NORTH CAROLINA GENERAL ASSEMBLY

1975 SESSION

 

 

CHAPTER 492

HOUSE BILL 445

 

 

AN ACT TO AMEND ARTICLE 2A OF CHAPTER 45 TO PROVIDE NOTICE AND HEARING PRIOR TO MORTGAGE FORECLOSURE SALES.

 

The General Assembly of North Carolina enacts:

 

Section 1.  Part 2 of Article 2A of Chapter 45 of the General Statutes is hereby amended by designating the present Section 45-21.16 as Section 45-21.16A and by amending Subsection (1) thereof to read as follows:

"(1)      Describe the instrument pursuant to which the sale is held, by identifying the original mortgagors and recording data, and if different from the original mortgagors shall list the record owner of the property as reflected on the records of the register of deeds not more than 10 days prior to posting the notice, who may be identified as present owners, and may reflect the owner not reflected on the records if known."

And by amending Subsection (3) thereof to read as follows:

"(3)      Describe the real property (including improvements thereon) to be sold in such a manner as is reasonably calculated to inform the public as to what is being sold, which description may be in general terms and incorporate the description as used in the instrument containing the power of sale by reference thereto. Any property described in the instrument containing the power of sale which is not being offered for sale should also be described in such a manner as to enable prospective purchasers to determine what is and what is not being offered for sale."

Sec. 2.  Part 2 of Article 2A of Chapter 45 of the General Statutes is hereby amended by adding a new section to be designated 45-21.16 at the beginning thereof to read as follows:

"§ 45-21.16.  Notice and hearing. — (a) The mortgagee or trustee granted a power of sale under a mortgage or deed of trust who seeks to exercise such power of sale shall serve upon each party entitled to notice under this section a notice of hearing. The notice shall specify a time and place for a hearing before the clerk of court and shall be served not less than 10 days prior to the date of such hearing. The notice shall be served in any manner provided by the Rules of Civil Procedure for the service of summons, or may be served by actual delivery by registered or certified mail, return receipt requested; provided, that in those instances in which service by publication would be authorized, service may be made by posting a notice in a conspicuous place and manner upon the property for a period of not less than 10 days before the date of the hearing.

(b)        Notice of hearing shall be sent to:

(1)        Any person to whom the security interest instrument itself directs notice to be sent in case of default.

(2)        To any person obligated to repay the indebtedness against whom the holder thereof intends to assert liability therefor, and any such person not notified shall not be liable for any deficiency remaining after the sale.

(3)        To the record owner or owners (including owners in tenancy by the entirety) of the real estate at the time of the giving of the notice.

(c)        Notice shall be in writing and shall state in a manner reasonably calculated to make the party entitled to notice aware of the following:

(1)        The particular real estate security interest being foreclosed, with such a description as is necessary to identify the real property, including the date, original amount, and book and page of the security instrument.

(2)        The name and address of the holder of the security instrument, and if different from the original holder, his name and address.

(3)        The nature of the default claimed.

(4)        The fact, if such be the case, that the secured creditor has accelerated the maturity of the debt.

(5)        Any right of the debtor to pay the indebtedness or cure the default if such is permitted, the date by which such payment may be made or cure effected, the amount to pay or steps necessary to cure by such date, and to whom payment should be made or notice of cure given.

(6)        The date, time and place when and where the real estate will be sold, unless the obligation is earlier satisfied.

(7)        The right of the debtor (or other party served) to appear before the Clerk of Court at a time and on a date specified, at which appearance he shall be afforded the opportunity to show cause as to why the foreclosure should not be allowed to be held. The notice shall contain a statement that if the debtor does not intend to contest the creditor's allegations of default, that the debtor does not have to appear at the hearing and that his failure to attend the hearing will not affect his right to pay the indebtedness and thereby prevent the proposed sale, or to attend the actual sale, should he elect to do so.

