Summary of a North Carolina Foreclosure
Documents Needed to Begin Foreclosure
1. A copy of the RECORDED Deed of Trust
2. A copy of the Note
3. A copy of the RECORDED Assignments, if applicable
4. Breakdown of the Arrearages, i.e. date the delinquency started,
monthly payments, monthly late charges, and any other costs that
may have been paid, i.e. taxes, insurance, property inspections,
etc.
North Carolina has a non-judicial foreclosure system by a trustee
under a deed of trust that includes a Judicial portion to obtain
an Order Authorizing Sale.
The foreclosure is initiated by the mailing and recording of the
Substitution of Trustee appointing the new trustee to complete the
foreclosure. The mailing is by certified and regular mail to owners,
mortgagors and the original trustee, if address known. The recording
is done at the Register of Deeds.
Once recorded, the filing of a Notice of Hearing commences the court
portion of the foreclosure. The Notice of Hearing is mailed by certified
and regular mail to owners and mortgagors, and also must either
be served on the owners and mortgagors or posted on the property.
The Court Clerk oversees this process, and each Court Clerk has
a differing requirement in regards to service and/or posting, but
North Carolina Statute requires posting at least 20 days before
hearing, or personal service at least 10 days before.
At the hearing, as long as the above requirements have been complied
with, the Order Authorizing Sale will be granted. Once done, the
Sale is set.
The Notice of Sale is filed with the Court, Published, and mailed
to all interested parties. The mailing is by certified mail to the
persons who have a record interest in the property as revealed by
a foreclosure certificate issued by a title company. The publication
is twice, at least seven days apart, the last within 10 days before
the sale. As a precautionary measure, this office also mails a copy
of the Sale Notice to the parties in interest. Of course, separate
notice is given to the IRS. Unless the deed of trust specifies a
different place, the place of sale must be held on the front steps
of the local superior court.
The sale may be continued a maximum of 90 days. Nonetheless, because
a continuance almost forces a restart we recommend a restart. In
North Carolina deficiency bids are prohibited in most instances.
When the sale is held, a third party bid at the sale is rare. However,
a Report of Sale is filed with the Court immediately after sale,
and other bidders or the owner have a right to submit an “upset
bid” within ten (10) days of the filing of the Report. The
Upset Bid must increase the bid by 5%. This process can continue
indefinitely, with the bid increasing. Along with this 10-day period,
the IRS also, of course, has a 120-day redemption right under federal
law. This upset bid process is North Carolina’s method of
redemption.
Upon expiration of the Upset Bid Periods, a Final Report and Account
of Sale is submitted to the Court Clerk. This must provide a detailed
breakdown of all expenses to the loan, and all attorney fees and
costs. Once the Court Clerk approves and files this Final Report,
the Trustee may issue a Foreclosure Sale Deed.
At any time up to the sale, the default may be "cured"
by the tendering of the delinquent payments, plus all costs of the
sale.
After the recording of the foreclosure sale deed, the successful
bidder is entitled to possession of the property. Obviously, if
possession is not voluntarily given, an eviction suit will be necessary.
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