How to Redeem the Property After a Tax Sale in North Carolina.

Every homeowner should know how to stop foreclosure. Take time and learn how you can reclaim your house after tax sale. Many states give delinquent taxpayers the chance to pay off the owed taxes and keep the home. It is possible even after a tax sale happens. Luckily, North Carolina is one of those states. This process is called “redeeming” the property.

How the Right to Redeem Usually Works

In some states, the homeowner can redeem or reclaim the house after a tax sale. To redeem, you must reimburse the purchaser the amount paid at the sale + interest.

Exactly how long the redemption period lasts vary from state to state. Usually, the homeowner gets at least a year from the sale to redeem the property. In other states, though, the redemption period happens before the sale.

Here is a list of your basic redemption rights in NC tax foreclosure:  

• Reclaiming the Property After a Mortgage-Type Tax Foreclosure Sale in North Carolina

You may redeem the property that is, pay off the delinquent taxes, plus applicable fees. It should happen before the court confirms the sale.

• Redeeming the Property After an In Rem Foreclosure in North Carolina

You can stop the foreclosure by paying off the debt before the upset-bid period ends. North Carolina law says that payment in full of the judgment together with interest and costs cancels the judgment.

You can set aside the judgment before the issuance of execution on the ground that you paid the tax. Either, the tax lien on which the decision is based is invalid. (N.C. Gen. Stat. § 105-375). However, if you want to ask the court to set aside the judgment, you need a lawyer to help you file a motion.

Does a Mortgage Survive a Tax Foreclosure in North Carolina?

Property tax liens almost always have priority over other liens, including mortgage liens and Deed of Trust liens. (For purposes of this discussion, the terms “mortgage” and “deed of trust” are used interchangeably.) Because a property tax lien has priority, if your home is sold through a tax foreclosure, the sale wipes other mortgages. So, the loan servicer will usually advance money to pay delinquent property taxes to prevent this from happening. The servicer will then demand reimbursement from you (the borrower).

The terms of most mortgage contracts require the borrower to stay current on the property taxes. If you don’t reimburse the servicer for the tax amount it paid, you’ll be in default under the terms of the mortgage, and the servicer can foreclose on your house in the same manner as if you had fallen behind in monthly payments.

Your Servicer Might Set Up an Escrow Account

After demanding repayment for the taxes, penalties, plus interest (and assuming you repay this tax debt), your servicer might set an escrow account for the loan.

 Each month, you’ll have to pay approximately one-twelfth of the estimated annual cost of property taxes. And perhaps other expenses, like insurance—along with your usual monthly payment of principal and interest. This money goes into the escrow account. Then the loan servicer thpays the cost of the taxes and other escrow items on your behalf through the escrow account.

Why Did The Servicer Set Up an Escrow Account?

Many mortgages have a clause that gives the lender the right and ability to establish an escrow account basically at any time it chooses. The servicer sets up and manages the account on behalf of the lender. To find out if and when the lender can set up an escrow account for your loan, read your mortgage contract and any other relevant documentation you’ve signed, like an escrow waiver.

The downside to having an escrow account is that you’ll have to make a bigger payment to the servicer each month. On the positive side, having an escrow account saves you from having to come up with a large amount of money when tax bills, and perhaps other bills, are due.

Getting Help

If you’re already facing a property tax foreclosure in North Carolina and have questions or need help redeeming your property, consider talking to a foreclosure lawyer, tax and / or real estate attorney. There is a shortest route you can take to solve your real estate financial issues. Contact NC TLC Estate today to discuss how we can clear up your complicated situation and save you from foreclosure.

For More information and Legal Help: Tax Foreclosures in North Carolina | Nolo