What should we do to avoid breaching the purchase contract while securing all signatures? – North Carolina

Short Answer

Get a written extension of any signature or execution deadline before it expires, or have a properly authorized agent sign under a valid power of attorney. Meanwhile, put any dispute about loan interest or proceeds into an escrow with the closing attorney so the sale can close on time. If the dispute persists, plan for a court-supervised interpleader after closing. Record the power of attorney with the deed to avoid recording delays.

Understanding the Problem

You are selling North Carolina real estate under a cash contract. Two co-owners have signed, but a third still must sign before a looming deadline. You also want a binding settlement on how to repay prior loan interest and split proceeds, without derailing the scheduled closing.

Apply the Law

In North Carolina, a buyer and all sellers must have a signed, enforceable contract by the stated deadline. An agent may sign for a seller if a valid, properly executed power of attorney (POA) grants authority to sell and convey real property. When an agent acts for more than one principal, the agent owes a separate duty of loyalty to each and must avoid conflicts. If the co-owners disagree about net proceeds, the closing attorney may hold disputed funds in trust so the deed can record and the sale can close, with the dispute resolved later by agreement or interpleader. The main forums and offices involved are: the Register of Deeds (recording the deed and POA), the closing attorney’s trust account (escrow), and, if needed, the Clerk/Superior Court (instructions on agent authority or interpleader). A key trigger is the contract’s signature/acceptance deadline—get a written extension before it expires if everyone cannot sign in time.

Key Requirements

• Valid authority to sign: Confirm the POA explicitly authorizes sale and conveyance of real property; the agent signs the contract and deed in the agent’s capacity for the principal.
• Written extension if needed: Before the signature/acceptance deadline, obtain a written addendum extending execution and, if needed, the closing date.
• Recordable documents: Ensure the deed and the POA (original or certified copy) meet notarization and recording requirements for the county Register of Deeds.
• Conflict management: If one agent represents multiple co-owners, identify and manage any conflicting economic interests; seek written consents or court guidance if needed.
• Escrow of disputed proceeds: Use a written escrow agreement with the closing attorney to hold the disputed amount so closing is not delayed.
• Interpleader as a backstop: If the dispute persists, the stakeholder (often the closing attorney) can file interpleader so a court decides allocation.

What the Statutes Say

• North Carolina Gen. Stat. § 32C-1-105 (Execution of power of attorney) – A POA must be properly executed (notarized) to be valid.
• North Carolina Gen. Stat. § 32C-1-116 (Judicial relief regarding powers of attorney) – The court (often through the Clerk of Superior Court) can determine an agent’s authority and resolve POA disputes.
• North Carolina Gen. Stat. § 32C-1-117 (Agent’s liability; remedies) – Violations of POA duties are breaches of fiduciary duty, and courts can grant remedies.
• North Carolina Rule of Civil Procedure 22 (Interpleader) – Allows a neutral stakeholder to deposit disputed funds and let the court decide who is entitled to them.

Analysis

Apply the Rule to the Facts: First, avoid breach by either (a) getting a written extension of the signature/acceptance deadline or (b) having the agent sign for the third co-owner under a valid POA that authorizes real estate sales. Second, keep the closing on track by placing the disputed loan interest/proceeds in the closing attorney’s trust account under an escrow agreement, disbursing only the undisputed amounts. Third, if the co-owners cannot finalize their settlement before closing, plan for interpleader so the court can decide allocation later without delaying recordation.

Process & Timing

1. Who files: Sellers (through their attorney). Where: Private contract addendum; future court relief in the county where the property sits if needed. What: Written addendum extending signature/acceptance (and, if needed, closing) dates; confirm POA authority for the agent to sign. When: Before the contract’s signature/acceptance deadline; do not rely on verbal extensions.
2. Next: Provide the original or certified POA to the closing attorney for recording with the deed at closing; execute a written escrow agreement identifying the disputed amount, who must consent to release, and a deadline for resolution. Typical coordination occurs within days to a couple of weeks; counties may vary on recording turnaround.
3. Final: Close and record the deed and POA with the Register of Deeds; disburse undisputed proceeds; hold the disputed portion in trust. If no agreement by the escrow deadline, the stakeholder files a Rule 22 interpleader in Superior Court so a judge decides distribution.

Exceptions & Pitfalls

• Limited POA authority: If the POA does not clearly authorize sale/conveyance, the agent cannot sign the contract or deed—obtain the principal’s direct signature or seek court instructions.
• Multiple principals, one agent: Serving as agent for more than one co-owner requires loyalty to each; if interests diverge, obtain informed written consents or seek court guidance before signing a settlement on anyone’s behalf.
• Recording glitches: A deed signed by an agent may not record if the notarial certificate is defective or the POA (or certified copy) is not available for recording—cure these before closing.
• Escrow clarity: Ambiguous escrow instructions can trap funds; specify the amount, release conditions, and a fallback to court interpleader.
• Communication risk: Verbal extensions invite disputes; always confirm extensions and escrow terms in writing.

Talk to a Real Estate Attorney

If you’re dealing with a tight contract deadline, a missing signature, or co-owners disputing sale proceeds, 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.