Short Answer

In a North Carolina partition sale, the Clerk of Superior Court adjusts each co-owner’s share of the sale proceeds for money received and money paid. Rents collected are credited to all co-owners by their ownership percentages, and necessary carrying costs like property taxes, insurance, mortgage interest, and essential repairs paid by one co-owner are typically reimbursed by credits. These credits and charges are netted in the final order before your distribution.

Understanding the Problem

You co-own real estate in North Carolina and a partition action is underway. You want to know how your share of past rental income and property taxes will be handled if your interest is bought out or the property is sold. This question sits at the heart of partition accounting: can you receive part of the rents, and must others reimburse you for carrying costs?

Apply the Law

North Carolina’s partition laws allow the Clerk of Superior Court to adjust (credit or charge) co-owners when dividing or selling property. The court accounts for rents and profits received by any co-owner, and for necessary expenses paid to preserve the property (taxes, insurance, mortgage interest, and necessary repairs). If one co-owner exclusively occupied the property, the court may consider a use-and-occupation charge or offset in the accounting. These adjustments are made in the special proceeding and reflected in the commissioners’ report and final order before money is distributed.

Key Requirements

• Show the money in: Identify and document rents collected or profits earned from the property during co-ownership.
• Show the money out: Prove necessary carrying costs you paid (taxes, insurance, mortgage interest, and necessary repairs) with receipts and statements.
• Occupancy facts: Establish who lived in or used the property, whether others were excluded, and any fair rental value information.
• Timing and forum: Ask the Clerk of Superior Court in the property’s county to award credits/charges in the partition proceeding before confirmation and disbursement.
• Netting in the order: Expect credits and charges to be netted against each party’s distribution from the sale proceeds.

What the Statutes Say

• North Carolina Gen. Stat. Chapter 46A (Partition) – Establishes partition by division or sale and authorizes adjustments for rents, profits, and necessary expenses.
• North Carolina Gen. Stat. Chapter 1, Article 29A (Judicial Sales) – Governs public and private judicial sales, confirmation, and distribution procedures used in partition sales.
• North Carolina Gen. Stat. § 7A-38.3B (Mediation of Clerk Matters) – Allows the Clerk to order mediation in special proceedings, including partition.

Analysis

Apply the Rule to the Facts: In your partition case, your share of rental income is typically your percentage of ownership applied to net rents (rents received minus agreed expenses related to generating those rents). If you paid property taxes, insurance, mortgage interest, or necessary repairs, the Clerk can credit those payments back to you from the sale proceeds before distributions. If you or the other co-owner lived in the property exclusively, the Clerk may consider a use-and-occupation adjustment or offset when calculating the final net shares.

Process & Timing

1. Who files: Any co-owner. Where: Clerk of Superior Court in the North Carolina county where the property sits. What: Partition special proceeding with a request for an accounting (credits for taxes/carrying costs and allocation of rents). When: Raise accounting issues before the commissioners’ report is confirmed and before funds are disbursed.
2. Commissioners and report: The Clerk may appoint commissioners to divide or sell. They report rents, expenses, and proposed allocations. Parties can file objections and ask the Clerk to adjust credits and charges. Timing can vary by county and sale method (including any upset bids).
3. Final order and distribution: The Clerk confirms the report/sale, enters credits for expenses and rents, and orders distribution. Sale proceeds are typically routed through an attorney trust account or the Clerk for payment of costs, liens, court-approved fees, and then net distributions.

Exceptions & Pitfalls

• Occupying co-owner: A co-owner who lived in the property may face a use-and-occupation offset; conversely, if you were excluded, you may seek one.
• Improvements vs. repairs: Necessary repairs are generally credited dollar-for-dollar; improvements are usually credited only to the extent they increase value, not their full cost.
• Mortgage payments: Interest is a carrying cost; principal reductions are treated differently and may require appraisal evidence to allocate value.
• Rents and records: Bring leases, bank statements, and deposit records; without documentation, rent credits may be reduced or denied.
• Trust account disbursements: Directing proceeds to an attorney trust account is standard so court costs, liens, and court-approved fees can be paid first—make sure your fee agreement authorizes any deductions.
• Tax reporting: Net rents allocated to you may be taxable; ensure settlement papers allocate rents through the sale date and address any prior filings where you were listed as a “partner.” Consult a tax professional.
• Move-out terms: If you occupy a unit tied to the other co-owner, include a written vacate date and any temporary occupancy payment in the settlement or consent order to avoid post-closing disputes.

Talk to a Partition Action Attorney

If you’re dealing with rent-and-expense accounting in a North Carolina partition case, 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.