Dec302025
Partition Action Q&A Series

How is a buyout amount calculated when there’s still a mortgage on the house and I’ve paid money into repairs or expenses? – North Carolina

Short Answer

In North Carolina, a buyout in a co-owned home usually starts with the home’s fair market value, then subtracts valid liens like the mortgage to get the equity. Each co-owner’s baseline buyout is their ownership share of that equity, but the court can also adjust the numbers in a partition case by giving credits for certain payments a co-owner made (like taxes, insurance, necessary repairs, and some loan payments) and for improvements—typically limited to the lesser of the cost or the value added. Documentation matters, and some reimbursements have timing limits.

Understanding the Problem

In a North Carolina co-ownership situation, a common question is: can a co-owner be bought out for a fair amount when the property still has a mortgage and that co-owner has paid out-of-pocket for repairs, insurance, taxes, or other property expenses. The decision point is how to calculate the buyout amount so it reflects both (1) the remaining mortgage and (2) the co-owner’s contributions, especially when documentation is incomplete and the other co-owner may not be able to refinance or pay a large lump sum.

Apply the Law

Under North Carolina law, a buyout number in a co-owned home typically tracks what would happen if the property were sold and the proceeds were divided, with adjustments for certain contributions. In a partition proceeding, the court can order an actual partition (physically dividing property) or a partition sale, and then it can account for “carrying costs” and certain repairs or improvements through contribution credits. In practice, the mortgage matters because it reduces equity, and reimbursements matter because they can shift how much equity each co-owner should receive.

Key Requirements

  • Determine equity (value minus liens): The starting point is usually the property’s fair market value, minus the mortgage payoff and other valid liens, to determine the equity available to split.
  • Confirm ownership shares: The baseline split usually follows each co-owner’s percentage interest (often 50/50, but the deed controls).
  • Account for reimbursable contributions: In a partition case, a co-owner can request credits for certain “carrying costs” (like taxes, insurance, repairs, and some loan payments) and for improvements, subject to limits and defenses.

What the Statutes Say

Analysis

Apply the Rule to the Facts: In the stated scenario, the baseline buyout starts with the home’s fair market value and subtracts the mortgage payoff to determine total equity. The co-owner’s starting share is then based on the deed’s ownership percentages. Because the co-owner has paid significant out-of-pocket amounts, the next step is to identify which payments qualify as “carrying costs” (such as property taxes, homeowner’s insurance, repairs, and certain loan payments) and which qualify as “improvements,” because improvements are generally capped at the lesser of the cost or the value added as of the date the partition case begins. Partial documentation can still support a claim, but it increases the risk of disputes about what was paid, when it was paid, and whether it was necessary versus elective.

Process & Timing

  1. Who files: Any cotenant (co-owner). Where: North Carolina Superior Court (the Clerk of Superior Court typically handles partition proceedings). What: A partition petition and an application/request for contribution credits for carrying costs and improvements as part of the partition case. When: Contribution claims for a partition sale can be raised during the partition proceeding; property-tax contribution is generally limited to taxes paid in the 10 years before the partition petition is filed.
  2. Valuation and accounting: The case typically requires evidence of fair market value, the current mortgage payoff, and proof of claimed expenses (receipts, bank records, invoices, insurance declarations, tax bills, contractor statements, and proof of payment). For improvements, evidence often focuses on whether the work increased value and how much value it added as of the case start.
  3. Resolution: If the parties agree, they can structure a voluntary buyout using the same framework (equity split plus agreed credits). If they do not agree, the court can order a partition method (including a sale if the legal standard is met) and then distribute proceeds after addressing liens, costs, and approved contribution credits.

Exceptions & Pitfalls

  • Improvements are not always reimbursed dollar-for-dollar: In a partition case, improvements are commonly capped at the lesser of the actual cost or the value added as of the date the proceeding starts, so expensive work that does not increase value may not translate into a matching credit.
  • Exclusive possession can change reimbursement: North Carolina law can limit reimbursement for certain items (including necessary repairs and interest on an encumbrance) if the paying co-owner had exclusive possession during the relevant period. Disputes often turn on who lived there, who controlled access, and whether the other co-owner was effectively excluded.
  • “Carrying costs” must preserve value: Courts tend to treat taxes, insurance, necessary repairs, and payments tied to acquiring/preserving the property differently than elective upgrades or personal expenses. Mixing categories can weaken a contribution request.
  • Proof problems: Cash payments, missing invoices, or unclear descriptions (for example, payments labeled only as “house stuff”) can lead to reduced credits. Bank statements, contractor texts/emails, photos, permits (if any), and third-party declarations can help fill gaps.
  • Mortgage reality affects buyout feasibility: Even if the math supports a buyout, a co-owner’s inability to refinance or obtain funds can push the dispute toward a court-supervised partition sale rather than a voluntary buyout.

Conclusion

In North Carolina, a buyout amount typically starts with fair market value minus the mortgage payoff to determine equity, then applies each co-owner’s ownership percentage. In a partition case, the court can also award contribution credits for qualifying carrying costs (like taxes, insurance, repairs, and certain loan payments) and limited credits for improvements (often capped at the lesser of cost or value added as of the case start), with a 10-year lookback limit for property-tax contribution. The next step is to file a partition petition in the Clerk of Superior Court and assert the contribution claim during the proceeding.

Talk to a Partition Action Attorney

If a co-owned home has a mortgage and one co-owner has paid for repairs, taxes, insurance, or other expenses and needs a fair buyout number, our firm has experienced attorneys who can help explain the contribution rules, the proof needed, and the timelines in North Carolina partition cases. 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.

Category: Partition Action Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.