Connecticut: Can I Include Mortgage, Property Taxes, and Carrying Costs in My Share of Sale Proceeds?

Short answer: It depends. Under Connecticut law, sale proceeds first pay any mortgages and liens that attach to the property. After liens are paid, whether a co-owner who paid more of the mortgage, property taxes, insurance, or other carrying costs can recover those extra payments from the remaining proceeds depends on the ownership relationship, any written agreement between owners, and whether you ask a court for an accounting or partition credit. Courts and lenders treat lenders’ claims differently from co-owners’ reimbursement claims.

How the mechanics work at closing

When real property is sold, the closing follows a priority order:

• First, mortgage lenders and other lien holders are paid from the sale proceeds.
• Second, closing costs and taxes due at sale are paid.
• Finally, any remaining proceeds are distributed to the owners in the manner agreed to by the owners or, absent agreement, according to ownership shares or a court order.

So if you mean “can I deduct the mortgage balance from my share?” — the lender’s lien is not part of an owner’s private allocation. The mortgage is paid first out of the gross proceeds, so you do not separately “take” the mortgage payment as an owner share. But if you personally paid mortgage payments or taxes before the sale (for example because you alone made payments while an absent co-owner did not), you may have a claim for contribution or credit against the other owner(s)’ share.

Key legal paths to recover extra carrying costs in Connecticut

1. Written agreement or contract: The cleanest way to ensure reimbursements is a written agreement among owners that spells out how carrying costs will be allocated and whether one owner may deduct payments from sale proceeds. Courts will enforce clear contracts.
2. Partition action / accounting: If co-owners cannot agree, a co-owner can bring a partition action. In Connecticut, partition law allows courts to divide property physically or order a sale and then make equitable adjustments. The court can consider contributions each owner made to mortgage, taxes, repairs, and other necessary expenses when ordering distribution of proceeds. (See Connecticut statutes on partition and related remedies.)
3. Equitable relief between co-owners: Where one co-owner paid expenses that preserved or increased the property’s value, Connecticut courts may award credits for necessary payments to avoid unjust enrichment. The court balances benefit and burden — payments that solely benefited one party may be treated differently from payments that benefited all owners.
4. Family law (divorce/equitable distribution): If the property is marital property in a divorce, Conn. Gen. Stat. provisions on equitable distribution guide how contributions and debts are allocated. The court considers contributions, debts, and other statutory factors in dividing proceeds. See Connecticut’s family law statutes for equitable distribution rules.

What courts typically consider when awarding credits for carrying costs

Connecticut courts look at several factors when deciding whether to credit one owner for mortgage, tax, insurance, or maintenance payments made by that owner:

• Was there an agreement (express or implied) about sharing costs?
• Did the payment preserve or increase the property’s value (for example, paying taxes to avoid a tax lien)?
• Did the paying owner benefit more than the non-paying owner (use, occupancy, or enhanced equity)?
• Did the paying owner treat the payments as loans, gifts, or investments? Are there records (checks, bank statements, canceled checks)?
• Did the mortgage payment reduce principal (which increases that payer’s equity) or primarily pay interest (more like a carrying cost)?

Practical examples (hypotheticals)

Example 1 — Two tenants in common, no agreement: Owners A and B own property as tenants in common. Owner A paid more of the mortgage and taxes for several years. On sale, the lender is paid first. If the owners cannot agree, either owner can file a partition or accounting. A court may allow A a credit for necessary payments that preserved the property’s value, but the court will offset credit for any extra benefit B received (for example, if B lived in the property and avoided rent).

Example 2 — Spouses in divorce: In a divorce, the court will consider mortgage and tax payments as part of the equitable distribution analysis. Payments that reduced the mortgage principal may be treated differently than those that solely paid interest or monthly carrying costs.

Example 3 — Written buyout agreement: If co-owners signed a written buyout agreement saying owner who pays mortgage may deduct a set amount from sale proceeds, that agreement generally controls and reduces the risk of litigation.

Steps to protect your position before sale

1. Keep detailed records: save canceled checks, bank statements, invoices, and receipts for mortgage, taxes, insurance, repairs, and utilities.
2. Get a written agreement: if possible, have all owners sign a written cost-sharing or buyout agreement that specifies how payments affect shares.
3. Seek an accounting early: ask the co-owner for a written accounting of contributions or demand reconciling payments in writing.
4. Consider escrow or lien: in some cases you may secure a reimbursement agreement with a promissory note or lien against the property (consult a lawyer before doing so).
5. If necessary, file a partition or accounting action to have a court decide credits and distribution.

Important Connecticut statutes and rules to review

• Connecticut statutes on partition and remedies — see the Connecticut General Statutes covering partition actions (review the statutes in Title 52 addressing civil remedies and partition). For statute text and specifics, consult the Connecticut General Assembly website: https://www.cga.ct.gov/current/title_52.htm.
• Connecticut family law statutes on equitable distribution (if the matter arises in divorce): review Title 46b of the Connecticut General Statutes: https://www.cga.ct.gov/current/title_46b.htm.

When lenders and liens take priority

Remember that mortgage lenders and recorded lien holders are paid directly from gross sale proceeds. Personal claims between co-owners are resolved after liens are satisfied. That means even if you paid more historically, those payments will not directly reduce the recorded mortgage balance at closing unless the lender is paid off and the net proceeds are then divided or a court awards a reimbursement.

When to talk to an attorney

If the sums involved are significant, owners disagree about credits, or you worry about a lien or partnership claim, seek advice from a Connecticut real estate attorney. An attorney can:

• Review ownership documents and mortgages.
• Prepare or negotiate written contribution or buyout agreements.
• File a partition or accounting action and argue for credits to which you may be entitled.
• Explain how equitable distribution rules apply in a divorce context.

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