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Tax Foreclosures - Frequently Asked Questions
If your question is not answered below, please submit your complete question to taxmeck@MecklenburgCountyNC.gov . A response will be provided via email.
Q: What is the process after the Office of the Tax Collector assigns a property to an attorney? A: Once the Mecklenburg County Office of the Tax Collector assigns a property to an attorney to foreclose, the attorney will start a title search of the property to determine, as a matter of public record, all of the owners, mortgage holders, judgment and lien holders, and other parties having an interest in the property. The attorney will notify the owners of the intent to foreclose on the property and will provide a timeline to resolve the tax delinquency. If no resolution is reached, the attorney will then prepare a complaint, which will then be filed with the Mecklenburg County Courts. The summons and complaint will be delivered to each defendant. Each party that is served is clearly informed by the summons that written answer, if any, must be filed with the Court within 30 days from the date the papers were served on the party.
Q: What is the legal effect of a tax foreclosure filing? A: There is no real defense to a property tax foreclosure complaint and lawsuit unless the tax is an illegal tax or imposed by clerical error for an illegal purpose. All interested parties that have a legal interest in the property will be notified that their interest will be terminated if a tax foreclosure sale of the property is completed.
Q: What happens after the filing of the tax foreclosure lawsuit? A: Defendants have 30 days to file a written answer to the complaint if they wish. Depending on the answers filed by the defendant, the attorney conducting the foreclosure will move for a judgment of sale. Once a judgment of sale is entered, the property is scheduled for sale at the Mecklenburg County Courthouse in Charlotte.
Q: When and where are tax sales conducted?
A: There is no regularly set sale date or time. Sales are scheduled on a case-by-case basis. Notices of sale are published in the Mecklenburg Times newspaper once a week for two weeks and posted at the Mecklenburg County Courthouse located at 832 E. 4th Street, Charlotte NC 28202 for at least 20 days.
Q: What is the process for a mortgage style foreclosure tax sale?
A: The sale is conducted by a Commissioner appointed by the Court. At the sale, the highest successful bidder is required to make a deposit of up to 20% of the final sale price, or $750.00 (whichever is greater), with the attorney or Commissioner, and the sale is reported to the Clerk of Court. After that, the sale stands open for 10 days for possible increased upset bids. If no upset bids are received, the attorney notifies the high bidder from the sale that the bidding period is over, and the successful bidder must deliver the balance of the purchase price. The sale is confirmed and a Commissioner's deed is delivered to the new owner.
Q: What is the process for upset bids?
A: Upset bids are calculated and received by the Special Proceedings Division of the Clerk of Court for each property. In order to file an upset bid, the upset bidder must raise the bid by 5% of the last bid or $750.00 (whichever is greater) and must provide a deposit in the form of cash/certified funds to the Clerk of Court of 5% of the new bid or $750.00 (whichever is greater). Every time an upset bid is filed, a new 10-day period begins. After all upset bid periods are completed, the highest successful bidder is notified and will need to deliver the balance of the purchase price to complete the sale.
Q: Can the tax foreclosure sale be stopped or redeemed from sale? A: State law provides that any owner, mortgage holder, or defendant in a filed tax foreclosure proceeding can stop the foreclosure process at any time by redeeming the property. The redemption price is equal to the taxes, interest, legal fees, and costs of the foreclosure proceeding to the date of the redemption. Anyone can contact the attorney managing the tax foreclosure suit for a payoff. A receipt will be provided that results in a dismissal of the action.
Bankruptcy proceedings filed by the property owner under federal law can also halt tax foreclosure actions. All the taxes, interest, fees, and costs to the date of the bankruptcy filing must be paid as a priority or secured claim in the bankruptcy proceeding.
Q: What happens if the successful bidder does not bring in the purchase price? A: Any successful bidder who does not deliver the purchase price upon demand by the closing attorney will be subject to the immediate loss of all deposits, possible civil action, and contempt prosecution for failure to honor the bid.