How to Settle an Estate if There Is a Lien in North Carolina

By Jennifer Williams

When a North Carolina court adjudicates a debt, the creditor may file a lien for the amount of the debt against the debtor's real property. The debtor's residence, commonly referred to as homestead property, is generally protected from sale, but other property may be sold to satisfy the debt if the debt is not paid or payment arrangements are not maintained. When the debtor dies, the lien remains attached to the property. How the estate is settled when a lien exists depends on the deceased's will.

Step 1

Determine all real property in the deceased's estate by conducting research at the county recorder's office. Determine whether there are any liens filed against any real property. List any lien you find by noting the creditor who filed it, creditor's contact information, amount of the lien, how the debt was incurred, and all references to the court proceeding in which the debt was adjudicated.

Step 2

Verify the lien is valid by researching court records for adjudication of the debt. Trace the origin and history of the debt and determine as best you can that the deceased did, in fact, incur the debt. If the debt is valid, contact the creditor to verify the current amount of the debt and any payment instructions.

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Step 3

Read the deceased's will specifically for reference to all property with liens attached. If the property was specifically bequeathed to a beneficiary, he must take the property subject to the lien. If the property was not specifically addressed in the will, the estate must pay off the lien before the estate can be settled.

Step 4

Notify beneficiary of property encumbered by a lien. Inform him that the property has an outstanding, valid lien. Provide details concerning the creditor and lien amount. Let him know that he must take the property subject to the lien and that it will not be paid out of estate proceeds. Inform him that once title to the property is transferred into his name, he is responsible for paying the lien or risk losing the property to satisfy the debt.

Step 5

Pay all expenses of the estate. Pay all debts of the estate with the exception of the lien on the bequeathed property. Re-title the lien-encumbered property into the rightful heir's name. Close the estate by filing the required final accounting with the clerk of the superior court handling probate.

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References

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Estate Laws for Insolvent Estates in Georgia

Georgia law considers a decedent's estate insolvent when the decedent dies without enough money to pay all of his debts, including taxes. As in bankruptcy, Georgia law exempts some assets from creditor attachment. In other words, some assets are not available to creditors to satisfy an estate's debt. Georgia law establishes the order in which debts must be paid from estate assets less exemptions. Each debt must be paid in full before the next in line may be paid. If there are not enough assets left to pay all of the debts remaining, those creditors do not receive payment.

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How to Find Out If an Estate Has Been Settled

Estate settlement occurs when the court approves the final report from the estate's appointed representative, usually an executor or administrator. The estate settlement process involves payment of the deceased's debts, final tax return fillings and the transfer and sale of assets with property and sale monies going to the deceased's heirs or will beneficiaries. Estate proceedings are a matter of public record, so if you need to know whether an estate was settled, you can find out by viewing the estate's court records. Finding out whether an estate is settled is useful in various situations, especially if you're a family member or will beneficiary who didn't receive your share, or a creditor who never received payment.

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