Dec232025
Real Estate Q&A Series

How can I get reimbursed from the sale proceeds for property taxes and other expenses I paid out of pocket on a home owned by a trust? – North Carolina

Short Answer

In North Carolina, reimbursement usually happens through the trust’s administration: the trustee treats the out-of-pocket taxes and other carrying costs as reimbursable trust expenses, documents them, and pays them from trust assets—often at the real estate closing from the sale proceeds. North Carolina law generally allows a trustee to reimburse properly incurred or advanced expenses and gives the trustee a lien on trust property to secure reimbursement. If there is a dispute about whether the expenses were authorized or “properly incurred,” reimbursement may need to be resolved through the trust’s records and, if necessary, the court handling related funds (such as an eminent domain deposit) or other appropriate court proceedings.

Understanding the Problem

In North Carolina, when a home is titled in a trust and someone pays property taxes, insurance, utilities, repairs, or similar carrying costs out of pocket to keep the property marketable and avoid enforcement actions, the key question is: can those payments be repaid from the trust or directly out of the sale proceeds at closing. The decision point usually turns on who paid the expenses (trustee versus a beneficiary or family member), whether the payments were made for the trust’s benefit, and whether the trustee has authority to reimburse those amounts as trust administration expenses before distributing the remaining proceeds. Timing also matters when an eminent domain matter must close first and taxes must be current before the transaction can move forward.

Apply the Law

North Carolina trust law generally treats reasonable expenses incurred or advanced to administer the trust—such as paying required property taxes to protect trust real estate—as reimbursable from trust assets. The trustee typically has the power to pay those expenses from trust property without having to get advance permission from the Clerk of Superior Court, and the trustee can secure reimbursement with a lien on trust property for amounts owed (including reasonable interest) when the expenses fit the statute’s standard. Separately, when money is deposited in an eminent domain case, the judge can enter orders that fairly address taxes and other charges connected to the property when disbursing those funds.

Key Requirements

  • Expense was for trust administration: The payment must relate to protecting, maintaining, or selling the trust-owned home (for example, paying delinquent property taxes to clear a lien and allow a closing).
  • Expense was properly incurred or advanced: The amount should be reasonable and connected to a real obligation tied to the property (not a personal expense), and it should be supported by proof such as tax bills, receipts, cancelled checks, or payment confirmations.
  • Right person requests repayment through the right channel: Reimbursement is straightforward when the trustee paid or authorized the payment and then reimburses the payer from trust assets or sale proceeds; it can become contested when a non-trustee paid without clear authorization and later seeks repayment.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The facts describe a trust-owned home that cannot move forward with an eminent domain closing or a market sale unless property taxes are brought current. Paying those taxes protects the trust property from tax enforcement and clears a closing obstacle, which fits the concept of a trust administration expense. If the payments were made by the trustee (or clearly approved by the trustee), reimbursement can usually be handled as an administrative payout from trust assets—often shown as a line item on the settlement statement at closing—before the remaining proceeds are distributed. If a non-trustee paid without clear authorization, the trustee will usually still need proof of payment and a documented basis for treating the payment as a reimbursable advance for the trust.

Process & Timing

  1. Who files: Usually no “filing” is needed if the trustee agrees and can pay from trust assets. Where: The reimbursement is typically handled by the trustee and the closing attorney through the North Carolina real estate closing. What: A reimbursement ledger and supporting documents (tax bills, receipts, proof of payment), plus written direction from the trustee to the closing attorney to pay reimbursement from proceeds as a seller debit/credit on the settlement statement. When: As early as possible—ideally before listing or immediately after identifying the tax delinquency—so the payoff amounts can be confirmed and built into closing instructions.
  2. If the eminent domain deposit is the available money first: The trustee (through counsel, if appropriate) may apply in the eminent domain case for disbursement and ask the judge to address taxes and related charges in a fair way as part of the disbursement order. Timing depends on the case schedule and whether there is any dispute about title or who should receive funds.
  3. Close and document: At closing, the closing attorney pays required tax amounts to clear liens and disburses the agreed reimbursement to the payer (if authorized by the trustee). The trustee then keeps those closing documents with the trust’s records and reflects the reimbursement in the trust accounting.

Exceptions & Pitfalls

  • Payer is not the trustee: N.C. Gen. Stat.  32-58 clearly protects a trustee’s right to reimbursement for proper advances, but a beneficiary or family member seeking repayment typically needs the trustee to treat the payment as a reimbursable trust expense. Without clear authorization, the trustee may ask for more documentation or may dispute whether the payment qualifies.
  • Missing documentation: Reimbursement often turns on proof. Tax office statements, payment confirmations, cancelled checks, and a simple year-by-year spreadsheet of what was paid and when can prevent disputes.
  • Confusing “trust listing” with “trust authority”: A listing in the trust’s name does not automatically prove who can sign closing documents or authorize reimbursements. The closing attorney will usually require trust documentation and proof of trustee authority.
  • Disputes among beneficiaries: If beneficiaries disagree about reimbursement (for example, claiming payments were voluntary gifts), the trustee may need to pause distribution and seek court guidance before releasing funds.
  • Tax liens must be handled first: Even when reimbursement is appropriate, closing must still address tax liens and required payoffs so title can transfer cleanly.

Conclusion

In North Carolina, reimbursement for property taxes and similar carrying costs on a trust-owned home is usually handled as a trust administration expense: the trustee documents the payments, confirms they were properly incurred to protect the property, and reimburses them from trust assets—often directly from the sale proceeds at closing. If an eminent domain deposit is involved, the court can also enter fair orders addressing taxes and related charges when disbursing funds. Next step: have the trustee give written closing instructions to pay the documented reimbursement on the settlement statement before proceeds are distributed.

Talk to a Real Estate Attorney

If you’re dealing with reimbursement for taxes and other out-of-pocket expenses on a trust-owned home before an eminent domain matter and sale can close, our firm has experienced attorneys who can help explain the options and timelines and coordinate with the closing process. 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: Real Estate 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.