Short Answer

Yes. In North Carolina, a partnership cannot be created just because someone lists you as a partner on a tax return. If you never agreed to carry on a business as co-owners for profit, you can disavow the supposed partnership. In your partition case and mediation, you can resolve this by written settlement terms (no-partnership acknowledgement, tax return corrections, and indemnity). If needed, a court can issue a declaratory judgment confirming no partnership exists.

Understanding the Problem

You are a North Carolina co-owner in a partition action and have mediation set to discuss a buyout. Your co-owner listed you as a business partner on tax returns without your consent. You want to know if you can remove yourself from that supposed partnership and handle proceeds routing and move-out terms as part of the settlement.

Apply the Law

Under North Carolina law, a partnership arises from an agreement to carry on as co-owners a business for profit—mere co-ownership of real estate or being named on a tax form is not enough. The partition action is a special proceeding before the Clerk of Superior Court, and related disputes are often resolved in mediation and memorialized in a consent order. If a real dispute remains about whether a partnership exists, you can ask the Superior Court for a declaratory judgment that no partnership exists and seek indemnity. Judicial sales in partition follow the judicial-sale rules, and proceeds are disbursed under court direction; private buyouts commonly route funds through an attorney trust account per a written disbursement agreement.

Key Requirements

• No mutual intent to partner: Show you did not agree to co-own and operate a business for profit (real estate co-ownership alone is not a partnership).
• Correct the record: Give written notice that you did not consent to any partnership; request amended tax filings and removal from any Schedule K-1s.
• Use mediation to settle: In the partition mediation, include terms: “no partnership,” mutual releases, indemnity/hold-harmless for any partnership debts/taxes, and required tax amendments.
• Court declaration if needed: If the other side won’t agree, file a declaratory judgment action in Superior Court to confirm no partnership exists.
• Control the money flow: State in a consent order where buyout/sale proceeds go (attorney trust account or Clerk) and the exact order of disbursements, including fees and liens.
• Possession terms: Put a clear move-out date and conditions (access, keys, utilities, condition) in the settlement so there’s no ambiguity after payment.

What the Statutes Say

• N.C. Gen. Stat. § 1-254 (Declaratory judgments) – Courts may declare the rights of parties and construe legal relations or documents.
• N.C. Gen. Stat. § 1-394 (Special proceedings summons) – Explains issuance and service of summons in special proceedings (like partition).
• N.C. Gen. Stat. § 7A-38.3B (Mediation before the Clerk) – Authorizes mediation in matters before the Clerk of Superior Court.
• N.C. Gen. Stat. § 1-339.36 (Upset bids) – Sets the 10-day upset bid process for judicial sales if your case involves a court-ordered sale.

Analysis

Apply the Rule to the Facts: You did not consent to a business partnership; being listed on your co-owner’s tax return alone does not create one. In your partition mediation, ask for a written “no partnership” clause, with your co-owner agreeing to amend any returns and indemnify you for taxes or debts tied to the supposed partnership. The consent order can direct buyout funds into your attorney’s trust account with a clear disbursement ladder, and it can set a firm move-out date and conditions for your apartment.

Process & Timing

1. Who files: If agreement is possible, either party. Where: Mediation in the partition case before the Clerk of Superior Court; if unresolved, Superior Court for a declaratory judgment. What: Consent order in the partition file; if needed, a Complaint for Declaratory Judgment and Rule 4 service; special proceedings use AOC‑SP‑100 Special Proceedings Summons. When: Aim to finalize terms at mediation before any sale or closing.
2. After agreement, submit the signed consent order to the Clerk for entry; if a judicial sale is used, follow Article 29A procedures, including the 10‑day upset bid period and confirmation.
3. On closing or buyout funding, disburse per the order: fees and liens first, then net shares. Execute a written move‑out agreement with date, access, and key return. Keep copies of any amended tax filings removing you.

Exceptions & Pitfalls

• If you actually shared profits, ran a business together, or held yourselves out as partners, a court could find a real partnership—document your lack of business operations and intent.
• Do not sign a proceeds‑routing directive unless the consent order or disbursement agreement clearly lists who gets paid, in what order, and for what amounts.
• Service/transfer trap: raising broader equitable issues in the special proceeding can trigger transfer to Superior Court; build clean, agreed terms into the mediation consent order when possible.
• Move‑out ambiguity causes conflict: specify date/time, condition, utilities, access for showings, and holdover terms in writing.

Talk to a Partition Action Attorney

If you’re dealing with a disputed “partnership” designation tied to a North Carolina partition case, 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.