Short Answer

In North Carolina, a personal representative can keep a sale moving by obtaining a court order that authorizes the sale and directs that the net proceeds be held in escrow while the lawsuit is resolved. All heirs, devisees, and any person asserting title or reimbursement claims should be joined, and the court can approve a public or private judicial sale. A consent order from mediation can allow the sale to close free and clear, with claims attaching to the proceeds.

Understanding the Problem

You are the personal representative in North Carolina and need to sell estate real property. After you denied relatives’ ownership and reimbursement claims, they filed a lawsuit within the response period. Now the sale is on hold, and everyone plans to mediate a deal to sell the property and later distribute the net proceeds. Can you move forward with the sale while the lawsuit is pending?

Apply the Law

Under North Carolina law, title to a decedent’s real property typically vests in heirs/devisees at death, but a personal representative may sell real property to pay debts or as authorized by will and statute. When selling to create assets, the personal representative files a special proceeding with the Clerk of Superior Court in the county where the land lies, joins heirs/devisees (and adverse claimants), and seeks an order approving a public or private judicial sale. If someone claims an ownership interest, that person must be made a party and the matter may be transferred to Superior Court if factual or equitable issues are raised. Courts can authorize sales while preserving claims by directing the net proceeds be escrowed, with claims attaching to those proceeds. Mediation can produce a consent order that implements this structure.

Key Requirements

• Authority to sell and forum: Confirm authority from the will or file a special proceeding to sell land to create assets in the county where the property is located.
• Join necessary parties: Serve all heirs/devisees and any adverse claimants to title or proceeds so the order binds them.
• Sale approval and method: Obtain court approval for a public or private judicial sale; follow judicial sale procedures, including confirmation and any upset bid period.
• Escrow/consent order: Use a court order (often by consent after mediation) to sell free and clear and deposit net proceeds into escrow, with all claims attaching to those proceeds.
• Proceeds handling: Apply liens and approved claims in statutory priority; do not distribute contested proceeds until the lawsuit or settlement resolves.

What the Statutes Say

• North Carolina Gen. Stat. § 28A-17-1 (Sale of real property to pay claims) – Allows a personal representative to apply to sell real property to create assets for debts/claims.
• North Carolina Gen. Stat. § 28A-17-2 (Petition contents) – Lists what the petition must include and sets venue.
• North Carolina Gen. Stat. § 28A-17-6 (Adverse claimants and transfer) – Requires joining claimants to title; issues of law/fact may be transferred to Superior Court.
• North Carolina Gen. Stat. § 7A-38.3B (Mediation of matters before the clerk) – Authorizes mediation in estate matters within the clerk’s jurisdiction.

Analysis

Apply the Rule to the Facts: Because relatives filed a separate lawsuit after you denied their ownership and reimbursement claims, ensure they are parties in the sale proceeding or secure a coordinated consent order in the lawsuit. Ask the court to authorize a public or private sale and to require the net proceeds be held in escrow, with all claims attaching to those proceeds. Your planned mediation is an efficient way to document a consent order that permits closing now while protecting everyone’s rights to the proceeds.

Process & Timing

1. Who files: Personal representative. Where: Clerk of Superior Court in the North Carolina county where the land is located. What: A petition to sell real property to create assets (include property description, parties, and best-interest statement) and a request to escrow net proceeds; in the pending lawsuit, submit a consent motion/order authorizing sale free and clear with claims attaching to proceeds. When: File promptly so the court can approve the sale structure before marketing/contract or closing.
2. After the order, conduct the court-approved sale (public or private). For a private sale, expect judicial-sale procedures and a short upset bid period before confirmation. Close and deposit net proceeds with the Clerk or an agreed trust account per the order.
3. Following mediation or final judgment, present a consent judgment or order allocating the escrowed proceeds, then distribute per the court’s direction and continue estate administration to completion.

Exceptions & Pitfalls

• If the will grants a power of sale, a nonjudicial sale may be possible, but with a pending title or reimbursement dispute buyers often require a court order and escrow to ensure clear title.
• Failing to join all heirs/devisees or adverse claimants can render an order void as to them; ensure proper service.
• If pleadings raise factual or equitable issues, the Clerk must transfer the proceeding to Superior Court; coordinate orders across the special proceeding and the lawsuit.
• A recorded lis pendens can block closing; incorporate in the consent order a release or limitation so the sale can proceed while claims attach to proceeds.
• Confirm bond sufficiency if the personal representative or a commissioner will receive sale proceeds; courts may require increased bond.

Talk to a Probate Attorney

If you’re dealing with a disputed estate property sale and need court approval to escrow proceeds while claims are resolved, 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.