USA – NORTH CAROLINA Law and Practice Contributed by: John Livingston and Brittani Miller, Kilpatrick Townsend & Stockton LLP
• Contract law which governs purchase agreements, including contingencies, disclosure requirements, and provisions for resolving disputes. • Zoning and land use regulations which govern whether the intended use of the property aligns with local ordinances and restrictions. • Environmental laws, such as the Coastal Area Management Act and wetlands regulations, which may impose additional requirements for properties in sensitive areas. • Taxation laws, including property taxes, transfer taxes and capital gains taxes, should be evaluated alongside potential exemptions or benefits, such as 1031 exchanges or Opportunity Zone incentives. • For rental properties, landlord-tenant laws outline lease obligations, eviction procedures and ten - ant rights. Additionally, certain municipalities have regulations prohibiting or restricting short-term rentals. 2.7 Soil Pollution or Environmental Contamination A buyer of real estate may be held responsible for soil pollution or environmental contamination on a prop - erty, even if they did not cause it. To mitigate this risk, buyers should perform due diligence investigations, negotiate contractual protections with sellers and explore liability-limiting programmes prior to closing on the purchase of the property to gain a thorough understanding of what issues impact the property. Additionally, a Phase I Environmental Site Assess - ment should be completed prior to any real property transfer. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law A buyer should review and analyse the zoning code for the municipality and the county where the subject property is located to determine permitted uses. Most municipalities make zoning codes available online or at their planning department. Many municipalities will issue zoning letters on request stating whether there are any current violations of the zoning code with respect to the property. It is possible to enter into development agreements with relevant public authorities following open dia - logue and negotiations about the best way forward
for all involved parties. The specifics of the develop - ment agreement are governed by statute (N.C. Gen. Stat. § 160D-1000 et seq). 2.9 Condemnation, Expropriation or Compulsory Purchase Governmental taking of land is possible under the legal principle of eminent domain. This allows the gov - ernment or authorised entities to take private property for public use, provided that just compensation is paid to the property owner. The process begins with the government determining the need for the property for a public purpose. The entity must make a good-faith offer to purchase the property at fair market value. If the owner accepts, the transaction proceeds as a voluntary sale. If the owner refuses, the government files a condemnation action in court. The court deter - mines whether the taking is lawful and establishes the amount of just compensation owed to the property owner, often based on property appraisals and expert testimony. North Carolina law also allows property owners to challenge the taking if they believe it is not for a legitimate public purpose or if the compensation offered is inadequate. 2.10 Taxes Applicable to a Transaction An excise tax is levied on each instrument by which any interest in real property is conveyed to another person or entity unless the conveyance qualifies for an exemption under North Carolina law. The tax rate is USD1 on each USD500 or fractional part thereof of the consideration or value of the interest conveyed. The seller pays the tax to the register of deeds of the county in which the real estate is located before recording the instrument of conveyance. If the instru - ment transfers a parcel of real estate lying in two or more counties, the tax must be paid to the register of deeds of the county in which the greater part of the real estate with respect to value lies. Excise taxes on conveyances do not apply to any of the following transfers of an interest in real property: • by operation of law; • by lease for a term of years; • by or pursuant to the provisions of a will; • by intestacy; • by gift;
890 CHAMBERS.COM
Powered by FlippingBook