Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney in Nevada for guidance specific to your situation.
Detailed Answer
When two or more parties own real estate together and agree to sell, they often share ongoing expenses—known as carrying costs—such as mortgage interest, property taxes, insurance, utilities, and maintenance. If one co-owner advances more than their fair share of these costs, Nevada law permits them to seek reimbursement from the other co-owner(s) at closing or through a partition action.
1. Identify and Document Carrying Costs
Compile a detailed ledger of all expenses the advancing co-owner paid on behalf of the property. Include:
- Mortgage interest and principal (if agreed upon)
- Property taxes and special assessments
- Homeowners’ or hazard insurance premiums
- Utilities (water, electricity, gas)
- Repairs and routine maintenance
Retain invoices, canceled checks, bank statements, and receipts. These documents form the basis for reimbursement.
2. Calculate Each Co-Owner’s Share
Divide total carrying costs by each co-owner’s ownership percentage. For example, if Co-Owner A owns 60% and Co-Owner B owns 40% and total costs amount to $10,000, A’s share is $6,000 and B’s share is $4,000.
3. Demand Payment or Adjust at Closing
Provide a written demand for reimbursement to the other co-owner(s). If the property is under contract, submit the expense ledger to the buyer’s escrow officer so that closing statements can reflect the adjustment. The unpaid portion can be deducted from the co-owner’s net proceeds under the joint sale agreement.
4. Partition Action Alternative
If co-owners cannot agree on reimbursement, either party may file a partition action under Nevada Revised Statutes (NRS) Chapter 40. In a partition by sale, the court will order sale of the property and distribute net proceeds. Under NRS 40.450, the court may consider contributions by one co-owner for carrying costs and award a credit against their share. See NRS 40.450.
5. Court-Ordered Accounting
During the partition proceedings, the advancing co-owner can request an accounting of rents, profits, and liabilities under NRS 19.090. The court will examine evidence of payments and allocate costs fairly before distributing proceeds.
6. Enforcing the Judgment
Once the court issues a judgment awarding reimbursement, the non-advancing co-owner must pay their share. If they fail to comply, the advancing party may record the judgment as a lien and pursue collection.
By carefully documenting expenses, communicating early, and leveraging Nevada’s partition statutes, co-owners can recover carrying costs and avoid prolonged disputes.
Helpful Hints
- Open a dedicated bank account for property expenses to simplify tracking.
- Include a clause in your joint sale agreement addressing how carrying costs will be divided.
- Send monthly or quarterly statements of expenses to co-owners for transparency.
- Consider mediation before filing a partition action to save time and costs.
- Keep copies of all insurance and tax notices to prove timely payment.
- Obtain a certified court order if informal reimbursement attempts fail.