New North Carolina Foreclosure Sale Cancellation Procedure

Session Law 2018-40, which became effective on July 1, 2018, amends portions of N.C.G.S. § 45-21.21. The amendments revise the procedure for postponing a foreclosure sale and set forth a new procedure for canceling a foreclosure sale.

We have included links to Session Law 2018-40 and the Administrative Office of the Courts' memorandum to the Clerks explaining the amendments for your review.

Pursuant to N.C.G.S. § 45-21.21(b), the party conducting the foreclosure sale must publicly announce the postponement of the sale at the time and place the sale was originally scheduled to take place as set forth in the notice of sale, provide notice of the sale postponement to all interested parties, and attach a copy of the postponement notice to the originally posted notice of sale. The notice of sale postponement must contain language stating that the sale is postponed, the hour and date to which the sale is postponed, and the reason for the sale postponement. A copy of the notice of sale postponement must either be delivered orally or in written form to all interested parties. As a result of the amendments to N.C.G.S. § 45-21.21 the party conducting the foreclosure sale now must also provide notice of the sale postponement to the Clerk’s office as soon as that party knows that the sale is being postponed, and post a copy of the notice of sale postponement at the courthouse on the same day he/she provides notice to the Clerk.

The biggest change to N.C.G.S. § 45-21.21 is a new foreclosure sale cancellation procedure which did not exist under prior law. Specifically, the party conducting the foreclosure sale must provide written notice of a sale cancellation to the Clerk of Superior Court. The notice of cancellation must include the following: case number; mortgagor(s) and record owner(s) name(s); USPS address or legal description; originally scheduled date and time for the sale; and a statement that the foreclosure sale has been canceled or withdrawn. If this notice is not provided to the Clerk’s office prior to the originally scheduled sale date/time, the party exercising the power of sale must do the following:

  • publicly announce the sale cancellation at the originally scheduled sale date/time;
  • attach the notice of sale cancellation to the originally posted notice of sale;
  • provide written or oral notice of cancellation to the parties entitled to notice of the sale;
  • and “hand-deliver” the notice of sale cancellation to the clerk of court.

The AOC memorandum has made it clear that the Clerks’ offices are not to post the notice of sale postponement or the notice of sale cancellation for the person exercising the power of sale so both scenarios will require the person exercising the power of sale to make a trip to the courthouse to complete the posting in addition to the requirements to provide notice to the interested parties and the Clerk.

As currently written, the amendments to N.C.G.S. § 45-21.21 contain drafting errors and may create confusion when they are applied in practice. Errors contained in subsections (h), and (i) have been recognized by the General Counsel for the Administrative Office of the Courts and are supposed to be addressed at the next legislative session (e.g., incorrect references to subsection (b) that should instead reference new subsection (g)). Local rules implemented by the Clerks in North Carolina’s 100 counties regarding posting of notices of sale postponements and sale cancellations may change as each clerk determines how to proceed. We will provide further updates to you as they develop.

In order to ensure compliance with the new sale cancellation requirements, please be sure that you timely notify our office of any pending sale cancellation(s) (e.g., due to approval of loss mitigation, reinstatement of the loan, or redemption).

If you have any questions, please contact Lauren Thurmond by telephone at (704) 362-9255, ext. 2312 or by email at lauren.thurmond@hutchenslawfirm.com

Published by Lauren S. Thurmond on July 19, 2018.