Detailed Answer
When co-owners enter a joint sale agreement, they share the burden of carrying costs—expenses required to maintain the property until sale. Common carrying costs include mortgage interest, property taxes, insurance premiums, utilities, and routine maintenance. Under Minnesota law, each co-owner must contribute their fair share. If one owner pays more than their share, they may recover the excess from the other.
1. Identifying Carrying Costs
First, list all expenses you’ve paid on behalf of the property. Typical items are:
- Mortgage payments (principal and interest)
- Real estate taxes and special assessments
- Hazard and liability insurance
- Utility bills (electricity, water, gas, etc.)
- Repairs and maintenance
- HOA dues or common charges
2. Calculating Each Owner’s Share
Most joint sale agreements define ownership percentages (for example, 60/40). To calculate the other owner’s share:
- Add up total carrying costs over the relevant period.
- Multiply by the other owner’s ownership percentage.
- Subtract any payments they already made.
Example: Total costs were $10,000 and your co-owner owns 40%. Their share = $10,000 × 0.40 = $4,000. If they paid $1,000, you can claim $3,000.
3. Recovering Costs Under Minnesota Law
Co-owners have two primary paths to recovery:
A. Contract-Based Claim
If your joint sale agreement contains a cost-sharing clause and a breach of contract remedy, send a formal demand letter outlining the unpaid balance. Cite the agreement’s terms and offer a deadline (e.g., 30 days). If the co-owner still doesn’t pay, you may sue for breach of contract in district court. You can seek the unpaid amount, interest, and any attorney fees if the agreement allows.
B. Partition Action with Equitable Contribution
When parties cannot agree, Minnesota law allows a partition action under Minn. Stat. § 558.01 et seq. During partition, the court can order sale of the property and apportion net proceeds. Under Minn. Stat. § 558.06, subdivision 5 (Minn. Stat. § 558.06), the court may grant credit to the co-owner who paid carrying costs.
Key steps:
- File a petition for partition in the county where the property sits.
- List the unpaid carrying costs and ownership percentages.
- Request that the court award you credit for the additional costs you covered.
The judge will adjust each party’s share of the sale proceeds to reflect credits for taxes, insurance, mortgage payments, and other outlays.
Interest and Timing
Absent an agreed interest rate, courts may apply Minnesota’s statutory rate for judgments (Minn. Stat. § 549.09) until payment. File your claim or partition petition promptly, as delay may complicate record-keeping and enforcement.
Disclaimer: This article is for educational purposes only and does not constitute legal advice. Always consult a qualified attorney to discuss your unique situation.
Helpful Hints
- Keep organized, dated receipts or bank statements for every expense.
- Define carrying cost obligations and remedies clearly in your joint sale agreement.
- Send written notices to your co-owner before initiating legal action.
- Consider mediation or arbitration clauses to resolve disputes faster.
- Consult an attorney early to preserve your rights and evidence.