4.3 North Carolina Property Rights and Ownership

Forms of Ownership

General estates in land are tested nationally; the state section adds North Carolina's specific co-ownership rules. Tenancy in severalty is sole ownership by one person or entity. Co-ownership comes in three forms, and the default when a deed names two or more grantees without survivorship language is tenancy in common (TIC).

JTWROS in NC requires the four unities — time, title, interest, possession — and the deed must expressly create the right of survivorship; NC presumes TIC otherwise. If one joint tenant sells, the unity of time/title breaks and that share becomes a tenancy in common with the remaining owners.

Tenancy by the entirety is unique to married couples. Both spouses are treated as one owner, so both must sign any deed or deed of trust. A judgment against only one spouse cannot force a sale. Divorce automatically converts a TBE into a tenancy in common.

Marital Property: Equitable Distribution

North Carolina is an equitable-distribution state, not a community-property state. On divorce, marital property is divided equitably — fairly, which the court presumes to be equal but may adjust for factors such as income, duration of marriage, and contributions.

Trap: Equitable does not mean automatic 50/50. A licensee should never advise spouses on how title will be split — that is a legal question for an attorney.

Mortgages, Foreclosure, and Transfer Taxes

North Carolina is a title-theory state and uses the deed of trust rather than a true mortgage. Legal title is held by a neutral trustee for the lender until the loan is repaid; the borrower keeps equitable title and possession. This structure enables non-judicial power-of-sale foreclosure, which is faster than the judicial foreclosure used in lien-theory states.

Excise (transfer) tax: NC levies an excise tax — the 'revenue stamp' — on deeds at $1 per $500 of value, i.e., $2 per $1,000, paid by the seller. Worked example: a $350,000 sale = $350,000 / 500 = 700 increments x $1 = $700 excise tax. A few coastal counties add a local land-transfer tax.

Homestead Exemption

The homestead exemption (N.C.G.S. 1C-1601) protects home equity from general creditors — but not from a mortgage/deed-of-trust foreclosure or a tax lien.

Easements and Adverse Possession

Trap: Both the prescriptive-easement and adverse-possession periods are 20 years in NC — easy to confuse with other states' shorter periods.

Condominiums, Timeshares, and Leasehold Interests

North Carolina regulates several special ownership forms that surface on the state section. Condominiums created after October 1986 fall under the NC Condominium Act (Chapter 47C), which requires a developer to deliver a public offering statement to the first buyer and gives that buyer a right to cancel within a statutory period. The owner holds fee-simple title to the unit plus an undivided share of the common elements.

Timeshares are tightly regulated: NC requires a timeshare developer and salespeople to be licensed, mandates a 5-day right of rescission that cannot be waived, and requires deposits to be held in escrow.

Water and Mineral Rights

North Carolina follows riparian rights for water bordering a parcel — an owner of land touching a watercourse may make reasonable use of the water but cannot unreasonably harm downstream owners. Along navigable waters and the ocean, the public-trust doctrine protects public use below the mean high-water line.

Mineral, oil, and gas rights can be severed from the surface estate and sold separately. Because a severed-rights holder may have a legal right to enter and use the surface to extract minerals, NC requires the seller to give buyers a separate Mineral and Oil and Gas Rights Mandatory Disclosure Statement — a recurring state-exam fact that overlaps with the environmental section.