This is a short summary of the non-judicial foreclosure process in North Carolina. This is meant as a guide so a homeowner can educate themselves on the process, and possibly engage in foreclosure defense pro-se.
This is a first draft and updates will be forthcoming sighting specific statutes applicable to each section. This post is for educational purposes only and not meant as legal advice.
If you would like a free evaluation of your foreclosure situation please call 919-866-2706 or email your inquiry to ceradinilaw@gmail.com.
45 day letter (NCGS § 45-102 & § 45-103) – If you reside in the property which is being foreclosed (i.e., primary residence) then the lender must send you letter stating that you are delinquent, how much you owe, what steps can be taken to mitigate the delinquency, and where to seek additional assistance from HUD approved counselors.
30 day letter (NCGS § 45-21.16(5a)) – The lender must send a letter to the homeowner by first-class mail to the homeowner’s last known address which details in writing the amount of principal, interest, and any other fees, expenses, and disbursements that the “holder” in good faith is claiming to be due as of the date of the written statement, together with a daily interest charge based on the contract rate as of the date of the written statement.
Notice of Hearing (NCGS § 45-21.16) – A notice of this hearing must be served on the homeowner and all parties of interest in the property not less than 10 days before the hearing; if service is being effected by posting on the property then the posting must be made not less than 20 days before the hearing.
Clerk of Court Hearing (NCGS § 45-21.16) – Four main issues of law decided at this hearing: 1) is there a valid debt; 2) who is the “holder” of the debt; 3) if proper notice was given; and 4) does the “power of sale” exist in the loan documents (look to Deed of Trust). The “Holder” bears the burden of proof in meeting these four issues of law. The Trustee, or Substitute Trustee, can not testify or advocate for either party, they are a third party neutral whose duties are to the Trust created by your Deed of Trust which holds legal title to your property. The homeowner my present evidence and/or testimony to refute any of the evidence the “holder” relies upon to establish their claim to foreclosure based upon the four legal issues involved. Equity is not considered in this hearing, or on appeal form this hearing. Issues of equity, and actions to enjoin the foreclosure sale, must be brought in a separate civil action pursuant to N.C.G.S. § 45-21.34.
Order Allowing Foreclosure Sale – If the Clerk determines that the lender has shown sufficient proof to establish it is entitle to foreclose on the property pursuant to the four issues of law , then they will issue an Order allowing the Trustee (or Substitute Trustee) to advertise and sell the property at a foreclosure auction.
Appeal from the Clerk’s Order – An appeal for the Clerk’s Order must be made by filing a Notice of Appeal in the Special Proceeding (the foreclosure action) within 10 days of the issuing of the order. If the Order is properly appealed, the matter will be heard in Superior Court on a de novo review. You must follow up with the Clerk’s office to ensure this hearing is calendared in a timely manner.
Appeal Hearing in Superior Court – The Superior Court will hold a de novo (“from the new”) review hearing on the four issues of law which were decided by the Clerk. Again, only the four issues of law are before the court and no arguments in equity will be considered. The hearing will be as if the prior Clerk’s hearing did not take place, however the Superior Court judge may take judicial notice of what the determinations where at the Clerk’s hearing.
Notice and Posting of Foreclosure Sale – 20 days prior to sale date, posted in courthouse and advertised in the paper. All interested parties in the property must be sent a copy of this notice or the sale is wrongful.
Foreclosure Sale – Anyone can bid at the foreclosure sale, including the home owner, however there is a minimum deposit amount that must be posted with the Clerk of Court before an individual is can bid at the sale (see the Notice of Foreclosure Sale for details).
Upset Bids – Anybody can “upset bid” a property that has been sold at a foreclosure sale if they make their bid to the Clerk of Court’s (Special Proceeding division) within 10 days of the foreclosure sale date. Typically, the individual must bid 5% more than the winning bid, or 5% more than the last upset bid. Every time an upset bid is made, the 10 day Right of Redemption period runs anew.
10 Day Right of Redemption – Every homeowner that has their property sold at a foreclosure auction has an equitable period of redemption in which they can “redeem” their property. This period of time is only for 10 day from the foreclosure sale, or 10 days from the last upset bid. In order to redeem the property, the homeowner must pay the “holder” the full amount due at the time of the foreclosure sale, including all penalties, costs, and fees.
“Rights of the Parties Have Fixed” – Under North Carolina law, after the 10 day Right of Redemption period has expired “the rights of the parties have fixed,” meaning the high bidder is now the owner of the property. After the rights of the parties have fixed it is no longer possible to enjoin the foreclosure sale under N.C.G.S. § 45-21.34 and the court will consider such actions “moot”.
Action to Enjoin the Foreclosure Sale Pursuant to N.C.G.S. § 45-21.34 – Prior to the time of the foreclosure sale, or before the rights of the parties have fixed, a homeowner can bring grievances in equity against the lender and move to enjoin the sale of the property. Causes of action in equity vary and are specific to the facts of each situation. *(A full discussion is not appropriate in this summary of procedure and will be addressed in a separate post.)