Once you become delinquent in paying your property taxes in North Carolina, the tax collector can foreclose on your home. (This usually only happens if you don’t respond to phone calls and letters from the tax collector about getting caught up. Since foreclosure is expensive, it is typically the last method used to collect taxes.)
In order to foreclose, the collector will either file a lawsuit in court or use what’s called an “in rem” procedure. Read on to learn more general information about tax foreclosures in North Carolina, the difference between the two foreclosure processes, and what you can do to save your North Carolina home once a tax foreclosure starts.
If you don’t get paid up on your property taxes in North Carolina, the tax collector may start a foreclosure. The foreclosure process either:
With this kind of foreclosure, the tax collector files a lawsuit against you in court. If you don’t respond to the suit and provide a valid defense (such as that you aren’t actually behind in your taxes) or pay the delinquent amounts to get current, the court will order your home to be sold at a public auction in order to pay off the delinquent taxes, costs, and fees (N.C. Gen. Stat. § 105-374).
Notice of the lawsuit. When the tax collector files the foreclosure action with the court, you’ll receive a summons and a copy of the complaint (the lawsuit).
Notice of the sale. Once the court enters a judgment of foreclosure, a notice of sale will be published in a newspaper and posted publicly (N.C. Gen. Stat. § § 105-374, 1-339.17).
How to save your home. After your home is sold to satisfy the tax debt, the court must confirm the sale. You can pay off the delinquent taxes (plus various other amounts) at any time prior to confirmation, which will stop the foreclosure process and save your home. This is called “redeeming” the property. (Learn more in Getting Your Home Back After a Property Tax Sale in North Carolina.)
Instead of filing a lawsuit, the tax collector can use an alternative process called an “in rem” foreclosure.
In rem process. With an in rem foreclosure, the tax collector files a certificate with the court. This step is referred to as “docketing” (N.C. Gen. Stat. § 105-375). This step effectively creates a judgment against your home in the amount of the taxes, interest, and costs.
Notice of the in rem foreclosure. At least 30 days before docketing the judgment, the tax collector must send you a notice of the foreclosure by registered or certified mail, return receipt requested.
If the tax collector does not receive a return receipt indicating that you actually got the notice within ten days, he or she must make reasonable efforts to locate and notify you by, for example:
When your home will be sold. Three months after docketing (but no more than two years later), the tax collector can file a request for execution with the court. The court then orders the sheriff to sell your home to satisfy the tax debt.
Additional notice you’ll receive. The sheriff will then mail you a notice of sale by registered or certified mail, return receipt requested, 30 days before the sale date. If the sheriff does not receive a return receipt within ten days, he or she must take steps to notify you by posting notice at the courthouse and publishing the notice in a newspaper, for example.
How to stop the foreclosure sale from taking place. You can stop the foreclosure sale by either paying off the debt or getting the court to set aside (invalidate) the judgment. (Get more details in Getting Your Home Back After a Property Tax Sale in North Carolina.)
To read North Carolina’s tax foreclosure statutes, go to the North Carolina General Statutes § § 105-349 through 105-378.