Anatomy of a NC Foreclosure (Part 1)

If you’re confused about the legal process of foreclosure in North Carolina, you’re not alone.  This is the first in a series of posts which I hope will shed light on a complex and ever-changing area of our state’s law.

North Carolina is a “non-judicial” foreclosure state, meaning that the lender is not required to file a lawsuit to foreclose.  Instead, the lender instructs the “trustee” under the deed of trust to initiate a “special proceeding” before the county’s clerk of superior court.  If the clerk makes certain findings at the hearing, an order is entered allowing the trustee to sell the property at auction — literally, “on the courthouse steps.”

Just because the lender is not required to file a lawsuit doesn’t mean you are without an opportunity to argue against the foreclosure.  But the lender has the benefit of a process that is much speedier than a lawsuit.

You are required to be served with notice of the foreclosure hearing, which will give you a date and time to appear before the clerk of superior court, but miss that hearing and your options become severely limited.  (Far too many people show up in my office after their foreclosure hearing has taken place, or even worse, within a few days of the foreclosure auction itself.)

You have the right to challenge a foreclosure at the hearing before the clerk, but the issues you are allowed to argue are limited to highly technical legal elements.  I’ll get into those in the next post.

The main point of this post: if you’re in foreclosure, please don’t wait until the last minute.  You have many options and opportunities to avoid losing your property, but those options dwindle with every passing day.