What’s the process to buy out a co-owner’s interest and refinance the mortgage solely in my name? – North Carolina

Short Answer

In North Carolina, you can buy out a co-owner by agreement or, if you cannot agree, through a partition special proceeding before the Clerk of Superior Court. The buyout amount usually reflects each co-owner’s equity after accounting for payments like mortgage, taxes, insurance, and necessary repairs, with possible offsets for exclusive occupancy. To refinance into your name, you must secure lender approval and record a deed from the co-owner (or obtain a court order) so title rests solely in you.

Understanding the Problem

In North Carolina, can I, as a co-owner, buy out the other co-owner’s interest and then refinance the mortgage into my name only? Here, one co-owner moved out months ago, and the remaining co-owner has paid the utilities, HOA, and mortgage while living in the home. The question is focused on how to structure a buyout and, if needed, use the partition process to complete the transfer so the lender will refinance.

Apply the Law

North Carolina allows co-owners (tenants in common or joint tenants without survivorship) to resolve ownership either by agreement or by filing a partition special proceeding with the Clerk of Superior Court in the county where the property sits. If co-owners cannot divide the property fairly in kind, the court can order a sale. Throughout, the Clerk can address equitable accounting for shared expenses and use. You will also need lender underwriting and a deed or court order placing title in your name before refinancing.

Key Requirements

• Co-ownership and venue: The property is co-owned; any court action is filed where the property is located before the Clerk of Superior Court.
• Agreement or partition: If both sides agree, sign a deed and settlement papers reflecting the buyout. If not, file a partition special proceeding; the respondent answers, and the Clerk manages next steps.
• Valuation and accounting: Determine equity and adjust for contributions (mortgage interest, taxes, insurance, necessary repairs, HOA) and possible offsets for exclusive occupancy.
• Form of relief: Partition in kind if practical; sale if division would cause substantial injury. In certain “heirs property” situations, a statutory buyout right may apply before any sale.
• Title and refinance: Lenders require clear title. Record a deed from the co-owner (or rely on a court order/commissioner’s deed) before closing the new loan in your name.

What the Statutes Say

• North Carolina Gen. Stat., Chapter 46A (Partition) – Governs partition as a special proceeding, division in kind, and sale when appropriate.
• North Carolina Gen. Stat. § 1-394 (Special proceedings—service/answer) – Sets special proceeding summons and response timelines.
• North Carolina Gen. Stat. § 1-301.2 (Transfer of special proceedings) – Requires transfer to Superior Court if factual or equitable issues are joined.
• North Carolina Gen. Stat. § 1-339.1 (Judicial sales) – Provides procedures if a court-ordered sale is necessary.

Analysis

Apply the Rule to the Facts: Two co-owners share a home; one moved out, and the remaining co-owner has been paying the mortgage, HOA, and utilities while living there. A negotiated buyout can net the departing co-owner’s equity after crediting the paying co-owner’s contributions and considering an offset for exclusive use. If they cannot agree, a partition special proceeding allows the Clerk to address valuation and accounting and either confirm a buyout or order division or sale. After title is cleared into one name, the refinance can close.

Process & Timing

1. Who files: Any co-owner. Where: Clerk of Superior Court in the county where the property is located. What: Verified petition for partition (special proceeding) and Special Proceedings Summons (AOC‑SP‑100), served under Rule 4. When: The responding co-owner typically has 10 days after service to answer.
2. Next: If no agreement, the Clerk may hold a hearing, appoint commissioners to evaluate partition in kind versus sale, and consider equitable accounting. Mediation can be ordered. Timeframes vary by county and case complexity.
3. Finish: If parties agree on a buyout, the departing co-owner signs a deed to the buyer at a closing that settles net equity and payoffs. If the case proceeds, the court enters orders for division, sale, or buyout; title is conveyed by deed (including a commissioner’s deed if sold). Then complete the refinance in your name.

Exceptions & Pitfalls

• Heirs property buyout rules: Family-owned “heirs property” can trigger statutory appraisal and buyout procedures before any sale. Procedures and timelines are specific.
• Accounting traps: Keep receipts for mortgage interest, taxes, insurance, HOA, and necessary repairs. Expect possible offsets for your exclusive occupancy when claiming contributions.
• Mortgage vs. title: Removing a co-owner from the deed does not remove them from the existing mortgage. Your refinance must pay off or assume the loan per lender terms.
• Service and transfer: Improper service can delay relief. If an answer raises factual or equitable issues, the Clerk must transfer the case to Superior Court.
• Sale risk: If the property cannot be fairly divided and no buyout occurs, the court may order a judicial sale; proceeds are then distributed after costs and liens.

Talk to a Partition Action Attorney

If you’re dealing with a co-owner buyout and need to refinance into your name, 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.