Short Answer

In North Carolina, you secure your share by demanding a full accounting before or at mediation and building a line‑item buyout formula that nets rental income owed to you against agreed credits (taxes, insurance, necessary repairs, and similar expenses). Put the numbers, documents, indemnities, move‑out terms, and payment mechanics into a signed settlement (and, if a court case is pending, a consent order) so the Clerk of Superior Court can enforce it if needed.

Understanding the Problem

In North Carolina, as a co-owner considering a buyout in a partition context, how do you make sure the buyout figure includes your share of rental income and any unpaid distributions? Mediation is scheduled, and you have not received distributions to date. You want a clear, enforceable number that reflects what you are owed.

Apply the Law

North Carolina partition and co-tenancy law aims for an equitable accounting between co-owners. In a negotiated buyout, that same accounting approach applies: account for rents and profits collected, subtract reasonable and necessary carrying costs, address whether any occupant owes use-and-possession charges (generally only after ouster), and handle improvement claims by any increase in value rather than raw cost. Partition actions are filed with the Clerk of Superior Court in the county where the land sits. If a sale happens instead of a buyout, judicial sale procedures include a short upset‑bid window.

Key Requirements

• Prove income and distributions: Gather leases, rent rolls, bank statements, and tax forms to show all rents received and distributions (or lack of them).
• Document necessary expenses: Credits usually include property taxes, insurance, mortgage interest, necessary repairs, and similar carrying costs paid by a co-owner; keep invoices and proof of payment.
• Address occupancy and ouster: A co-owner living in the property is not usually charged rent absent ouster; rents actually received from third parties must be shared.
• Handle improvements correctly: Improvement claims are typically limited to enhanced value attributable to the improvement, not the full spend.
• Set tax and CPA terms: If Schedule E or K‑1 items need amending, use holdbacks and indemnities to cover amended returns and resulting taxes/penalties.
• Lock it in writing: Use a detailed, signed settlement term sheet (and consent order if a case is pending) with exhibits, deadlines, and enforcement language.

What the Statutes Say

• North Carolina Gen. Stat. § 7A-38.3B (Mediation in matters before the clerk) – Clerks can order mediation in cases within their jurisdiction, including partition matters.
• North Carolina Gen. Stat. § 1-339.36 (Upset bids) – After certain judicial sales, a new bid may be filed within 10 days to upset the sale.
• North Carolina Gen. Stat. § 1-301.2 (Special proceedings: transfer/appeal) – Governs transfer of issues to superior court and appeals in special proceedings like partition.

Analysis

Apply the Rule to the Facts: Because you have not received distributions, start with a rent ledger and bank records showing all rents collected. Subtract only documented, necessary carrying costs (taxes, insurance, mortgage interest, and necessary repairs) actually paid. If you occupy the property, you are generally not charged rent absent ouster; if your co-owner collected tenant rents, those must be shared. Wrap these figures into a buyout term sheet that includes CPA holdbacks, tax indemnities, and a defined move‑out window after payment.

Process & Timing

1. Who files: A co-owner seeking resolution. Where: Clerk of Superior Court in the county where the property is located. What: If settlement fails, file a verified petition for partition and for an equitable accounting of rents and profits; request appointment of commissioners and accounting relief. When: Prepare the full accounting before mediation; if a sale occurs later, remember the 10‑day upset‑bid period under judicial sale rules.
2. At mediation, present a spreadsheet that nets rents owed to you against agreed credits (taxes, insurance, necessary repairs), plus any improvement adjustments. Build in CPA cost sharing, tax indemnities, escrow holdbacks, and your requested possession period after payment.
3. Finalize by signing a detailed settlement agreement (and, if a case is pending, a consent order) with line‑item exhibits, payment and deed timelines, move‑out date, releases, and dismissal terms. If no settlement, proceed with commissioners, report, objections window, and sale or in‑kind division as applicable.

Exceptions & Pitfalls

• Occupancy isn’t automatically “rent”: Absent ouster, a living co-owner is typically not charged rent; focus on tenant rents actually received.
• Repairs vs. improvements: Routine, necessary repairs usually credit at cost; improvements are typically credited only to the extent they increase value.
• Thin documentation: Without leases, bank statements, receipts, and tax schedules, numbers get disputed; ask for a formal accounting and attach the supporting documents to the settlement.
• Taxes and amended returns: If past K‑1s/Schedule E need correction, use escrow holdbacks and indemnities to cover additional taxes, penalties, and CPA fees.
• Entity ownership wrinkle: If title is in a partnership/LLC, partition may be limited; the buyout may be governed by the governing agreement—confirm title and the controlling document before finalizing terms.
• Fees and costs: Courts may apportion commissioners’ fees and some costs from sale proceeds; negotiate who pays attorneys’ and CPA fees in the settlement.

Talk to a Partition Action Attorney

If you’re dealing with a disputed co-owner buyout and need rental income and unpaid distributions counted correctly, 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.