North Carolina Foreclosure Laws

Foreclosure Laws in North Carolina

Both judicial foreclosures and non judicial foreclosures are used in North Carolina, and both are about equally as common, depending on the mortgage involved. It generally takes about 3 to 4 months for North Carolina foreclosure homes to be processed and sold.

The judicial foreclosure process is usually only necessary when a mortgage does not contain a Power of Sale clause, which enables the lender to pursue a foreclosure on their own, or if title problems exist with the mortgage. The process of judicial foreclosure begins when a lender files a suit against a defaulted borrower in court. The homeowner will then receive a specific amount of time in which to pay off the default debt. If they fail to pay off the debt in the allotted time period, a foreclosure sale will be scheduled following a procedure determined by the court.

If a Power of Sale clause does exist in a mortgage, a preliminary hearing on the matter must still be held to determine if a foreclosure can happen. The lender must inform the homeowner of the details of their default, including how much they owe, at least ten days before the hearing takes place. The county clerk will then preside over the hearing, and if they determine a foreclosure is necessary to recover the delinquent loan, a foreclosure sale will be scheduled.

Often times mortgages will dictate specific terms for the time, place and location of foreclosure sales, and these must be adhered to.

The lender must issue a Notice of Sale before the foreclosure auction takes place, including the time, date, location and terms of the sale. This Notice must be published in a local newspaper once weekly for two weeks, the second publication appearing no more than 10 days before the sale takes place. The homeowner and any junior lien holders are also entitled to receive a copy of the Notice of Sale at least 20 days before it occurs. The Notice of Sale must also be posted at the county courthouse within the same time frame.

Foreclosure sales are held at the county courthouse between the hours of 10 am and 4 pm. The sale can be postponed by posting a bulletin at the county courthouse.

Once a winning bidder is established at the sale, that person receives a preliminary Certificate of Sale, but this is not binding. Following the sale, there is a 10 day period of redemption, during which the homeowner can regain control of their property and avoid foreclosures by paying off the full debt of their loan. Furthermore, any other bidder can also enter an upset bid that is higher than the winning bid at the auction, and thereby become the winner of the property. The upset bid requires a 5% deposit when it is made. Once the period of redemption passes, ownership of the party is transferred to whoever has made the highest bid offer on the property.