(8)        That if the foreclosure sale is consummated the purchaser will be entitled to possession of the real estate as of the date of delivery of his deed, and that the debtor, if still in possession, can then be evicted.

(9)        That the debtor should keep the trustee or mortgagee notified in writing of his address so that he can be mailed copies of the notice of foreclosure setting forth the terms under which the sale will be held, and notice of any postponements or resales.

(d)        The hearing provided by this section shall be held before the clerk of court in the county where the land, or any portion thereof, is situated. Upon such hearing, the clerk shall consider the evidence of the parties and may consider in addition to other forms of evidence required or permitted by law, affidavits and certified copies of documents. If the clerk finds the existence of (1) valid debt of which the party seeking to foreclose is the holder, (2) default, (3) right to foreclose under the instrument, and (4) notice to those entitled to such under subsection (b), then the clerk shall further find that the mortgagee or trustee can proceed under the instrument, and the mortgagee or trustee can give notice of and conduct a sale pursuant to the provisions of this Article. The act of the clerk in so finding or refusing to so find is a judicial act and may be appealed to the judge of the district or superior court having jurisdiction at any time within 10 days after said act. If an appeal is taken from the clerk's findings, the clerk shall stay the foreclosure pending appeal, providing that the clerk shall as a condition of staying the foreclosure require that the appealing party post a bond with sufficient surety to protect the prevailing party from any probable loss by reason of delay in the foreclosure.

(e)        In the event of an appeal, either party may demand that the matter be heard at the next succeeding term of the court to which the appeal is taken which convenes ten or more days after the hearing before the clerk, and such hearing shall take precedence over the trial of other cases except cases of exceptions to homesteads and appeals in summary ejectment actions, provided the presiding judge may in his discretion postpone such hearing if the rights of the parties or the public in any other pending case require that such case be heard first. In those counties where no term of court is scheduled within 30 days from the date of hearing before the clerk, either party may petition the resident superior court judge or chief district court judge, who shall be authorized to hear the appeal.

(f)         Waiver of the right to notice and hearing provided herein shall not be permitted except as set forth herein. At any time subsequent to service of the notice of hearing provided above, the clerk, upon the request of the mortgagee or trustee, shall mail to all other parties entitled to notice of such hearing a form by which such parties may waive their rights to the hearing. Upon the return of the forms to the clerk bearing the signatures of each such party and that of a witness to each such party's signature (which witness shall not be an agent or employee of the mortgagee or trustee), the clerk in his discretion may dispense with the necessity of a hearing and proceed to issue the order authorizing sale as set forth above."

Sec. 3.  G.S. 45-21.17 is hereby amended to read as follows:

"§ 45-21.17.  Posting and publishing notice of sale of real property. — In addition to complying with such provisions with respect to posting or publishing notice of sale as are contained in the security instrument,

(a)        Notice of sale of real property shall

(1)        Be posted, at the courthouse door in the county in which the property is situated, for 20 days immediately preceding the sale.

(2)        And in addition thereto,

a.         If a newspaper qualified for legal advertising is published in the county, the notice shall be published in such a newspaper once a week for at least two successive weeks; but

b.         If no such newspaper is published in the county, then notice shall be published once a week for at least two successive weeks in a newspaper having a general circulation in the county.

c.         In addition to the newspaper advertisement under (a) or (b) above, the clerk may in his discretion, on application of any interested party, authorize such additional advertisement as in the opinion of the clerk will serve the interest of the parties, and permit the charges for such further advertisement to be taxed as a part of the costs of the foreclosure.

(b)        When the notice of sale is published in a newspaper, (1) The period from the date of the first publication to the date of the last publication, both dates inclusive, shall not be less than seven days, including Sundays, and (2) The date of the last publication shall be not more than ten days preceding the date of the sale.

(c)        When the real property to be sold is situated in more than one county, the provisions of Subsections (a) and (b) shall be complied with in each county in which any part of the property is situated.

