North Carolina foreclosure law

Lenders in North Carolina can foreclose on mortgages and deeds of trust in default in either the judicial or non-judicial (in or out of court) methods. The average wait time is 60 days or two months, although this can vary from one contract to another.

Judicial foreclosure
In a judicial foreclosure, the lender files a lawsuit against the borrower and obtains a court order allowing them to foreclose. Once the foreclosure is declared, the home is put up for public auction and sold to the highest bidder. This process is used when the contract does not contain a Power of Sale, a clause that would otherwise allow the lender to sell the home directly.

Non-judicial foreclosure
A non-judicial method is used when a Power of Sale exists in the contract. Basically, this clause states that the borrower has authorized the lender to sell the property as payment in case they default on the loan. The power may be executed by the lender himself or by a representative called a trustee.

Generally, the date, time and place specified in the clause are followed throughout the foreclosure. However, the state requires a preliminary hearing to determine whether a foreclosure can take place or not. If the court rules in favor of foreclosure, the clerk issues a notice of sale indicating the names of the lender and borrower, a description of the home, and the time, date, and place of the sale. The foreclosure then proceeds as follows:

1) The notice of sale is sent to the borrower via first class mail at least 20 days before the sale date, and published in a local newspaper once a week for two consecutive weeks. The last ad should appear at least 10 days before the foreclosure sale. The notice is also posted on the door of the courthouse for 20 days before the sale date.

2) The sale is conducted at the county courthouse anywhere from 10am to 4pm. The home is sold via public auction to the highest bidder. The clerk of court also accepts upset bids for up to 10 days after the sale.

The foreclosure sale can be postponed, as long as it is announced at the original time and place. A notice stating the new terms will then be posted on the door of the courthouse.

Right of redemption and deficiency claims
Borrowers in North Carolina are given a Right of Redemption, which means they have a specific period after the sale to redeem their home by paying the foreclosure sale price. Lenders can also sue for deficiency, or make a personal claim against the borrower if the foreclosure is not sufficient to pay off the balance.

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