Foreclosure Guidelines in North Carolina

Highlights:

Judicial/ Non-Judicial Foreclosure: Available/ Available

Right of Redemption / Deficiency Judgment: Yes / Depends

Timeline: 60 Days, Can vary depending on individual cases

Deed of Trust / Mortgage as Security Instruments: Deed of Trust, Mortgage

Both Judicial and Non-Judicial foreclosure processes are available in North Carolina.

 

Judicial Foreclosure process:   

The Judicial foreclosure process is used when a power of sale clause is not present in either the Deed of Trust / Mortgage documents. In this process, the lender is required to file a lawsuit against the borrower, in case of a default. The court verifies the same and gives an order authorizing the foreclosure process if it finds that the borrower has defaulted on the mortgage loan. The property is then sold off to the highest bidder through a public auction.

Non-Judicial Foreclosure process:

If a power of sale clause is present in either the Deed of Trust or Mortgage documents, Non-Judicial foreclosure process can be used. The power of sale authorizes the lender or their authorized representative (called as Trustee) to carry out the foreclosure proceedings in case the borrower happens to default on the mortgage payments. The following guidelines are followed for the same.

If the power of sale document contains the place, time and other conditions of the foreclosure sale, the same needs to be followed. In North Carolina, a preliminary hearing precedes the foreclosure process where the clerk of the court determines if the foreclosure sale can proceed. After the clerk approves the same, the following procedures are followed.

A notice of sale is pasted on the door of the courthouse at least 20 days before the actual date of foreclosure sale. The same needs to advertised in a local newspaper at least once a week, for two consecutive weeks with the second ad being published at least 10 days prior to the actual date of foreclosure sale. This notice also needs to be sent to the borrower using registered post, not more than twenty days before the sale date.

The notice should contain all the details of the property, name/ correspondence details of the lender, borrower and any other party involved, details of the foreclosure sale like date, time, location & terms of the foreclosure sale.

The foreclosure sale generally happens in the courthouse of the same county where the property is located. It can be carried out on any business day between 10:00 AM to 4:00 PM.

During the foreclosure sale, the property is sold off to the highest bidder through a public auction. Up to ten days after the foreclosure sale, upset bids, if any can be filed with the clerk of the court.

If the foreclosure sale needs to be postponed, a notice regarding the same needs to be prepared (along with the reason for postponement) and pasted on the courthouse door, in addition to making an announcement to that effect on the date/time when the original foreclosure sale was supposed to be conducted.

In this method, borrowers can reclaim their property using their right of redemption (for up to a certain period) by paying up all their dues and the lender can also file for a deficiency judgment if the value offered by the highest bidder is less than the actual amount due by the borrower.

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