Short Answer

Yes—if your deed clearly created a right of survivorship (for example, a deed to spouses as tenants by the entirety or a deed stating “joint tenants with right of survivorship”), you can claim the surplus that follows from that ownership. In North Carolina, survivorship must be created by the deed’s wording; it is not automatic. Timing matters: if the co-owner died before the sale, survivorship typically vests full title in the survivor, and the surplus usually follows that ownership. If both co-owners were alive at the sale, surplus is normally split by each owner’s share after all liens and costs are paid.

How North Carolina Law Applies

“Surplus funds” are what remains from a foreclosure or other court-approved sale after paying the costs of sale and valid liens in order of priority. North Carolina distributes that surplus to the person(s) entitled to it based on their ownership when the sale is finalized. If the recorded deed expressly created a right of survivorship—either by naming spouses as tenants by the entirety or by saying “joint tenants with right of survivorship”—the survivor usually owns the entire property upon the other owner’s death. In that scenario, if the co-owner died before the sale was completed, the surviving owner often becomes entitled to the surplus (after paying superior liens).

By contrast, if the deed did not clearly create survivorship, the owners are treated as tenants in common. There is no survivorship in a tenancy in common. If a co-owner dies before the sale, that person’s share does not pass to the other owner; it passes to the decedent’s estate or heirs, and the surplus is divided accordingly. North Carolina clerks often treat sale proceeds as “standing in the shoes” of the real property when distributing funds, so the deed language and the timing of any death drive who gets the surplus.

Examples:

• Joint tenants with right of survivorship; one co-owner dies before the sale: the survivor typically takes the entire surplus (after liens) because survivorship vested before the sale.
• Joint tenants with right of survivorship; both owners alive at sale: surplus usually splits according to each owner’s share; a later death doesn’t enlarge the survivor’s portion of that already-created surplus.
• Tenants in common (no survivorship language): each owner (or an owner’s estate/heirs if deceased) receives their share of the surplus.

Key Requirements

• Express survivorship in the deed. North Carolina abolishes the automatic survivorship incident of joint tenancy. The deed must clearly say survivorship exists (for example, “as joint tenants with right of survivorship”) or the owners must be spouses holding as tenants by the entirety.
• Timing of death vs. sale. Survivorship must vest before the sale. If the co-owner died before the sale’s completion and survivorship applies, the survivor normally becomes the sole owner and can claim the surplus. If both owners were alive when the high bid was accepted/confirmed, the surplus is generally fixed to each owner’s share at that time.
• No survivorship = tenancy in common. Without clear survivorship language, each owner’s share is separate. A deceased owner’s share goes to their estate/heirs, not the surviving co-owner.
• Liens and costs come first. The trustee/clerk pays sale expenses, taxes, and lienholders in order of priority before any owner receives surplus.
• Proof is required. To assert a survivorship claim, be ready to provide the recorded deed, proof of death (if relevant), and any estate documents showing who stands in the decedent’s shoes if there is no survivorship.

Process & Timing

1. Confirm the sale is final. Wait until the upset-bid period closes and the trustee/clerk confirms the sale.
2. Gather documents. Obtain a certified copy of the recorded deed, any death certificate, and—if no survivorship—letters of administration or testamentary for the decedent’s estate.
3. Identify liens. Confirm taxes, HOA liens, judgments, and other encumbrances that will be paid before any surplus.
4. File a claim for surplus. Submit a written claim in the foreclosure file with the Clerk of Superior Court (or to the trustee as instructed), attaching your evidence (deed, proof of death, estate papers) and explaining your survivorship or ownership basis.
5. Hearing if disputed. If there are competing claims, the clerk typically notices a hearing and decides who is entitled to what share.
6. Order and disbursement. The clerk issues an order of distribution. The trustee/clerk then disburses funds per that order.

What the Statutes Say

• North Carolina Gen. Stat. § 45-21.31 — Governs distribution of foreclosure sale proceeds, including paying costs, lienholders, and any surplus to the person(s) entitled.
• North Carolina Gen. Stat. § 41-2 — Abolishes automatic survivorship in joint tenancies; survivorship exists only if the instrument expressly provides it, which is why deed wording is critical.
• North Carolina Gen. Stat. § 39-13.6 — Addresses creation/conveyance involving tenancy by the entirety between spouses, a form of title that includes survivorship.
• North Carolina Gen. Stat. § 28A-15-2 — Explains how non-survivorship real property passes at death (to heirs or devisees), which controls who receives a deceased owner’s share of surplus when there is no survivorship.

Exceptions & Pitfalls

• Assuming “joint tenancy” equals survivorship. In North Carolina, survivorship must be stated in the deed. “Joint tenants” without explicit survivorship language usually means no survivorship.
• Overlooking timing. If both owners were alive when the sale became final, a later death typically does not enlarge the survivor’s share of the already-created surplus.
• Ignoring liens. Taxes, HOA dues, and recorded judgments may reduce or eliminate surplus before owners are paid.
• Estate involvement when no survivorship. If there’s no survivorship and a co-owner died, their estate (through a personal representative) must claim that share.
• Simultaneous or uncertain deaths. If you cannot prove one owner survived the other, survivorship may not apply under North Carolina’s simultaneous-death rules. Procedures can be technical—get advice promptly.

Helpful Hints

• Get a certified copy of the recorded deed to confirm whether survivorship was created in writing.
• Ask the trustee or clerk for the post-sale accounting so you can see what liens and costs will be paid before any surplus.
• If a co-owner died, include the death certificate and, if there’s no survivorship, estate appointment papers with your claim.
• File your claim quickly and in writing; contested surplus claims may require a hearing.
• Procedures can vary by county, and deadlines can change. When in doubt, call the clerk’s office or speak with counsel.

Talk to a Surplus Funds Attorney

If you’re trying to claim foreclosure surplus and believe your deed’s right of survivorship affects your share, 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.