How can I calculate a fair buyout amount for my co-owner’s share? – North Carolina

Short Answer

In North Carolina, a fair buyout starts with the property’s fair market value, then adjusts for liens and each co-owner’s contributions and use of the property. Typically, you calculate net equity (value minus mortgages and sale-like costs), apply each owner’s percentage, then add credits for things like mortgage, taxes, insurance, and necessary repairs—and offset for exclusive use or rental value where appropriate. If you cannot agree, a partition case before the Clerk of Superior Court will finalize the accounting or lead to a court-ordered sale.

Understanding the Problem

You want to buy out your co-owner (or be bought out) on a North Carolina home and need a defensible number to put in a demand letter. The single decision is how to price the buyout consistent with North Carolina partition rules, knowing that if there is no agreement the Clerk of Superior Court can order an in-kind division with adjustments or a sale and divide the net. One key fact here: your co-owner paid off a refinance under a deed of trust and seeks reimbursement.

Apply the Law

North Carolina partition law lets any co-owner seek either a physical division (in kind) with equalizing payments (owelty) or, if that would cause substantial injury, a sale with net proceeds divided. In both paths, the court can account for each co-tenant’s contributions (taxes, mortgage, insurance, necessary repairs), give credit for improvements to the extent they increased value, and consider offsets for exclusive possession or rents collected. Partition actions are filed as special proceedings before the Clerk of Superior Court in the county where the property sits; partition sales (if ordered) are judicial sales with an upset-bid period.

Key Requirements

• Fair Market Value: Get a credible current appraisal to anchor the calculation.
• Baseline shares: Start with each deeded ownership percentage (often 50/50 for tenants in common if unspecified).
• Net equity first: Subtract outstanding liens and reasonable sale-type costs to estimate net equity.
• Contribution credits: Credit a co-owner for carrying costs (e.g., mortgage, taxes, insurance) and necessary repairs; improvements earn credit only to the extent they enhanced value.
• Use/rent offsets: If one owner had exclusive use or collected rent, a reasonable rental-value offset may apply.
• Forum and outcomes: If no agreement, file a partition with the Clerk; the court may order in-kind division with owelty or a judicial sale with an upset-bid window.

What the Statutes Say

• North Carolina Gen. Stat., Chapter 46A (Partition) – Procedures for partition, including division in kind, sale for partition, commissioners, and accounting among co-tenants.
• North Carolina Gen. Stat., Chapter 1, Article 29A (Judicial Sales) – Rules for court-ordered sales, confirmations, and upset bids.
• North Carolina Gen. Stat. § 1-301.2 (Transfer of special proceedings) – Clerk must transfer if issues of fact or equitable relief are raised.

Analysis

Apply the Rule to the Facts: Start with an appraisal to set fair market value. Subtract any outstanding liens to estimate net equity. Because your co-owner paid off a refinance, credit those qualifying carrying-cost payments (and any necessary repairs) before dividing net equity by ownership percentage. If one party had exclusive use, apply a reasonable rental offset. The buyout price equals the other party’s adjusted share after these credits and offsets.

Process & Timing

1. Who files: Any co-owner. Where: Clerk of Superior Court, special proceedings division, in the North Carolina county where the property is located. What: Verified petition for partition and Special Proceedings Summons (AOC‑SP‑100). When: No fixed statute of limitations for partition; file when negotiations fail.
2. The Clerk determines whether division in kind is feasible; if so, appoints commissioners to value and divide, with possible owelty to equalize. If not feasible, the Clerk orders a judicial sale; a special commissioner conducts the sale under Article 29A procedures, subject to upset bids.
3. After the commissioners’ report or sale, the Clerk confirms, applies the accounting (credits, offsets, and costs), and enters an order distributing deeds (for in-kind) or net proceeds (for sale).

Exceptions & Pitfalls

• Improvement credits are based on enhanced value to the property, not the raw cost spent.
• Keep records for every mortgage, tax, insurance, and repair payment; undocumented claims are hard to credit.
• If one co-owner lived there alone, a reasonable rental-value offset may reduce that owner’s credits.
• Heirs’ property can trigger special appraisal-and-buyout procedures before a sale; procedures and deadlines can vary by issue.
• Partition sales follow judicial-sale rules; missing an upset-bid window can change the outcome.

Talk to a Partition Action Attorney

If you’re dealing with a co-owner buyout or a likely partition, 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.