North Carolina Foreclosure Laws

The laws of North Carolina provide for both the available foreclosure processes, judicial and non-judicial. Both primary security instruments apply therefore and these are the mortgage lien and the deed of trust. These are the legal agreements which secure the underlying loan and in the deed of trust the property is held in trust until the loan is repaid, whereas the property itself serves as security in a mortgage lien.

In the case of a deed of trust, a non-judicial foreclosure is able to take place due to the power of sale granted to the trustees. This is what allows this type of foreclosure to take place. The trustee has to strictly follow all the steps outlined to affect this process, which includes posting notices of sale as well as ensuring that a preliminary hearing takes place.

This differs from many of the other US states which are title theory states. Essentially it means that the trustee is able to post the necessary preliminary notices of sale without the leave of the courts, however they also have to proceed to a hearing with the clerk of the court for the clerk to issue a notice of sale.

In terms of a judicial foreclosure, the mortgage is the instrument of security and it does not contain a power of sale clause. The judicial foreclosure is required to pass through the court system from beginning to end.

Typically the time taken for a North Carolina foreclosure to take place is approximately 60 days, but this is the very lowest end of the spectrum and applies to non-judicial foreclosures only. Judicial foreclosures take a great deal longer particularly if they are contested, and rights of redemption apply, as do deficiency judgments in this state, both of which are subject to certain conditions.

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