North Carolina foreclosure laws allow for non-judicial and judicial foreclosures. The judicial foreclosure process requires mortgage lenders to file a lawsuit in court to foreclose on the property. Non-judicial foreclosures necessitate that the borrower’s mortgage or deed of trust documents contain a power of sale provision, which gives the lender pre-approval to sell the home to satisfy the loan balance if the borrower defaults on the mortgage. In either case, successfully following the foreclosures process by the lender leads to sale of the home to the highest bidder.
Power of Sale Requirements
To ensure the validity of non-judicial foreclosures, North Carolina foreclosure laws mandate that a preliminary hearing occurs before the sale of a property at a foreclosure auction. The purpose of the hearing is to determine the validity of the foreclosure sale. Most deed of trust or mortgage paperwork has a power of sale clause that outlines the time, place and terms of a foreclosure sale. The clerk of the court must issue the lender a notice of sale.
The lender or its representative must follow the procedures listed below:
1) Send a notice of sale to the borrower by first-class mail a minimum of 20 days before the sale. The lender must publish a notice in a newspaper that has general circulation in the county of foreclosed properties location once a week for two weeks in a row. Publication must occur no less than ten days before the foreclosure sale takes place. In addition, the lender must post the notice on the courthouse door for 20 days before the auction.
2) The notice of sale must contain the name of the borrowers, the lender and provide a legal description of the property. In addition, the notice must state the date, time and place of the foreclosure sale.
3) The foreclosure sale has to take place at the courthouse in the county where the property is located. The sale must take place between the hours of 10 AM and 4 PM. North Carolina foreclosure laws mandate the sale of the property to the highest bidder. However, rules allow home foreclosures investors to file an upset bid with the court clerk for up to 10 days after the foreclosure sale. An upset bid has to exceed the highest bid placed at auction by a minimum of 5%.
4) North Carolina foreclosure laws permit the seller to postpone the foreclosure sale at the time and place schedule for the initial sale. The lender or its representative must post a notice of the new date and time for the rescheduled foreclosure sale.