North Carolina Foreclosure Law: How The Foreclosure Process Affects You

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This section will review foreclosure laws in North Carolina. Because foreclosure laws vary from state to state, it is important to understand how the North Carolina.foreclosure process works. Remember, when you consider buying a foreclosure, the state in which the property is located determines the laws regarding the property, not the state where the buyer may reside. In many cases buyers of foreclosed homes located in North Carolina also live in North Carolina. Be aware of how state foreclosure laws may impact your personal situation. You can learn a lot about the system for foreclosure in North Carolina in this section, but our information is not a substitute for professional legal advice. And because every state’s laws are subject to change without notice, we recommend you consult a real estate lawyer to gain a professional opinion of our information, and your interpretation of the information, as it applies to your specific real estate investment or home purchase situation. Visit the North Carolina law details below to learn about how North Carolina foreclosure handles aspects of judicial or non-judicial availability, primary security instruments, foreclosure timelines and foreclosure filing milestones, guidelines for Power of Sale in North Carolina, and application of deficiency judgments. We’ll help you understand these foreclosure law terms and how North Carolina applies them to the process. You may or may not need to navigate through North Carolina’s laws in great detail during your purchase process, but smart foreclosure buyers find that learning a lot might help save a lot on a discount home purchase.
Judicial Foreclosure Available:
Yes
Non-Judicial Foreclosure Available:
Yes
Primary Security Instruments:
Deed of Trust, Mortgage
Timeline:
Typically 60 days
Right of Redemption:
Yes
Deficiency Judgments Allowed:
Varies
Information on North Carolina foreclosure laws.
In North Carolina, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below.

Power of Sale Guidelines
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. However, in North Carolina, a preliminary hearing must be held before a power of sale foreclosure can take place.

After the preliminary notices have been issued, the clerk of the court will conduct a hearing to determine whether or not a foreclosure sale may take place. If and when the clerk issues a notice of sale, the foreclosure may proceed as follows:
1. A notice of sale must be:
a.  Mailed first class mail to the borrower at least 20 days before the sale
b.  Published in a newspaper of general circulation in the county where the property is located once a week for 2 successive weeks, with the last ad being published not less than 10 days before the sale
c.  Posted on the courthouse door for 20 days prior to the foreclosure sale

2. Said notice must name the borrowers, the lenders, provide a description of the property and state the date, time and place of sale.

3. The sale must be conducted at the courthouse in the county where the property is located between the hours of 10:00 am and 4:00 pm. The property will be sold to the highest bidder. Upset bids may be filed with the court clerk for a period 10 days after the foreclosure sale.

4. The sale may be postponed by announcing the need to postpone at the time and place the regular sale would have taken place. A notice of the postponement, stating the new date and time the foreclosure sale will be held, must be posted on the courthouse door.

Lenders may pursue a deficiency judgment and borrowers retain the right to redemption.

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