Short Answer

In North Carolina, a former owner can ask a Superior Court judge to unwind a deed (rescind or cancel it) if the sale was procured by fraud, undue influence, or other unfair conduct. The court can set the deed aside, impose a constructive trust, or recharacterize the deal as an equitable mortgage. Fraud claims generally must be filed within three years of when the fraud was discovered. File quickly and record a notice of lis pendens to protect the claim against future transfers.

Understanding the Problem

You’re asking whether, under North Carolina real estate law, you can help an elderly relative reclaim a home they sold to a neighbor, where the buyer “paid off the mortgage” as the only consideration and the relative is now renting the home back. The goal is to undo the deed or otherwise restore your relative’s ownership because the family believes the sale was a scam that caused a significant loss.

Apply the Law

North Carolina courts can cancel a deed or rescind a sale if the seller proves the transfer resulted from fraud, constructive fraud (abuse of a position of trust), undue influence, or other inequitable conduct. If a deed that looks “absolute” was in substance a loan secured by the home, the court can treat it as an equitable mortgage and allow redemption. Lawsuits to unwind a deed are filed in the Superior Court in the county where the property lies; recording a lis pendens in the Register of Deeds protects the claim while the case is pending. Fraud claims are typically subject to a three-year statute of limitations that runs from discovery; related claims can have different deadlines.

Key Requirements

• False statement or concealment: The buyer misrepresented or hid a material fact (for example, price, terms, or consequences of signing) that mattered to the decision to sell.
• Intent and reliance: The buyer intended the seller to rely, the seller reasonably relied, and that reliance drove the sale.
• Damage: The seller suffered harm (such as loss of equity from a below‑market sale and leaseback).
• Abuse of trust (constructive fraud): If the buyer occupied a position of trust or dominance over the seller, show the buyer used that position for personal gain and the seller was harmed.
• Undue influence/unconscionability: Show overreaching, pressure, or grossly inadequate consideration that makes the deal inequitable.
• Forum and protection: File in Superior Court and record a lis pendens to give notice and preserve your relative’s rights during the case.
• Deadlines: Fraud is generally three years from discovery; other claims may differ, and deadlines can be complex.

What the Statutes Say

• North Carolina Gen. Stat. § 1-52(9) (Limitations—fraud) – Fraud claims generally must be filed within three years from discovery of the facts constituting fraud.
• North Carolina Gen. Stat. § 75-1.1 (Unfair and deceptive trade practices) – Deceptive practices in or affecting commerce can create additional remedies in appropriate cases.
• North Carolina Gen. Stat. § 1D-15 (Punitive damages—fraud as aggravating factor) – Fraud can support punitive damages where the statute applies.

Analysis

Apply the Rule to the Facts: Your relative allegedly sold far below value, received only a mortgage payoff, and is now leasing the home back. Those facts can indicate misrepresentation, unfair pressure, or an unconscionable bargain. If the neighbor downplayed value or the nature of the deal and your relative relied on that, the fraud elements may be met. If your relative trusted the neighbor and the neighbor used that trust for personal gain, constructive fraud may apply. The leaseback and minimal consideration could also support treating the deed as an equitable mortgage in the right circumstances.

Process & Timing

1. Who files: The former owner (or a court‑appointed guardian if capacity is an issue). Where: Superior Court in the county where the property is located. What: Civil complaint seeking rescission/cancellation of deed, quiet title, constructive trust/equitable mortgage, and any related claims (e.g., fraud; where appropriate, unfair and deceptive trade practices). Record a notice of lis pendens with the Register of Deeds. When: File as soon as possible; fraud claims are generally within three years of discovery.
2. After filing, promptly serve the buyer, request temporary restraining or preliminary injunctive relief if needed to prevent transfer or eviction, and begin discovery (documents, appraisals, communications about the sale).
3. Resolution may be by settlement or court order. If successful, the court can direct the Register of Deeds to cancel the deed and quiet title back to the seller, impose a constructive trust, or recharacterize the transaction as a mortgage, along with any appropriate monetary relief.

Exceptions & Pitfalls

• Subsequent sale risk: If the buyer resells to a good‑faith purchaser before you record a lis pendens, reclaiming title becomes harder and your remedy may be limited to money.
• Commerce requirement: Unfair and deceptive trade practice claims apply only to conduct “in or affecting commerce”; a purely private, one‑off transaction may not qualify.
• Capacity and authority: If the seller now lacks capacity, you may need a guardian to bring claims; if an agent signed the deed, examine the power of attorney for authority and potential constructive fraud.
• Ratification/waiver traps: Continuing to accept lease terms after learning key facts can complicate rescission arguments—raise objections promptly and in writing.
• Deadline confusion: Different claims can carry different limitation periods; track the discovery date and do not delay filing.

Talk to a Real Estate Attorney

If you’re dealing with a below‑value sale and leaseback that looks unfair, 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.