Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney to discuss your specific situation.
Detailed Answer
When co-owners agree to sell real estate jointly, each party typically shares the property’s carrying costs. Carrying costs include mortgage interest (not principal), property taxes, insurance premiums, utilities, and necessary maintenance. Under Delaware law, a co-owner who advances more than their fair share can recover the excess payments through contract remedies or a partition action. Below is a step-by-step guide.
1. Identify and Document All Carrying Costs
Keep all invoices, bank statements, insurance bills and tax statements. Common carrying costs include:
- Mortgage interest payments
- Annual real estate taxes
- Property and casualty insurance premiums
- Routine repairs and maintenance
- Utility bills (water, electricity, etc.)
2. Determine Each Co-Owner’s Share
Unless the joint sale agreement specifies another split, assume equal shares. For a 50/50 arrangement, each co-owner pays half of the total carrying costs.
3. Calculate the Excess Payment
Add up all carrying costs for the relevant period. Multiply the total by the co-owner’s ownership percentage to find each party’s fair share. Subtract the non-paying co-owner’s actual contributions from their fair share to determine the excess you may recover.
4. Demand Reimbursement
Send a written demand listing the total costs, each owner’s share, the shortfall amount, and a reasonable deadline (e.g., 30 days). Reference the joint sale agreement and Delaware law holding co-owners liable for their proportional expenses.
5. File a Breach of Contract or Partition Action
If the co-owner fails to reimburse, you have two main remedies:
- Breach of Contract Claim: Suing for the unpaid balance under the joint sale agreement. You can also seek pre-judgment interest if the agreement allows or under 10 Del. C. § 8111.
- Partition Action: Under 10 Del. C. § 5502 (Delaware Code), you can ask the court to divide or sell the property. The court may grant a credit for necessary expenses you advanced, including mortgage interest, taxes and insurance. See 10 Del. C. § 5527 (Delaware Code).
Helpful Hints
- Keep detailed records with dates, payees, amounts and payment methods.
- Review your joint sale agreement for any cost-sharing or dispute resolution clauses.
- Consider mediation before filing suit to save time and fees.
- Calculate interest on late reimbursements if your agreement or statute authorizes it.
- Consult an attorney promptly to preserve evidence and deadlines.
- In partition actions, the Court of Chancery can appoint a commissioner to handle sale proceeds and credits.
- Factor in court costs and attorney’s fees if you expect to recover them under your agreement or statute.