(d)        The notice of sale shall be mailed at least 20 days prior to the date of sale to each party entitled to notice of the hearing provided by G.S. 45-21.16 whose address is known to the trustee or mortgagee and in addition shall also be mailed to any party desiring a copy of the notice of sale who has complied with Subsection (e) below. Notice of the hearing required by G.S. 45-21.16 shall be sufficient to satisfy the requirement of notice under this section provided such notice contains the information required by G.S. 45-21.16A.

(e)        (1) Requests for copies of notice. Any person desiring a copy of any notice of default and sale under any security instrument with power of sale upon real property may, at any time subsequent to the recordation of the security instrument and prior to the giving of notice of hearing provided for in G.S. 45-21.16, cause to be filed for record in the office of the register of deeds of the county where all or any part of the real property is situated, a duly acknowledged request for a copy of such notice of sale. This request shall be signed and acknowledged by the party making the request, shall specify the name and address of the party to whom the notice is to be mailed, shall identify the deed of trust or mortgage by stating the names of the parties thereto, the date of recordation, and the book and page where the same is recorded, and shall be in substantially the following form:

'In accordance with the provisions of G.S. 45-21.17(e) request is hereby made that a copy of any notice of sale under the deed of trust (mortgage) recorded on ________, 19___, in Book ________, page ___, records of ________ County, North Carolina, executed by __________ as trustor (mortgagor) in which _________ is named as beneficiary (mortgagee), and as __________ trustee, be mailed to __________ at the following address: ____________________________.

Signature: ________________________________.'

(2)        Register of deeds' duties. Upon the filing for record of such request, the register of deeds shall index in the general index of grantors the names of the trustors (mortgagors) recited therein, and the names of the persons requesting copies, with a marginal entry in the index of the book and page of the recorded security instrument to which the request refers; or upon the filing for record of such request, the register of deeds may instead of indexing such request on the general index of grantors stamp upon the face of the security instrument referred to in the request the book and page of each request for notice thereunder.

(3)        Mailing notice. The mortgagee, trustee, or other person authorized to conduct the sale shall at least 20 days prior to the date of the sale cause to be deposited in the United States mail an envelope with postage prepaid containing a copy of the notice of sale, addressed to each person whose name and address are set forth in a duly recorded request therefor as specified in (1) above, directed to the address designated in such request.

(4)        Effect of request on title. No request for a copy of any notice filed pursuant to this section nor any statement or allegation in any such request nor any record thereof shall affect the title to real property, or be deemed notice to any person that the person requesting copies of notice has any claim or any right, title or interest in, or lien or charge upon the property described in the deed of trust or mortgage referred to therein.

(5)        Evidence of compliance and actions for failure to comply. The affidavit of the mortgagee, trustee, or other person authorized to conduct the sale that copies of the notice of sale have been mailed to all parties filing request for the same hereunder shall be deemed prima facie true. As to parties entitled to notice of foreclosure sale by virtue of G.S. 45‑21.17(e)(1), no such party shall be permitted to attack a foreclosure on grounds that he was not mailed the notice herein provided for unless such action be brought prior to confirmation of the sale if the property is purchased by someone other than the secured party, and if bought by the secured party, unless the action is brought within six months of the date of confirmation of the sale and prior to the time the secured party sells the property to a bona fide purchaser for value. As to parties entitled to notice of foreclosure sale by virtue of G.S. 45-21.17(e)(1), no action may be brought either attacking the foreclosure or seeking damages resulting therefrom unless brought within six months of the date of confirmation of the sale, and in no case may be brought unless the party bringing the same tenders the full amount of the secured partys' investment in the property (including costs and expenses in the foreclosure action and all accrued interest), and if on hearing it is proven that the party bringing the action received mailed notice or had actual notice of the sale before it was held (or if a resale was involved, prior to the date of the last resale), then he shall not prevail and shall be charged with such costs and expenses as are incurred in defending such action, including reasonable attorneys' fees of the defending party to be assessed by the court."

