North Carolina Foreclosure Laws

While North Carolina allows both judicial and non-judicial foreclosures, judicial proceedings are usually only used if there is a problem with the title deed to the property. As most mortgages or deeds of trust in North Carolina contain a Power of Sale clause allowing the lender to foreclose without a court ruling, judicial proceedings are generally not needed.

Even in the case of a non-judicial foreclosure, however, a preliminary hearing is necessary to register the foreclosure action. After a lender files for the ability to foreclose, the court meets to decide whether to allow it. If the borrower (homeowner) is ruled to be in default, the court clerk issues a Notice of Sale and the lender is allowed to auction off the property.

The Notice of Sale must be posted at the county courthouse and at the property in question, as well as published in a local weekly newspaper for at least two weeks before the sale occurs. The homeowner is entitled to receive a copy of the Notice at least 20 days prior to the sale. The homeowner also retains the right to halt the foreclosure by paying off the default debt owed to the lender at any time before the sale occurs.

The foreclosure auction, which is generally held at the county courthouse, must occur between the hours of 10 a.m. and 4 p.m. If the sale needs to be postponed, the lender may do so by posting notice on the courthouse door.

Once a winning bidder has been established, the original homeowner has ten days in which to redeem ownership by paying the lender the default amount owed. If this does not occur, full ownership is transferred to the winning bidder. Under North Carolina foreclosure law, the lender has the right to pursue a deficiency judgment against the homeowner if the sale price fails to satisfy the full amount of the original loan provided.

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