How do I prove my share of home equity if my name remains on title? – North Carolina

Short Answer

In North Carolina, surplus funds from a foreclosure go first to junior lienholders of record and then to the property owner(s) of record at the time of the sale. To prove your share, file a motion or petition in the foreclosure special proceeding before the Clerk of Superior Court with your recorded deed and a sworn statement showing your ownership and percentage interest. A quitclaim by your ex only affects their share; it does not cut off yours.

Understanding the Problem

In North Carolina, can you claim and prove your share of surplus foreclosure funds when your name is still on title? You, as a co-owner, must ask the Clerk of Superior Court to disburse the surplus after the sale is final. The key trigger is that the home was sold at foreclosure and generated surplus. One complicating fact: your ex-spouse quitclaimed his interest to third parties.

Apply the Law

The surplus from a foreclosure sale is the amount left after paying the foreclosing debt and sale costs. By statute, the trustee or commissioner applies the proceeds: (1) sale expenses and the foreclosing debt; (2) junior liens of record in order of priority that were cut off by the sale; and (3) any remainder to the owner(s) of record at the time of sale, in proportion to their title interests. The foreclosure and any surplus issues are handled in the existing special proceeding before the Clerk of Superior Court in the county where the property is located. A sale is not final until the 10-day upset bid period expires.

Key Requirements

• Standing: You must be an owner of record at the time of the foreclosure sale or a valid assignee of an owner’s interest.
• Priority of liens: Junior liens of record are paid before any owner receives surplus.
• Proof of title and share: Provide the recorded deed and documents showing how you held title (e.g., tenants in common, tenants by the entirety before divorce), which establishes your percentage.
• Proper forum and notice: File in the foreclosure SP file with the Clerk of Superior Court and give notice to all known claimants (trustee, junior lienholders, co-owners, assignees).
• Sworn evidence: Support your claim with an affidavit and certified register-of-deeds records; be prepared for a hearing where the clerk makes written findings.

What the Statutes Say

• N.C. Gen. Stat. § 45-21.31 (Application of proceeds of sale) – Sets the order: costs and debt, then junior liens, then any remainder to the owner(s) of record.
• N.C. Gen. Stat. § 45-21.26 (Report of sale) – Requires filing a report of sale, which starts the upset-bid window.
• N.C. Gen. Stat. § 45-21.27 (Upset bids) – A sale becomes final after the 10-day upset bid period expires with no higher bid.

Analysis

Apply the Rule to the Facts: You are on the recorded title, so you have standing to claim any remainder after junior liens. Your ex-spouse’s quitclaim to third parties may transfer only his share, not yours. The clerk will require proof of how you held title and your percentage (often 50/50 if owned as tenants in common after divorce). You must file and serve a motion in the foreclosure file; if contested, the clerk will take evidence and issue a written order with findings.

Process & Timing

1. Who files: The owner-claimant. Where: In the existing foreclosure special proceeding (SP number) before the Clerk of Superior Court in the county where the property is located. What: A Motion/Petition for Disbursement of Surplus Proceeds with a sworn affidavit, certified copy of the recorded deed, any divorce judgment or separation agreement affecting title, and copies of any known liens or assignments. When: After the 10-day upset bid period ends and the trustee deposits surplus or the court holds it.
2. Serve the trustee/commissioner, junior lienholders of record, your ex-spouse, and any assignees who claim his share. If someone does not appear, the clerk may require a servicemember status declaration before entering a default order. The clerk sets a hearing; timelines vary by county.
3. Attend the hearing. The clerk decides who is entitled and in what amounts and enters a written order with findings. The clerk then issues payment to approved claimants.

Exceptions & Pitfalls

• Assignments/Quitclaims: An assignment or quitclaim by your ex-spouse can transfer only that person’s share; it does not reduce yours.
• Hidden liens: HOA, judgment, or child-support liens recorded before the sale are paid ahead of owners’ surplus and can reduce what you receive.
• Wrong forum or poor notice: File in the foreclosure SP file and serve all known claimants; missing a junior lienholder or assignee can delay or derail disbursement.
• Title form matters: Divorce usually converts tenancy by the entirety to a tenancy in common, often 50/50 absent an agreement—bring documents that clarify your percentage.
• Contribution disputes: Claims about who paid the mortgage or repairs are typically outside a surplus hearing; the clerk focuses on record title and lien priority.

Talk to a Surplus Funds Attorney

If you’re dealing with claiming your share of foreclosure surplus funds in North Carolina, 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.