Detailed Answer
Short answer: When you sell real property in West Virginia, mortgages, property tax liens, and other secured liens are normally paid out of the sale proceeds at closing before owners divide the net money. Other carrying costs (mortgage payments, insurance, utilities, maintenance) you personally paid while the property was owned may be reimbursable, but reimbursement depends on ownership type, any agreement between owners, and equitable remedies a court might apply.
How the money flows at a typical closing
- Liens and encumbrances that attach to title (most importantly the mortgage) are satisfied first from the sale proceeds. This is a matter of lien priority and closing procedures.
- Property taxes and any special tax liens that must be cleared to transfer clean title are also typically paid at or before closing.
- Closing costs (title fees, recording fees, broker commissions) are paid next, according to the closing statement.
- After those items are paid, the remaining funds (net proceeds) are distributed to the owners according to their legal share (for example, tenants in common by percentage ownership, or as otherwise provided in a deed or agreement).
Why the mortgage and tax liens get paid first
A mortgage is a lien on the property. A buyer (and the title company) will insist the mortgage be satisfied so the buyer gets clear title. Likewise, tax liens have priority and often must be paid to transfer title. For background on West Virginia statutory law that governs property rights and taxation, see West Virginia Code, Title 36 (Property) and Title 11 (Taxation):
When you can claim reimbursement for carrying costs
If you paid most or all of the mortgage payments, property taxes, insurance, or other carrying costs, you may be able to claim contribution or an equitable credit against the net proceeds. Key factors a court or negotiating parties will consider include:
- Ownership form: Are you tenants in common, joint tenants, or is the property marital/family property? Ownership form affects how proceeds are split.
- Written agreements: Any written agreement (purchase agreement, deed language, partnership or operating agreement, divorce settlement) that allocates payments or reimbursement will control if it is valid.
- Record of payments: Clear records showing who paid mortgage, taxes, insurance, and maintenance matter a great deal.
- Whether payments were necessary or voluntary: Payments that protected the property’s value (e.g., mortgage, taxes, insurance, essential repairs) are more likely to justify reimbursement or an accounting than purely optional upgrades.
- Equitable remedies in a partition action: If co-owners cannot agree and one files a partition action, West Virginia courts can require an accounting and may award credits for contributions toward mortgage, taxes, and necessary expenses.
Illustrative hypothetical (how this plays out)
Two people, A and B, own a rental house as tenants in common, each 50%. A paid the mortgage, taxes, insurance, and some necessary repairs for three years because B was delinquent. They sell the house. At closing, the mortgage and tax liens are paid first from sale proceeds. After closing, A asks for reimbursement from B for A’s extra payments. If A and B have no written agreement, A can demand an accounting and may seek contribution. A court could order B to reimburse a portion of those payments or adjust the split of net proceeds to reflect contributions.
Practical points under West Virginia law
- Even though liens are paid first, an owner who advances mortgage or tax payments may have a claim against the other owners for contribution; such claims often arise in partition lawsuits or settlement negotiations.
- Document everything. Keep copies of canceled checks, bank records, invoices, and receipts for mortgage payments, tax payments, insurance, and repairs.
- If you expect to claim reimbursement, raise the issue before closing so the title company can reflect any agreed offsets on the closing statement or escrow instructions.
When to get an attorney
Talk to a West Virginia real property attorney if:
- Co-owners dispute who paid what or how to split proceeds.
- One owner refuses to cooperate with closing or transfer of title.
- You need to pursue reimbursement through a partition action or contribution claim.
How an attorney might help
- Prepare or review closing instructions and settlement statements to ensure credits and reimbursements are reflected.
- File a partition or contribution action if co-owners cannot reach agreement.
- Negotiate a settlement allocating net proceeds and any reimbursements to avoid litigation.
Helpful Hints
- Get everything in writing. A written agreement beats an after-the-fact claim.
- Keep precise financial records for mortgage, taxes, insurance, maintenance, and repairs.
- Ask the title company for a draft closing statement early so you can spot what will be paid from proceeds and what will remain as net proceeds to be divided.
- If you expect reimbursement, request it be shown as a line item on the closing statement or handled by escrow instructions.
- If you’re unsure of your ownership share or rights, request a title search and have an attorney review the deed and any relevant agreements.
- Consider mediation before filing court actions; it’s often faster and less expensive than litigation.
Disclaimer: This article provides general information about West Virginia property practices and is not legal advice. It does not create an attorney-client relationship. For advice tailored to your situation, consult a licensed West Virginia attorney.