Does Real Estate Go Through Probate in North Carolina

Losing a loved one is difficult enough without having to worry about the legal details of handling their estate. For families who experienced the loss of a loved one, a common question in probate matters is, “Does real estate go through probate in North Carolina?”

Understanding how the North Carolina probate process applies to real estate can help families avoid unnecessary disputes and delays, and make informed decisions during an already difficult time. The attorneys at Carolina Tax, Trusts & Estates, a Department of Van Camp, Meacham & Newman, PLLC, guide North Carolina families through probate and estate administration, providing comprehensive legal representation, including preparing and filing court documents, notifying heirs, and even selling and distributing assets.

An Overview of North Carolina Probate

Probate is the legal process of managing a deceased person’s estate. It is overseen by the Clerk of Court and generally involves appointing an estate executor or personal representative who identifies and inventories the deceased person’s assets, pays their legally enforceable debts and taxes, and distributes the remaining assets to the deceased person’s heirs and beneficiaries.

The deceased person’s personal property, like bank accounts, investments, and tangible items, often must pass through probate. In North Carolina, real estate generally does not pass through probate unless the deceased person’s Will directs it to be sold.

NC Real Estate Probate

In North Carolina, real estate generally passes outside of probate. Property owned by entireties between a married couple cannot be pulled into probate. Property with a joint tenancy or individually owned property can be pulled into probate. Property ownership may be directed to a beneficiary by a Will or intestacy, but the property itself does not pass through probate unless it is directed to be sold in a Will or is pulled into probate through a special proceeding, such as to pay debts when there are no other assets.

Unless the real estate is in the probate estate, the estate executor or personal representative will not manage the property, collect rent, or prepare it for sale. Probate assets cannot be used to maintain or manage the deceased person’s property unless it is in the probate estate. Most are not.

What is the Probate Process for NC Real Estate?

When real estate is part of the probate estate, managing it is an important aspect of settling the estate. The probate court typically follows these steps:

1. Validate the Will. If the deceased person died with a Will, the probate court must confirm it is valid. If the person died without a Will, North Carolina intestacy law will apply.
2. Appoint an Estate Executor or Personal Representative. This individual manages the estate, pays debts, and oversees the property.
3. Inventory and Appraisal. The real estate must be valued to determine its total value.
4. Manage and Sell the Real Estate. If the real estate is part of the probate estate, the estate executor or personal representative manages the real estate, renting or preparing it for sale according to the court’s instructions.
5. Paying Debts and Taxes. The estate executor or personal representative pays valid and enforceable debts and the estate’s other outstanding obligations.
6. Distribute Proceeds. The remaining property is distributed to the deceased person’s heirs according to their Will, if they had one, or according to North Carolina intestacy laws.

Avoiding the Probate Process for Real Estate in NC

To ensure real estate passes outside of probate, property owners can use various ownership structures to avoid real estate probate.

Joint Ownership with Rights of Survivorship

When co-owners hold property as joint tenants with rights of survivorship, the property automatically passes to the surviving owners without probate.

Spouses often hold property as tenants by the entirety, which also passes directly to the surviving spouse without probate. Typically, recording the death certificate and an affidavit of survivorship in the county land records is sufficient to transfer property ownership.

Living Trust

Real estate held in a living trust remains under the trustee’s control. Because the real estate is a trust asset, the trustee can transfer it according to the terms of the trust without probate court approval.

Transfer-on-Death Deed

A transfer-on-death deed passes property directly to the named beneficiary outside of probate when the death certificate is filed.

Federal Law on Mortgages on NC Real Estate

The federal Garn St. Germain Depository Institutions Act of 1982 can impact property with an existing mortgage. The law protects certain transfers from triggering a due-on-sale clause. These are clauses in some mortgage documents that require full payment when the property is transferred or sold. Under the law, lenders are prohibited from enforcing due-on-sale clauses in the following situations:

• Transfer to a Relative Upon Death. When property is transferred to a relative as a result of the borrower’s death, the lender cannot demand loan repayment immediately. The relative can assume the mortgage under the same terms, maintaining the current mortgage rate and payment schedule.
• Transfer to a Spouse or Children. The Act offers the same protections when the property is transferred to a spouse or children.
• Transfer from a Living Trust. If the property is in a living trust, the Act allows the property to be transferred without triggering a due-on-sale clause.

How a North Carolina Probate Lawyer Can Help

Navigating the probate process for real estate in North Carolina is challenging. While there is no requirement to use a lawyer, you will benefit from working with an experienced North Carolina probate attorney.

The probate team at Carolina Tax, Trusts & Estates, a Department of Van Camp, Meacham & Newman, PLLC, can help you navigate the North Carolina probate process. Contact us today to schedule a confidential consultation to discuss your situation and how we can assist you.