What Happens Under North Carolina Abandoned Property Laws?
North Carolina abandoned property law is a bit different in some regards than many states across the U.S. Generally speaking, abandoned property is that which has been forsaken or abandoned by its owner, and to which the owner has no intention to return. While there is no list of exact definitions or categorizations of such property, broadly speaking this property can be:
While it is not limited to that list, the above-mentioned categories include most abandoned items and property, where an individual has no intention of reclaiming the goods. Here are some of notable laws regarding property that has been abandoned in North Carolina:
- It is against the law for a tenant to abandon property given to them by their landlord, without written consent from the landlord;
- If a tenant abandons personal property upon termination of their lease , the landlord must hold the property for at least 30 days after the date when the tenant vacates the property, before removing it;
- Abandonment of a residence (and its contents) is one reason a landlord may have for bringing an eviction action against a tenant;
- A tenant that moves out prior to the end of their lease, or who vacates a residence without giving notice as is required under North Carolina law, runs the risk of forfeiting their security deposit and being taken to court for not only property damage but also unpaid rent.
If property is abandoned to a landlord, the landlord is permitted under North Carolina law to hold the personal property for 30 days, allowing the tenant time to retrieve their belongings.
NC Abandoned Property Defined By The Law
North Carolina law defines property as abandoned when the owner has relinquished all claims to its ownership, dominion and interest therein, without a specific purpose of a further claim and without the intention of passing title to another. The term "intention" speaks to the intent of the owner. A party’s possession of property belonging to another and his intention to exercise exclusive control over it with the intent to relenquish it to no one but the owner is inconsistent with the intention to abandon. The law presumes that a person intends to do that which he must be legally bound to do. Therefore, unless a person has been legally bound to abandon property, that person is presumed to intend not to abandon the property. Property is presumed to be abandoned when the owner has neglected to claim or take charge of it for 15 years and it is in the possession of another as owner.
Legal Procedure for Recovering Abandoned Property
Those who suspect they hold property which may have been abandoned but located outside of their own county, can search the unclaimed property listing on the North Carolina State Treasurer website. Once located, an individual will need to obtain the Claims Packet from the website, or print the Claims Packet Application. All individuals will need to complete and send the Claims Packet Application, even if there is a claim form located in the packet. For those claiming items from a deceased person’s estate, the heirs of the estate are to use the Claimant Form.
Once the application has been completed and all information is provided, it is sent to the State Treasurer’s Office with the required records and/or fees. The fee is $15 per claim, or $50 per business (for businesses with more than ten claims). Property is only paid to the claimant listed on the application, and not the upset beneficiary.
If the State Treasurer’s Office denies the claim, it must provide a written reason as to why the application has been denied. The claimant then has 90 days to issue a written request for reconsideration. If the State Treasurer’s Office continues to deny the claim, it then has 90 days to file a notice of appeal and transmit all documentation to the North Carolina Office of Administrative Hearings. A judge will then be required to review the evidence and make a decision as to whether the claim should be granted or denied.
Property Owner Rights & Responsibilities
The legal rights of property owners to have abandoned property removed from their property and the state’s ability to forcibly seize property left on another’s land are governed by N.C. Gen. Stat. § 44A-40 and § 44A-41.
NC Department of Administration (the "Department"), Real Estate Management division must be notified of abandoned property that is worth more than $500, unless it weighs less than 50 lbs.; occupies less than 200 sq. ft.; has been in place for less than five years, or if the physical property is being used or occupied. Once the Department determines that the abandoned property is or has been abused or neglected to an extent and value that can not be practically repaired or reclaimed, the Department shall use "reasonable efforts to locate the owner of the physical property. If reasonably possible, the Department shall contact the owner or the owner’s nearest known relative or representative by mail to see if the owner wants the physical property or if the owner will authorize another person to use, reclaim or dispose of the physical property." N.C. Gen. Stat. § 44A-41(b).
If the Department is unable to locate the owner or two attempts to reach the owner or the owner’s family fail within a month after sending notice, the Department shall remove the property from grounds "or make it reasonably accessible." N.C. Gen. Stat. § 44A-41(c).
The NC Secretary of Administration will hold the property for 60 days. After 60 days, the Department may sell the prevented property at auction if it has not "already been reacquired" by the owner or if the owner "has not authorized someone else to use, reacquire, or dispose of the physical property. If the Department is required to remove the physical property from the premises for its own protection it may do so at its discretion after obtaining orders of a district court of the county if the property has a fair market value of less than $500.00." N.C. Gen. Stat. § 44A-41(d)(e).
