NC Foreclosures: Don’t Get Upset Over the Upset Bid Process

The Low Down on The Upsets

The Trustee’s main goal at the time of the foreclosure sale on the courthouse steps is to get as high a price as possible for the property.  The foreclosing lender provides the opening bid and the Trustee heads to the courthouse to conduct the sale.  What usually happens?  The Trustee is the only one there and cries the sale to him/herself (I personally try and find a sympathetic security guy, bailiff or fellow attorney to at least stand there and look interested).  There being no bidders, the bank becomes the high bidder, and the Report of Sale is filed reflecting them as the purchaser for the amount of the opening bid.

At this point, the sale is not a done deal.  In some jurisdictions, the bank would have the absolute right to a deed to the property.  However, in North Carolina, the “upset bid period” has just started.

During the next 10 days, someone can take the bank’s place as top bidder by upsetting the bid.  The rules for doing this are pretty simple:  

  • You go to the courthouse and complete a form with the Clerk of Superior Court.  
  • You must raise the bid by at least 5% and put down a deposit of 5% of your new bid.  For example, a Report of Sale is filed showing the bank as the successful purchaser for 100K.  
  • To upset the bid, you must raise the bank by… (5% of 100K) and put a deposit down of …. (5% of your new bid).  

This starts a new upset bid period, so the 10 days starts running again.  

This process goes on until 10 days have elapsed without the bid being upset.  At that point, the sale confirms to the high bidder and the rights of the parties become fixed.

Published by Lanée Borsman on September 30, 2016