Summary:
This case began as an interpleader filed by a closing attorney caught in the middle of a family property dispute — wisely deciding not to referee a fight over sale proceeds while trying to deliver clear title.
Susan Arcuri and her late partner, John Renegar, owned a house in Charlotte as tenants-in-common. In 2021, Arcuri alone signed a $245,000 promissory note, but both she and Renegar signed the Deed of Trust, which described both as “Borrowers” — while also expressly stating that any co-signer not on the Note was not personally liable for the debt.
When Renegar passed away, his interest passed to his two adult children. The property was eventually sold, and everyone agreed the lien had to be paid. The disagreement? Who’s share took the mortgage hit.
Arcuri argued:
Everyone had to give up proceeds proportionally because everyone pledged their interest.
The Renegar children argued:
Only Arcuri signed the Note — so payment comes from her half.
The trial court agreed with the children, and the Court of Appeals affirmed.
The majority emphasized a core principle:
A deed of trust secures a debt — it does not create a new obligation to pay one. And Section 13 of the Fannie Mae form deed could not be clearer that co-signers like Renegar encumber the property only, without assuming payment responsibility. Therefore, the mortgage payoff was deducted solely from Arcuri’s share of the proceeds .
The opinion does correct one misstep below: the deed did encumber the Renegar heirs’ interest — but encumbrance is different from personal liability. That distinction mattered, but not enough to change the outcome.
Chief Judge Dillon concurred, offering a richer surety analysis. He explained that someone who mortgages property for another’s debt is often treated like a surety — responsible only to the extent of the pledged property. In his view, there is a rebuttable presumption that Renegar was acting as surety, and Arcuri failed to offer competent evidence that the loan was actually for joint benefit. Since she didn’t rebut the presumption, the payoff properly came from her side.
Commentary:
What makes this opinion interesting — and highly relevant to bankruptcy lawyers — is how clearly it separates:
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Who owes the debt
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What property is pledged
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Who ultimately bears the economic burden when property is sold
Creditors — and sometimes debtors — tend to conflate these.
The Court’s reasoning reinforces what we too often see in practice:
Signing the deed of trust is not the same as signing the note.
This is particularly common with non-borrowing spouses, partners, elderly parents helping their children qualify, and anyone else who winds up “on title” but not “on the loan.”
The Court wisely refused to treat the sale payoff as some kind of equitable contribution obligation. There was no separate agreement shifting responsibility. No implied assumption. No magic language in the deed that turned a non-obligor into a debtor.
And had this landed in bankruptcy?
A Chapter 7 or Chapter 13 trustee might have argued “benefit to the estate,” “marshalling,” or equitable contribution — but those are uphill climbs without evidence. The opinion makes clear:
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The encumbrance survives.
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The obligation does not expand.
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Proceeds follow liability unless facts show otherwise.
Chief Judge Dillon’s concurrence is also worth flagging for practitioners. His surety analysis opens the door — in other cases — for evidence showing:
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both parties benefited from the loan,
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the loan refinanced joint debt,
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improvements increased shared value,
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or the parties intended shared obligation.
Had Arcuri produced competent evidence (not an unverified pleading), the outcome may have been different. That’s a practice pointer worth remembering.
Takeaways for consumer bankruptcy and real-property lawyers
✔ Always review both the Note and Deed of Trust — they are related, but not identical.
✔ Co-signing a deed does not create personal liability without signing the note.
✔ Encumbrance ≠ obligation.
✔ Evidence matters — especially when seeking contribution.
✔ In bankruptcy cases, don’t assume joint ownership means joint liability.
And finally — the closing attorney did exactly what closing attorneys should do in these situations: interplead and walk away slowly.
With proper attribution, please share.
To read a copy of the transcript, please see:
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