Common Problems with Abandoned Property
Abandoned properties cause a number of problems for neighboring land owners. The first problem is that depending on the circumstances, the presence of an abandoned property may put a nearby owner in a position where he or she risks liability if there is an injury on the abandoned property. The owner may either be responsible for injuries that occur on the property or be accused of trespass or other wrongdoing that causes an injury on the property, even if the owner of the property was totally at fault for the injury. A similar problem is present when it comes to asserting or defending against any claim that the abandoned property has crossed over onto the neighboring owner’s property and therefore has created an encroachment onto the neighboring property owner’s land .
A related problem with abandoned properties is that if an abandoned property loses its power, water, or other utility services, the property can quickly deteriorate into a real hazard if someone vandalizes the property, breaks in and prevents the police from knowing about the situation by re-machining the lock, burns down the structure, and so forth. Especially with commercial properties, the property may have uncontrolled hazardous wastes that may be escaped and create a public nuisance or foundational instability.
The original owner of the abandoned property becomes just another potential plaintiff against whom the injured party may file a lawsuit.
Claiming Disputed Abandoned Property
When it comes to disputes over the title of property that has been abandoned, there are a few options available under North Carolina law. Blume discusses the circumstances surrounding the possibility of an estray action in which a party may possess a certain property and wish to maintain possession it in the case where the true owner does not appear to claim the property. Where a party has an abandonment claim, the right to possess such property for a certain amount of time expires after seven years has run. In this case, alternative claimants of the property may choose to go before a magistrate to resolve the dispute regarding the true owner of the property.
An estray action is initiated by the filing of a complaint and issuance of a summons. Once filed, a magistrate will issue a summons that will instruct the property claimant to appear before such magistrate at a given time and place. A claim of abandonment will only be allowed where the parties provide a legal description of the property believed to be abandoned. In North Carolina, a grievance can only arise out of the rules laid out in the North Carolina General Statutes Section 6C-317.
Securing abandoned property through adverse possession is another option under North Carolina law. To prevail on an adverse possession claim, the claimant must be in possession of the land under a claim of right, for ten years or more; they must be open and hostile. Adverse possession can only occur when the property is secured through exclusive possession by the same person for ten years, and the boundaries of the land in question must be clearly defined.
Disputes between parties over property abandoned after entry of an estate are also possible. Where an individual lacks the interest necessary to keep the property, such property passes to the administrator of the estate whether they have claimed the property through declaration or not. Unlike the law set forth in the North Carolina General Statutes Section 6C-317, an action claiming a right to recovery may be brought under an affidavit of the party entitled to possession of the property. The affidavit must be in writing, executed in the presence of two witnesses who are not parties to the action, and sworn to by the party making such claim.
New Developments & Revisions of the Law
Over the last several years, the North Carolina General Assembly has made various changes to the state’s escheat (abandoned property) laws. The most significant are:
Recently, the North Carolina Department of State Treasurer announced its intention to increase both the number and the types of properties eligible for a voluntary disclosure.
Property owners and holders can also expect to see accelerated reinstatement and interest assessment procedures for UCC and other business-type transactions and further penalties of up to $1,000 for non‐compliance and failure to timely remit property that has been escheated.
Why are these changes important? For property holders, the changes represent a shortening of the litigation free "period of dormancy" as a remedy to force compliance. For property owners, holders and claimants alike, the changes represent additional opportunities to reclaim abandoned property through voluntary disclosure, etc. Now, more than ever, being informed is the key to being prepared and protecting your rights if property is seized for escheatment.
Additional Resources
Property owners in North Carolina looking for more information on the steps to take should they find abandoned property on their premises can look to a number of state and local resources. The N.C. Department of State Treasurer handles unclaimed property through its website, which provides additional detail and examples of the types of abandoned property that qualify for the program, along with information about how abandoned real property is handled . While the site is geared toward unclaimed monetary property, it still serves as a valuable resource for anyone with questions about the program. Counsel also can contact the North Carolina Bar Association’s Lawyer Referral Service at 1-800-662-7660. Attorneys across the state can provide clients with basic guidance on how to handle abandoned property issues. If the owner or former tenant of abandoned personal property cannot be located despite several attempts, verify with an attorney the best way to alleviate your liability before discarding items on your own.