Short Answer

In North Carolina partition cases, you can usually finance a co-owner buyout by either: (1) a court-approved private sale to you with a purchase-money deed of trust recorded at closing, or (2) an allotment of the property to you with an owelty lien securing the amount you owe the other co-owner. Both options require approval in the partition case before the Clerk of Superior Court and compliance with judicial sale procedures, including an upset-bid and confirmation step for private sales.

Understanding the Problem

In North Carolina, can I use the property itself as collateral to get a loan that funds a co-owner buyout after the Clerk has ordered a sale or division in a partition case? Here, the court has already entered an order for sale or division, and you want to buy out your co-owner, using a loan secured by the property to fund the payoff.

Apply the Law

North Carolina partition matters run through the Clerk of Superior Court. Once the court orders sale or division, the Clerk can approve a transaction that lets a co-owner buy out the other’s interest. There are two common structures: (1) a private sale to the co-owner under the judicial sale procedures, with the buyer’s lender taking a purchase-money deed of trust at closing; or (2) an in-kind division awarding the property to one party with an “owelty” (equalizing) payment secured by a lien on the awarded property. Private sales include a report, an upset-bid period, and a confirmation step; lenders often fund at confirmation and record their deed of trust simultaneously with the commissioner’s deed. The Clerk can also account for taxes and necessary repairs so that fair credits are applied before payment.

Key Requirements

• Court approval in the partition case: Ask the Clerk to authorize either a private sale to you as a co-owner or an allotment with an owelty lien.
• Clear valuation and accounting: Use a current appraisal and request credits for carrying costs (e.g., taxes) and necessary repairs before setting the net buyout amount.
• Financing structure: For a private sale, close with a purchase-money deed of trust recorded with the commissioner’s deed. For an owelty, the lien secures what you owe until paid.
• Judicial sale procedures: Expect a sale report, a 10-day upset-bid window on private sales, and confirmation before closing.
• Recording and payoff mechanics: At closing, the commissioner delivers the deed, your loan funds pay the co-owner’s share and costs, and your lender’s deed of trust is recorded.

What the Statutes Say

• North Carolina Gen. Stat. Chapter 46A (Partition) – Governs partition by division or sale, including procedures and remedies.
• N.C. Gen. Stat. § 1-339.33 (Private sales by order) – Clerk may authorize a private sale instead of a public auction.
• N.C. Gen. Stat. § 1-339.36 (Upset bids on private sales) – Provides a 10-day upset-bid period after the sale report.
• N.C. Gen. Stat. § 1-339.28 (Confirmation) – Confirmation requirements; additional judicial approval if minors or incompetents are involved.

Analysis

Apply the Rule to the Facts: Because the court already ordered sale or division, you can ask the Clerk to approve a co-owner buyout at the appraised value. Your plan to use a loan secured by the property fits a court-approved private sale with a purchase-money deed of trust, or an in-kind division with an owelty lien. Your request for credits for half the property taxes and necessary heater repairs can be handled in the court’s accounting and applied against the buyout amount or proceeds.

Process & Timing

1. Who files: A co-owner. Where: Clerk of Superior Court in the county where the property is located (existing partition file). What: Motion to approve either (a) a private sale to the co-owner at the appraised value with authority to use purchase-money deed of trust financing, or (b) allotment with an owelty lien; include appraisal and a request for credits for taxes and necessary repairs. When: After the order for sale or division and before any commissioner’s sale is finalized.
2. For a private sale: the commissioner reports the sale; a 10-day upset-bid period runs; if no upset bid, the Clerk enters an order confirming the sale. Lenders commonly fund after confirmation; closing then occurs with the commissioner’s deed and simultaneous recording of your purchase-money deed of trust. Timelines can vary by county and whether any upset bid is filed.
3. For an owelty allotment: the court awards the property to you and fixes the owelty amount; an owelty lien secures payment. You then close on your loan, the lender’s deed of trust is recorded, and the owelty is paid from loan proceeds, after which the lien is canceled.

Exceptions & Pitfalls

• Lender timing: Many lenders require confirmation before funding; build in time for the upset-bid period and confirmation.
• Title sequencing: Ensure the order authorizes the commissioner to accept purchase-money financing and that the deed and deed of trust record simultaneously at closing.
• Credits proof: Bring proof of taxes paid and invoices for necessary repairs; “improvements” that were not necessary may not be credited the same way.
• Parties with disabilities: If any owner is a minor or incompetent, additional judicial confirmation is required, which can add time.
• Notice and procedure: Serve all parties of record; errors in notice, sale reporting, or confirmation can delay or invalidate the transaction.

Talk to a Partition Action Attorney

If you’re dealing with a court-ordered sale or division and want to finance a co-owner buyout using the property as collateral, 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.