Does having the mortgage only in my name change how equity is split if both of us are on title? – North Carolina

Short Answer

In North Carolina, if both co-owners are on the deed, the starting point is that equity is shared according to the ownership stated on title, not whose name is on the mortgage. However, in a partition action or dispute over sale proceeds, the co-owner who paid the mortgage, taxes, or other carrying costs can usually ask the court for contribution or reimbursement before the remaining equity is split.

Understanding the Problem

The core question is whether, under North Carolina partition and co-ownership law, one co-owner’s sole responsibility on the mortgage changes how the equity is divided when both co-owners are listed on the deed. The issue often arises when one person has made the down payment, mortgage, tax, and insurance payments, while the other title holder has contributed little or nothing but still demands half the sale proceeds. The focus is whether mortgage liability and unequal financial contributions affect the final division of net proceeds if the property is sold voluntarily or through a partition action.

Apply the Law

Under North Carolina law, record ownership on the deed generally controls each person’s starting share of the property, but courts can adjust the financial outcome to account for who actually paid the carrying costs and certain other expenses. A partition action in superior court is the usual forum when co-owners cannot agree on how to sell or divide the property or its proceeds.

Key Requirements

Co-ownership on title: Both parties must hold an ownership interest as tenants in common or joint tenants; that recorded interest sets the presumptive share of equity.
Documented contributions to carrying costs: One cotenant may claim contribution or reimbursement for payments of carrying costs such as mortgage payments, property taxes, insurance, and necessary repairs.
Partition forum and timing: A partition proceeding in superior court allows the judge to order an actual partition or sale and to adjust the distribution of net sale proceeds based on contributions and statutory rights to contribution.

What the Statutes Say

N.C. Gen. Stat. § 46A-21 (Petition by cotenant) – Allows any cotenant to file a partition action in superior court and join other owners and lienholders, including mortgage holders.
N.C. Gen. Stat. § 46A-27 (Carrying costs and improvements) – Gives a cotenant the right to contribution from other cotenants for carrying costs, including payments on a loan used to acquire the property, and for certain improvements.
N.C. Gen. Stat. § 41-86 (Reimbursement of a cotenant) – Addresses when a cotenant can obtain contribution or credit for necessary repairs, improvements, taxes, and interest on encumbrances.
N.C. Gen. Stat. § 105-363 (Taxes paid by cotenant) – Provides lien and reimbursement rights when one cotenant pays property taxes for the benefit of the common property.

Analysis

Apply the Rule to the Facts: Where one North Carolina co-owner is solely on the mortgage but both are on the deed, the court generally begins with equal ownership shares if the deed shows equal interests. However, if one cotenant paid the full down payment and all mortgage, tax, and insurance payments while the other made no financial contribution, the paying cotenant can seek contribution for those carrying costs in a partition sale. The court can reimburse those amounts from the gross sale proceeds first, then divide the remaining net equity according to the recorded ownership shares.

Process & Timing

Who files: Any cotenant who wants to resolve the dispute may file. Where: In the Superior Court of the North Carolina county where the property is located. What: A verified partition petition under Chapter 46A, requesting an actual partition or partition sale and asking for contribution credits for carrying costs and other reimbursable items. When: Typically filed once it becomes clear the co-owners cannot agree on sale terms or division of proceeds.
The court determines whether to order a physical division or a sale, appoints commissioners or a sale officer if needed, and receives evidence about each cotenant’s payments toward mortgage, taxes, insurance, repairs, and improvements. This stage can take several months or more, depending on court dockets and the complexity of the accounting.
After the property is sold, the court or clerk approves a final report, applies any allowed contribution or reimbursement in favor of the paying cotenant, and then distributes the remaining net sale proceeds according to the adjusted shares. The final order and disbursement resolve the equity split between the co-owners.

Exceptions & Pitfalls

Courts may limit reimbursement if the paying cotenant had exclusive possession and enjoyed all the benefits of the property, especially for interest payments and certain repairs.
Improvements do not automatically increase a cotenant’s share; the law generally limits recovery to the lesser of the added value or actual cost and requires that the claim be raised in the partition proceeding.
Failure to keep clear records of mortgage, tax, insurance, and repair payments can make it harder to prove contribution and reduce any credit awarded.
Verbal side agreements about unequal ownership or reimbursement are hard to enforce if they conflict with the deed or are not supported by clear evidence.
Not joining all necessary parties, including any deed of trust holder, can delay the case or require refiling.

Conclusion

In North Carolina, having the mortgage only in one name does not by itself change the ownership shares shown on the deed, so equity starts out divided according to title. However, in a partition action or similar dispute, the cotenant who paid the down payment, mortgage, taxes, insurance, and other carrying costs can usually seek contribution or reimbursement before the remaining net proceeds are split. The practical next step is to file a partition petition in superior court asking for a sale and appropriate contribution credits.

Talk to a Partition Action Attorney

If a co-owner is demanding half the equity even though only one person has paid the mortgage and other costs, our firm has experienced attorneys who can help explain options, potential contribution credits, and the partition sale process. 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 a specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If there is a deadline, act promptly and speak with a licensed North Carolina attorney.