How to Calculate and Recover Carrying Costs from a Co-Owner in Alabama
Disclaimer: This article is for educational purposes only and does not constitute legal advice.
Detailed Answer
When two or more people jointly own real property in Alabama and agree to sell, each owner must share “carrying costs” during ownership. Carrying costs include mortgage payments, property taxes, insurance premiums, utilities, and maintenance. If one co-owner advances these costs, Alabama law allows that party to seek contribution from the other co-owner.
Step 1: Identify and Document All Carrying Costs
- Gather bills and receipts for property taxes, mortgage interest, hazard insurance, utilities, and repairs.
- Note the dates each expense was paid and the total amount.
- Maintain a running log or spreadsheet with categories, dates, and amounts.
Step 2: Determine Each Co-Owner’s Pro Rata Share
Most joint sale agreements allocate ownership by percentage (e.g., 60%/40%). To calculate each owner’s share:
- Add up total carrying costs advanced by one owner (e.g., $12,000 in taxes, insurance, mortgage).
- Multiply that total by the other owner’s ownership percentage (e.g., $12,000 × 40% = $4,800).
Step 3: Demand Payment or File a Partition Action
First, send a written demand letter. Include:
- A detailed breakdown of costs and dates.
- The calculation showing the co-owner’s share.
- A deadline for payment (e.g., 30 days).
If the co-owner fails to pay, you may file a partition action in the county circuit court. Under Ala. Code § 6-6-708 (Ala. Code § 6-6-708), the court can credit the partition sale proceeds with necessary expenses paid by one co-owner and order contribution.
Step 4: Accounting in Court
In your partition complaint, attach all documentation of expenses. The court will:
- Review your itemized statements.
- Credit or debit each party’s share.
- Order the non-paying co-owner to reimburse their portion from the sale proceeds.
Helpful Hints
- Keep receipts and invoices in one place. A clear trail strengthens your claim.
- Include interest on unpaid amounts when demanding reimbursement. Check your joint sale agreement for an interest rate.
- Review your joint sale agreement for any special procedures or deadlines on contributions.
- Consider mediation before filing a lawsuit. It can save time and legal fees.
- Consult a licensed attorney in Alabama for tailored advice and to draft pleadings if you file a partition action.