Sec. 4.  Subsection (a) of G.S. 45-21.21 is hereby amended by deleting the word "six" and inserting in lieu thereof the word "twenty".

Sec. 5.  Subsection (b) of G.S. 45-21.21 is hereby amended by adding a new subdivision (3) to read as follows:

"(3)      Give written or oral notice of postponement to each party entitled to notice of sale under G.S. 45-21.17."

Sec. 6.  Subsection (d) of G.S. 45-21.21 is hereby amended to read as follows:

"(d)      If a sale is not held at the time fixed therefor and is not postponed as provided by this section, or if a postponed sale is not held at the time fixed therefor or within 30 days of the date originally fixed for the sale, then prior to such sale taking place the provisions of G.S. 45-21.16, G.S. 45-21.16A, and G.S. 45-21.17 shall be again complied with except that if on appeal from findings of the clerk pursuant to G.S. 45-21.16(d) and (e) the appellate court authorizes the sale to be held, as to such sale so authorized the provisions of G.S. 45-21.16 need not be complied with again but those of G.S. 45-21.16A and 45-21.17 shall be."

Sec. 7.  Sub-subdivision b. of Subdivision (2) of Subsection (b) of G.S. 45-21.29 is hereby amended to read as follows:

"b.        If no such newspaper is published in the county, then notice shall be published once a week for at least two successive weeks in a newspaper having a general circulation in the county."

Sec. 8.  Subsection (b) of G.S. 45-21.29 is hereby amended by adding a new subdivision (3) to read as follows:

"(3)      Notice of resale shall be mailed to each party entitled to notice of sale pursuant to G.S. 45-21.17."

Sec. 9.  Subsection (k) of G.S. 45-21.29 as the same appears in the 1974 Cumulative Supplement is hereby amended by renumbering subdivisions (2) through (6) as subdivisions (3) through (7) and adding a new subdivision (2) to read as follows:

"(2)      The provisions of this Article have been complied with, and".

Sec. 10.  Subsection (a) of G.S. 45-21.30 is hereby amended by deleting the words "or personal".

Sec. 11.  Subsection (c) of G.S. 45-21.33 is hereby amended by adding a new subdivision (3) to read as follows:

"(3)      Proof as required by the clerk, which may be by affidavit, that notices of hearing, sale and resale were served upon all parties entitled thereto under G.S. 45-21.16, G.S. 45-21.17 and G.S. 45-21.29."

Sec. 12.  Chapter 45 of the General Statutes is hereby amended by adding a new section G.S. 45-21.45 to read as follows:

"§ 45-21.45.  Validation of foreclosure sales where notice and hearing not provided. — In all cases where mortgages or deeds of trust on real estate with power of sale have been foreclosed pursuant to said power by proper advertisement and sale, but the mortgagor or grantor under such mortgage or deed of trust did not receive actual notice of such foreclosure or have the opportunity of a hearing prior to such foreclosure, all such sales are hereby fully validated, ratified and confirmed and shall be as effective to pass title to the real estate described therein as fully and to the same extent as if such notice and opportunity for hearing had been given, unless an action to set aside such foreclosure is commenced within one year from the date of ratification of this act."

Sec. 13.  The provisions of this act, except for Section 12, shall not apply to foreclosures which were commenced prior to the ratification hereof, but shall apply only to those as to which no notice of sale had been posted prior to such ratification.

Sec. 14.  The words clerk of court as used in this act shall be deemed to include assistant clerk of court.

Sec. 15.  Subsection (b) of G.S. 45-21.9 is hereby amended by deleting the last sentence thereof and by inserting in lieu thereof the following:

"As to any such sale, it shall not be necessary to comply with the provisions of G.S. 45-21.16 but the requirements of G.S. 45-21.17 relating to notices of sale shall be complied with."

Sec. 16.  This act shall not affect pending litigation.

Sec. 17.  This act shall become effective upon ratification.

In the General Assembly read three times and ratified, this the 6th day of June, 1975.