Sale Type: | Court-supervised tax foreclosureThe legal process by which a lienholder forces the sale of a property to recover the debt owed when the property owner fails to pay. sale (judicial or in rem) |
Interest Rate: | Not earned by buyers (owners owe 2% from Jan 6 to Feb 1, then 3/4% per month on delinquent taxesProperty taxes that remain unpaid past the due date, which may result in penalties, interest, and eventually a tax lien being placed on the property.) |
Bid Method: | Public auction, then a 10-day upset bid period (minimum increase of 5% or $750) |
Owner can redeem until the court confirms the sale | |
Sale Date(s): | Set by each county; there is no statewide schedule |
State Statute(s): | N.C. General Statutes Chapter 105, Subchapter II, Article 26 (G.S. 105-374 and 105-375) |
Limited (a taxing unit that buys at the sale may assign its bid by private sale) | |
State Website: |
How North Carolina Tax Foreclosure Sales Work
North Carolina does not sell tax lien certificates, and the tax collector does not simply hand out a tax deedA legal document that transfers property ownership to the government or an investor after the owner fails to pay property taxes for an extended period. at a delinquent tax sale. Instead, the county, city or town forecloses on its tax lien through the courts, and the property is sold at a public auction. The buyer receives a deed from the person who conducts the sale. Local governments can use either of two methods:
Judicial foreclosure (G.S. 105-374): a civil lawsuit that works much like a mortgage foreclosure. The buyer typically receives a commissioner’s deed or trustee’s deed.
In rem foreclosure (G.S. 105-375): in rem means the case is against the property itself, not against the owner personally. The government dockets its tax certificate as a judgment and sells the property under that judgment. The buyer typically receives a sheriff’s deed.
In an in rem case, the tax collector must send notice by certified mail at least 30 days before docketing the judgment, and the notice must say that the lien can still be paid before judgment is entered.
Sales are generally held in person at the courthouse. Dates, locations and procedures are set county by county, so there is no statewide sale calendar.
The Upset Bid Process
North Carolina uses an upset bid system. An upset bid is a higher bid placed after the auction that reopens the sale to everyone. Here is how it works:
After the auction, the person conducting the sale files a report of sale with the clerk of superior court.
For 10 days after the report is filed, anyone can place an increased bid. Counties generally require it to be at least 5% higher than the current bid, or $750 higher, whichever is greater.
Each time a new upset bid is placed, the 10-day period starts over.
Anyone with an interest in the property can also file exceptions to the sale during this time.
When 10 days pass with no exception and no increased bid, the sale can be confirmed by the court. The judgment of confirmation directs delivery of the deed once the purchase price is paid.
This means winning at the auction does not guarantee you will end up with the property.
Redemption in North Carolina
North Carolina has no redemption period that runs after the sale. Instead, an owner, mortgage holder or other party to the case can stop the foreclosure by paying the taxes, interest, fees and costs owed. Many counties allow this up until the court confirms the sale. Once the sale is confirmed and the deed is delivered, redemption rights end.
Delinquent taxes in North Carolina accrue interest of 2% from January 6 to February 1, then three-fourths of 1% per month after that (G.S. 105-360). That interest is paid by the owner to the taxing unit. A buyer at a foreclosure sale does not earn it.
What Buyers Should Know
Opening bid: it is generally set to cover the taxes, interest and costs, and it can change as interest and expenses accrue.
Deposit: counties require a deposit from the high bidder on sale day, and the amount varies by county.
Payment: the balance is due after the upset bid period ends, along with recording fees and revenue stamps.
Condition: properties are commonly sold as is, where is.
Taxing units can bid: a taxing unit may bid at the sale and later assign its bid by private sale (G.S. 105-376).
What This Means for Investors
North Carolina is a different model from a tax lien state. You are bidding to buy property at a court-supervised foreclosure sale, not earning interest on a lien. The owner may be able to redeem until the sale is confirmed, your bid can be upset by a higher bidder, and your money may be tied up while that happens. Returns are not guaranteed. The result depends on the price you pay, the property’s condition and title, and your plan for it. All investing involves risk, and results vary.
What Investors Should Check
The sale notice, including the date, location, opening bid and deposit rules
Whether the case is a judicial or in rem foreclosure, and what kind of deed you will receive
The upset bid deadline, and how your funds are handled if your bid is upset
Title, liens and other claims, using our guide on how to evaluate tax lien properties at auction
Recording fees, revenue stamps and the cost of holding the property
The current statutes and county rules, including how our tax lien states vs. tax deed states map shows each state
This content is for educational purposes only and is not legal, tax or financial advice. Talk with a qualified professional about your own situation.
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