$43,000 Tax Fight: Johnston County, Realty Company And Bank Clash In Court

JOHNSTON COUNTY, N.C. – Johnston County is seeking more than $43,000 in a property tax lawsuit against Central Carolina Realty of Raleigh, but both the real estate company and a bank named in the case are challenging key parts of the county’s claims.

According to court filings, the dispute involves two tracts totaling more than 127 acres near Clayton that had received reduced tax valuations under North Carolina’s present-use value program.

Johnston County says the properties lost that status after an ownership transfer in December 2025 and contends Central Carolina Realty owes $43,211.15 in taxes, interest and costs.

Central Carolina Realty disputes that the taxes are owed. The company says the land continued to be used for forestry and farming, contends it did not receive proper notice of the change in tax status, and has challenged the county’s actions.

In a later court filing, the company also alleged the county’s actions violated protections contained in the North Carolina Constitution.

The disagreement has now expanded beyond the property owner. Johnston County also named United Bank as a defendant after attempting to garnish money from Central Carolina Realty’s bank account.

United Bank in Raleigh says it complied with the garnishment and has asked that the county’s claims against the bank be dismissed.

Tax Status Changed After Property Transfer

The two properties had received present-use value treatment beginning in 2010, according to the county’s lawsuit.

Present-use value allows qualifying agricultural, horticultural and forestland to be taxed based on its qualifying use instead of its potentially higher market value.

According to court documents, the properties had been owned through a tenancy-in-common arrangement involving Central Carolina Realty and the Douglas Stephens and Cynthia M. Stephens Irrevocable Trust.

In December 2025, the trust transferred its interest to Central Carolina Realty.

Johnston County then reviewed the properties and determined Central Carolina Realty did not qualify to continue receiving the reduced valuation.

The county based its decision in part on filings with the N.C. Secretary of State identifying the company’s business as “Real Estate.” The county contends state law requires a qualifying business entity’s principal business to be farming, horticulture or forestry.

The county says tax notices were mailed Dec. 16 and Dec. 17, 2025, informing the owners that deferred taxes had become due because of the ownership change.

According to the county, Central Carolina Realty had 60 days to appeal the decision or file a new application and did neither.

Central Carolina Realty tells a different story.

In a sworn statement submitted in response to the garnishment, company president Justin Matthew Stephens said the company and trust “received no notice of delinquency or notice of change of status” for the properties.

Stephens also alleged the county “wrongfully canceled” the deferred-tax status for the forestry and farming properties and “wrongfully refused” to accept an application for their continued use.

He said the property transfers to Central Carolina Realty were made for business and estate purposes and should not have caused the properties to lose their tax status.

Johnston County disputes each of those assertions.

The county says it mailed written notices, sent information by email and contacted representatives of the company by telephone. It also says Central Carolina Realty never submitted a new application.

County Garnishes Bank Accounts

After the taxes remained unpaid, Johnston County began collection efforts.

Johnston County filed its Superior Court complaint June 12 against Central Carolina Realty and United Bank.

In the complaint, the county alleged United Bank had not responded to the garnishment and asked the court to enter judgment against both defendants for $43,211.15, plus attorneys’ fees and court costs.

United Bank strongly disputes the county’s account.

The bank said it physically received the garnishment at its Raleigh branch May 29. Its legal processing department reviewed the matter the next business day and placed a hold on $3,666.33 — the entire balance then available in Central Carolina Realty’s account.

United Bank said it mailed the $3,666.33 to Johnston County on June 10 and tracking information showed the payment was received June 15.

The bank argues Johnston County’s allegation that it failed to respond is inconsistent with what actually occurred.

United Bank said that after receiving the lawsuit June 16, its representatives informed or attempted to inform the county that the garnishment had already been honored and asked that the bank be dismissed from the case.

The bank also argues it cannot be held responsible for Central Carolina Realty’s entire alleged tax debt simply because it was served as a garnishee.

It says its responsibility was limited to funds belonging to the taxpayer that were actually in the bank’s possession — $3,666.33 — and says it turned over all of those funds.

United Bank has asked the court to dismiss the county’s claims against it and argues the county should not recover attorneys’ fees from the bank.

County Explains Review Process

Johnston County Report asked Johnston County Deputy County Manager and County Attorney Jennifer Slusser about the dispute.

Slusser declined to address the specifics of the civil lawsuit.

“Though it would be inappropriate for me to comment on the specifics of a particular case, I am able to provide you information on the County’s process, generally,” Slusser said.

She said the Tax Office reviews recorded property transfers each business day.

“If a property in present use value changes ownership, the property is reviewed by the present use value specialist to determine continued program eligibility,” Slusser said. “The taxpayer has an opportunity to appeal this determination.”

Slusser also said the Tax Office generally attempts to resolve delinquent taxes before seeking court intervention.

“The Johnston County Tax Office attempts to work with taxpayers and exhaust all collection efforts prior to filing for court intervention,” Slusser said.

But, she added, state law imposes deadlines in garnishment proceedings that the county must follow.

“In garnishment proceedings, the County follows the requirements of the law to collect the taxes owed,” Slusser said.

Court Will Sort Out Competing Claims

In court filings, Johnston County maintains the ownership transfer made the properties ineligible for present-use value treatment, that proper notice was given and that Central Carolina Realty failed to appeal within the required period.

Central Carolina Realty maintains the properties continued to be used for qualifying forestry and farming purposes, challenges the county’s handling of the tax status and disputes that the money is owed.

United Bank, meanwhile, says it honored the county’s garnishment, turned over every dollar it held that was subject to attachment and should not be held liable for Central Carolina Realty’s alleged tax debt.

Those competing claims remain before Johnston County Superior Court.