Short Answer

In North Carolina, a co-tenant can only mortgage or refinance their own undivided interest in the property; they cannot encumber your share unless you sign. The lender’s deed of trust attaches only to that co-tenant’s interest and, in a later partition, will be paid from that co-tenant’s allocated parcel (if divided) or from that co-tenant’s share of sale proceeds. If the loan was made within two years after the prior owner’s death, special estate rules may also affect the validity of the mortgage as to estate creditors and the personal representative.

How North Carolina Law Applies

Most inherited real estate is owned by heirs as tenants in common. Each co-tenant may sell or encumber only their own fractional interest. If your co-tenant signed a home equity loan or refinance without your consent, the deed of trust generally attaches to that co-tenant’s undivided interest, not yours. In a partition case, the court will protect existing liens: the lien follows the debtor co-tenant’s portion—either the specific parcel allotted to that co-tenant if the land is divided in kind, or that co-tenant’s share of sale proceeds if the property is sold.

There is an added wrinkle in the first two years after the decedent’s death. During that period, heirs’ sales, leases, or mortgages can be ineffective against the estate’s creditors and the personal representative unless specific requirements are met. The personal representative also has authority to seek court approval to mortgage estate real property to pay valid claims. This can impact a lender’s rights and your strategy if the property was encumbered soon after the decedent’s death.

Key Requirements

• Encumbrance limited to signer’s share: A co-tenant who borrows against the property without your signature encumbers only their own undivided interest. Your title is not pledged unless you sign the deed of trust or otherwise consent.

• Partition preserves lien rights: In a partition, existing liens are honored. The lien will attach to the debtor co-tenant’s allotted parcel if the land is divided, or be satisfied from that co-tenant’s portion of the sale proceeds if the court orders a sale.

• Two‑year estate rule: Within two years after death, heirs’ sales, leases, or mortgages can be void as to estate creditors and the personal representative unless the personal representative joins or statutory timing requirements are met. This protects creditors and may affect the enforceability of a new mortgage made during that window.

• Estate control where needed: The personal representative may ask the clerk for authority to lease or mortgage estate real property when doing so is in the best interest of administering and paying valid claims. Heirs take title subject to these powers.

• Accounting between co‑tenants: In a partition, the court can adjust equities among co‑owners—crediting necessary taxes, insurance, and mortgage payments that protected the common property, and accounting for rents or profits from exclusive possession. Cash pulled out by one co‑tenant in a new personal refinance generally remains that borrower’s responsibility.

Process & Timing

1. Confirm title and the lien: Get the recorded deed and the deed of trust. Verify who owns what and who signed the loan documents.

2. Check the estate timeline: If the loan happened within two years of the prior owner’s death, evaluate whether the personal representative joined the transaction and whether estate creditors are affected.

3. Open dialogue and preserve the property: Send written notice to the co‑tenant and lender that you do not consent to encumbering your interest. If there is a foreclosure threat, consider seeking a court order to prevent waste or to manage the property through the estate, if applicable.

4. File a partition if needed: A partition action (Chapter 46A) is filed in the county where the land sits. All co‑owners—and any lienholders—are named. The court decides whether division in kind is feasible; otherwise it orders a sale (often by open‑market listing). Existing liens are paid from the indebted co‑tenant’s portion.

5. Resolve credits and debits: At the end of the case, the court can adjust for taxes, insurance, necessary repairs, mortgage payments that preserved the property, and any rents or profits received by a co‑tenant in exclusive possession.

6. Distribution: If sold, the clerk pays costs, then lienholders, then distributes net proceeds to co‑owners according to their shares and any accounting adjustments.

What the Statutes Say

• North Carolina General Statutes § 28A‑17‑12: Explains that within two years after death, heirs’ sales, leases, or mortgages can be ineffective as to the estate and creditors unless statutory conditions are met or the personal representative joins.
• North Carolina General Statutes § 28A‑17‑11: Allows the clerk to authorize a lease or mortgage of estate real property when in the best interest of the estate.
• North Carolina General Statutes § 28A‑13‑3: Outlines the personal representative’s power to take possession, custody, and control of real property when needed to administer the estate.
• North Carolina General Statutes § 28A‑15‑1: States that a decedent’s real property is available to pay valid debts and claims, absent a statutory exception.
• North Carolina General Statutes § 28A‑15‑2(b): Provides that, subject to the personal representative’s powers, title to real property vests in heirs or devisees at death or probate.
• North Carolina General Statutes, Chapter 46A: Governs partition of real property, including procedure, appointment of commissioners, and sale when division is impractical. Specific sections vary by issue.

Exceptions & Pitfalls

• If you signed the loan: Your share is encumbered. Read the deed of trust carefully before signing any document.

• Two‑year window after death: A mortgage made by an heir in that period can be vulnerable as to the estate’s creditors unless the personal representative joined or statutory timing was met. This can complicate later sales or partition.

• Lienholders must be parties: In partition, failing to join a lender risks clouding title and delaying closing. Always name recorded lienholders.

• Accounting surprises: Keep receipts for taxes, insurance, and necessary repairs; the court may credit those. Unapproved improvements may receive only limited credit (typically up to the value added, not full cost).

• Foreclosure risk: A lender can foreclose only the borrowing co‑tenant’s undivided interest. That does not automatically take your title, but it can bring in a new co‑owner and increase pressure for partition.

Helpful Hints

• Pull the recorded deed of trust from the register of deeds to confirm who signed and what interest is described.
• If the decedent passed less than two years ago, ask the personal representative (or the clerk’s office) whether an estate is open and whether a creditor notice was published.
• Document all carrying costs you pay (taxes, insurance, necessary repairs). Good records improve your outcome in a partition accounting.
• If a lender threatens foreclosure, contact counsel quickly to evaluate options, including negotiating with the lender, intervening, or filing partition to control the sale process.
• When possible, explore a buyout between co‑owners before filing. It can save time and money and avoid a forced sale.

Talk to a Partition Action Attorney

If you’re facing a co‑owner’s refinance or lien on inherited property—or you need to protect your share through a partition—our firm has experienced attorneys who can help you understand your options and timelines. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney–client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.