating with the other owner(s) or by filing an accounting/partition lawsuit asking the court to order reimbursement—but recovery is not automatic.
2) Sale during divorce
In a divorce, Texas courts divide community property in a “just and right” manner rather than strictly 50/50 in all cases. If one spouse used separate funds to pay mortgage, taxes, or carrying costs, that spouse may have a claim for reimbursement if they can trace the separate funds and show the payment benefited the community or the other spouse’s separate property. Courts consider many factors when deciding whether to award reimbursement.
3) One spouse pays mortgage with separate funds
A spouse who used separate funds to reduce a community obligation or to preserve separate property can sometimes assert a reimbursement claim. Reimbursement requires good records showing the source of funds and proof the payment was not intended as a gift or waiver.
Practical steps to protect or pursue carrying‑cost reimbursements
- Gather documentation: mortgage statements, bank records, cancelled checks, receipt for property taxes, insurance invoices, HOA bills, repair invoices, and the final closing statement.
- Determine ownership status: confirm whether the property is community or separate property. Ownership documents, purchase records, and the timing of acquisition matter.
- Get the closing statement (ALTA/HUD): it shows exactly what liens and prorations were paid and how net proceeds were calculated.
- Look for written agreements: did you and the co‑owner/spouse sign any agreement saying one party would be reimbursed for carrying costs or that one would receive a larger share?
- Demand an accounting or negotiate: if a co‑owner paid significant carrying costs, start by asking for an accounting and offering to mediate or settle before suing.
- If needed, consult an attorney and consider filing a suit for reimbursement, partition, or an equitable lien. In partition suits and related claims, the Texas Property Code and court procedures control—see guidance on partition actions at the Texas statutes site: Texas statutes.
What you should expect at closing (summary)
- Mortgages and recorded liens: paid by the title/closing agent from sale proceeds before owners get paid.
- Property taxes: liened taxes must be satisfied; current taxes are usually prorated.
- Ordinary carrying costs: not automatically added to one owner’s distribution unless there is an agreement or court order.
Helpful hints
- Keep meticulous records of any carrying cost payments you make while you own the property—these are the key to any reimbursement claim.
- Obtain the full closing statement from the title company; it shows lien payoffs and prorations clearly.
- If you expect to pay large carrying costs that you want reimbursed, get a written agreement beforehand stating how those costs will be handled.
- In divorce cases, raise reimbursement claims early and provide evidence tracing funds to separate sources.
- Consider mediation to split disputed costs—court litigation is slower and more expensive.
- Talk to a Texas attorney about whether your payments might create an equitable lien, claim for reimbursement, or other remedy in court.
If you want, tell me whether this sale is part of a divorce, a sale between non‑married co‑owners, or a different situation, and I can explain the likely next steps and what documents you should gather.