Quick answer
Under Nebraska law, you may be able to recover or receive a credit for mortgage payments, property taxes, and other carrying costs you paid if those payments changed the parties’ ownership interests or preserved the property. Whether those costs reduce your share of sale proceeds depends on the legal context (for example, divorce/property division, partition between co-owners, or a negotiated settlement) and on documentation, agreements, and what a court finds equitable. Nebraska’s statutes governing division of marital property give courts broad authority to divide property equitably; courts commonly award credits or reimbursements for necessary payments made to preserve value. See Neb. Rev. Stat. § 42-365 and related provisions: https://nebraskalegislature.gov/laws/statutes.php?statute=42-365
Detailed answer — how this works in Nebraska
1) Which legal situation matters?
The rules differ depending on the context:
- Divorce (dissolution of marriage): The court divides marital property equitably and can award credits or reimbursements for payments that changed the value or preserved the property. See Nebraska’s property-division statute: https://nebraskalegislature.gov/laws/statutes.php?statute=42-365
- Co-owners (no divorce): If two or more people own property and one pays carrying costs, that person can seek an accounting or contribution in a partition action or by agreement; courts may grant a lien, credit, or reimbursement to avoid unjust enrichment.
- Sale outside litigation (private settlement/closing): The parties’ contract or negotiated split controls. You can ask for a credit at closing; the buyers/sellers can agree to allocate costs.
2) What kinds of carrying costs are usually considered?
Common carrying costs that courts and buyers may consider include:
- Mortgage payments (principal and interest). Payments of principal increase equity and are more likely to be treated as a contribution of value.
- Property taxes and special assessments.
- Insurance premiums required to keep the property marketable.
- Necessary repairs and maintenance that preserve or increase value.
- HOA/condo fees required to maintain the property’s good standing.
3) How do courts treat different types of payments?
While courts have discretion, a few general principles apply:
- Payments that preserve the asset’s value (property taxes, insurance, necessary repairs) are more likely to trigger reimbursement or credits because they prevent loss of value.
- Mortgage principal payments generally increase the payor’s equity. If one party used separate funds to reduce principal, a court may credit that party for the increase in equity.
- Interest, late fees, and penalties are less likely to be treated as contributions to equity; courts may be reluctant to fully reimburse avoidable interest or penalties unless they were necessary and reasonable to preserve the property.
- Voluntary improvements that increase fair market value may be treated differently than routine carrying costs; the party seeking reimbursement should show a measurable increase in value or an agreement to share costs.
4) Example (hypothetical) — how a credit might be calculated
Hypothetical: Two co-owners, A and B, own a house. After separation A pays the mortgage and property taxes for two years while B pays nothing. At sale, the net sale proceeds are split. A asks for a reimbursement or credit for the amounts paid.
What A should document and expect:
- Provide canceled checks, bank records, mortgage statements, tax receipts, and insurance invoices showing exact amounts and dates.
- Show how much of each mortgage payment reduced principal (equity increase) versus interest. Courts often treat principal reductions as additions to equity; interest may be treated differently.
- Show that property taxes and insurance payments were necessary to avoid tax liens or loss of coverage.
- If no prior agreement exists, the court will weigh fairness: how payments preserved the property, the parties’ respective resources, and their contributions during the ownership period.
5) Practical limits and things courts consider in Nebraska
Nebraska courts decide property division matters based on equitable principles and a list of statutory factors in dissolution cases (see Neb. Rev. Stat. § 42-365 and related sections). They will look at:
- Whether payments were necessary and reasonably made to preserve the property.
- Whether one party received a benefit (unjust enrichment) if no credit is given.
- Agreements between the parties (written or clear oral agreements may control).
- Timing and documentation of payments.
6) How this affects the closing statement
If you negotiate a credit before closing, the credit appears on the HUD/closing statement and reduces the paying party’s share of cash received at closing. If you cannot agree, you may need to ask a court to approve a credit or award reimbursement in post-sale accounting or division litigation.
7) Steps to protect your position
- Keep records: canceled checks, bank transfers, mortgage statements, tax receipts, insurance invoices, and receipts for repairs.
- Get an appraisal or market valuation near the time of sale so you can show effect of payments on equity/value.
- Ask for an interim accounting from your co-owner or during divorce proceedings; request an explicit credit at settlement or in the divorce/property division order.
- If you anticipate disagreement, obtain a written agreement allocating carrying costs before sale or ask a court for relief (credit, lien, or reimbursement) in a partition or dissolution action.
- Consult a Nebraska attorney to review options and file documents to protect your claim in court if necessary.
For the statutory basis for equitable division in divorce cases, see Neb. Rev. Stat. § 42-365: https://nebraskalegislature.gov/laws/statutes.php?statute=42-365 and related provisions at chapter 42: https://nebraskalegislature.gov/laws/statutes-chapter.php?chapter=42
Helpful Hints
- Document everything: payments, dates, purpose, and how much reduced principal vs. interest.
- Distinguish principal reductions (which increase equity) from interest (which usually does not).
- Keep copies of property tax bills and receipts to show you avoided liens or penalties.
- Negotiate a written split or credit before closing whenever possible — courts defer to clear written agreements.
- If you are in a divorce or partition case, ask your attorney to request a formal accounting and a court-ordered credit if the other party disputes your claim.
- Consider mediation to resolve credits early; mediation is often faster and cheaper than court litigation.
- Talk to a tax professional before assuming tax consequences — reimbursements and credits can affect basis and taxes.