Can we include language that releases everyone from future claims related to the property, and what rights would we be giving up by doing that? – North Carolina

Short Answer

Yes. In North Carolina, co-owners who are selling a jointly owned house can sign a broader settlement agreement with mutual releases that waives future claims tied to the property and the sale proceeds. The tradeoff is that each person may be giving up the right to later demand reimbursement (or defend against a demand) for things like taxes, insurance, repairs, mortgage payments, or improvements—claims that can otherwise be raised in a partition case or other dispute. The release language must be drafted carefully so it matches what everyone truly intends to waive.

Understanding the Problem

In North Carolina, when co-owners sell a jointly owned house, the closing often requires a signed writing that tells the closing attorney how to divide the net sale proceeds, including any repayment of a prior advance and each person’s share. The single decision point is whether the co-owners should sign a simple disbursement agreement that only instructs the payout at closing, or a broader settlement agreement that also includes mutual releases to prevent later claims about the property, expenses, or reimbursements.

Apply the Law

North Carolina law recognizes that co-owners (cotenants) can have contribution and reimbursement rights related to the costs of owning and preserving the property. In a partition proceeding, a cotenant can apply to the court to have certain carrying costs and certain improvement amounts credited or accounted for when the property is divided or sold. A private settlement and release can be used to waive or resolve those potential claims, but the scope of what is waived depends on the wording of the release and the issues it covers.

Key Requirements

• Clear scope of the release: The agreement should clearly state whether it releases only claims about the sale proceeds distribution, or also releases claims about past and future expenses, reimbursements, liens, and lawsuits connected to the property.
• Identification of the claims being settled: The agreement should address the categories of claims that commonly arise between co-owners (carrying costs, improvements, advances, and any alleged offsets) so there is less room for later disagreement about what was waived.
• Proper execution and closing coordination: The release and the disbursement instructions should be signed by all necessary parties and delivered to the closing attorney in time for closing, with consistent terms across the documents.

What the Statutes Say

• N.C. Gen. Stat. § 46A-27 (Carrying costs; improvements; right to contribution) – Allows a cotenant, in a partition proceeding, to seek contribution for carrying costs (including taxes, insurance, repairs, and acquisition-loan payments) and to seek credit for certain improvements, with special limits for property taxes.
• N.C. Gen. Stat. § 105-363 (Remedies of cotenants and joint owners for taxes) – Addresses how a cotenant who pays property taxes may protect their share and, in some situations, obtain a lien for amounts paid beyond their share.

Analysis

Apply the Rule to the Facts: Here, the co-owners want a signed writing for closing that divides proceeds, repays a prior advance, and sets each party’s share. Because one co-owner is worried about later reimbursement demands (maintenance, repairs, taxes, insurance, or similar) or a later lien/lawsuit after the sale, a broader settlement with mutual releases can reduce that risk by settling those categories of claims now. The key is that the release would likely waive not only future lawsuits, but also future demands for contribution that could otherwise be asserted in a partition-related accounting under North Carolina law.

Process & Timing

1. Who signs: All co-owners (and anyone else asserting a right to proceeds, if applicable). Where: Typically signed outside of court and delivered to the closing attorney handling the North Carolina closing. What: A written settlement/disbursement agreement that includes (i) sale terms and payout instructions and (ii) mutual releases (and, if appropriate, a promise not to file liens related to the property). When: Before closing, with enough lead time for the closing attorney to review and confirm it matches the settlement statement.
2. Confirm the “claim list”: The agreement should address the known categories of disputes: prior advances, mortgage or loan payments, taxes, insurance, repairs/maintenance, and improvements. If the intent is to release unknown claims too, the language should say so plainly and define the time period covered (for example, “through the closing date”).
3. Close and document completion: At closing, the settlement statement and disbursement should match the signed agreement. After closing, each party should keep a complete copy of the signed agreement and the final settlement statement in case a dispute resurfaces.

Exceptions & Pitfalls

• Overbroad release that waives the wrong things: A “release everyone from all claims of any kind” clause can unintentionally waive valid reimbursement rights (or defenses) that a party expected to keep, including claims tied to carrying costs and improvements that North Carolina law may otherwise allow to be raised in a partition accounting.
• Underbroad release that does not stop the feared claim: A document that only says “this is how proceeds are divided” may not prevent a later demand for reimbursement, a later lawsuit, or an attempted lien theory based on taxes or other payments. If the goal is finality, the agreement should expressly cover reimbursement/contribution claims and lien-related conduct connected to the property.
• Mismatch between the release and the closing paperwork: If the settlement statement, payoff figures, or disbursement instructions conflict with the release terms (for example, unclear treatment of a prior advance), the disagreement can reappear after closing.
• Claims outside the property dispute: A release aimed at “property-related claims” should be drafted so it does not accidentally sweep in unrelated disputes between the same people that have nothing to do with the house or the sale.
• Tax and professional advice limits: A settlement can allocate proceeds, but it should not be treated as tax advice; a tax attorney or CPA should be consulted if the allocation or reimbursement could have tax consequences.

Related reading may help frame the choice between a private agreement and court involvement, including doing a private sale or settlement agreement with the other co-owner and how sale proceeds get released to each co-owner.

Conclusion

Yes—North Carolina co-owners can use a broader settlement with mutual releases to reduce the risk of future claims tied to the property and the sale. The main right given up is the ability to later seek (or contest) reimbursement for property-related costs and credits that can otherwise be asserted between cotenants, including carrying costs and certain improvements. The most important next step is to have all co-owners sign a written settlement/disbursement agreement with release language that clearly defines which property-related claims are waived, and deliver it to the closing attorney before closing.

Talk to a Partition Action Attorney

If you’re dealing with co-owner concerns about reimbursement claims or lawsuits after a house sale, our firm has experienced attorneys who can help clarify options, draft release language that matches the deal, and coordinate the paperwork for closing. Call us today at [CONTACT NUMBER].

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.