North Carolina law allows the tax collector to recover delinquent property taxes by foreclosing on your home. To do this, the collector will use one of two different processes. Read on to learn more about these processes, how you can prevent the loss of your North Carolina home to either type of tax foreclosure, and how much it will cost you.
If you face a North Carolina tax foreclosure because you fail to pay your property taxes, the process will either be a:
To conduct a mortgage-type foreclosure, the tax collector files a lawsuit against you in court. The court will enter a judgment and your home will be sold to a new owner. To finalize the sale, the court must confirm it following an upset bid period.
Redeeming your home after the sale. Following the sale, you can still reclaim your home (or “redeem” it) during the upset bid period.
What is an upset bid? Even after the sale takes place, another buyer can offer to buy the home by making a higher bid (of at least 5% over the sale price, but no less than $750) than the purchaser at the sale (N.C. Gen. Stat. § § 105-374, 1-339.25). This is called an upset bid.
How long is the upset bid period? In North Carolina, there is a ten-day period after the sale during which anyone can post an upset bid (N.C. Gen. Stat. § 105-374). If someone enters an upset bid during this time, the sale will stay open for another ten days. If there is a subsequent upset bid, the ten-day period starts over. Once ten days go by without an upset bid, the court will confirm the sale.
You can redeem at any time before the court confirms the sale. Under North Carolina law, you can pay the debt in full (that is, redeem the property) any time prior to confirmation (N.C. Gen. Stat. § 105-374). This will save your home from the foreclosure.
How much you have to pay to redeem. In order to redeem your North Carolina home, you must pay:
With an in rem foreclosure, the tax collector files a document with the court, which basically creates a judgment, and mails you notice about it. After three months, the court will issue an execution and the sheriff will sell your home to satisfy the tax debt (N.C. Gen. Stat. § 105-375).
How to stop an in rem foreclosure. At any time prior to the issuance of execution, you can ask the court to set aside (cancel) the judgment on the basis that:
If you want to set aside the judgment, you’ll have to appear before the court and file a motion. Your best bet is to consult with an attorney who can help you with this.
To find the statutes governing tax foreclosures in North Carolina, go to § § 105-349 through 105-378 of the North Carolina General Statutes.