FILED SENATE
Mar 8, 2021
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 196
SESSION 2021 PRINCIPAL CLERK
S D
SENATE BILL DRS35046-MUz-9A
Short Title: GSC Sale of Property Amendments. (Public)
Sponsors: Senators Edwards and Galey (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO (I) UPDATE THE MAILING METHOD OF NOTICE TO A JUDGMENT
3 DEBTOR OF AN EXECUTION SALE OF REAL PROPERTY, (II) CLARIFY THE
4 EFFECTS OF A DEFAULT BID IN PRIVATE JUDICIAL SALES AND PUBLIC OR
5 PRIVATE PARTITION SALES, AND (III) PROVIDE THAT IN A TAX FORECLOSURE
6 ACTION A COMMISSIONER'S FEE SHALL NOT BE INCLUDED IN THE AMOUNT
7 NECESSARY TO REDEEM THE REAL PROPERTY DURING THE PERIOD BETWEEN
8 THE DATE OF SALE AND THE JUDGMENT CONFIRMING THE SALE AND MAKE
9 TECHNICAL CHANGES, AS RECOMMENDED BY THE GENERAL STATUTES
10 COMMISSION.
11 The General Assembly of North Carolina enacts:
12
13 PART I. UPDATE MAILING METHOD OF NOTICE IN EXECUTION SALES
14 SECTION 1.(a) G.S. 1-339.54 reads as rewritten:
15 "§ 1-339.54. Notice to judgment debtor of sale of real property.
16 In addition to complying with G.S. 1-339.52, relating to posting and publishing the notice of
17 sale, the sheriff shall, at least ten days before the sale of real property, take the following action:
18 (1) If the judgment debtor is found in the county, serve a copy of the notice of
19 sale on him personally, orthe judgment debtor personally.
20 (2) If the judgment debtor is not found in the county, send and serve notice as
21 follows:
22 a. Send a copy of the notice of sale by registered mail or certified mail,
23 return receipt requested, to the judgment debtor at his the judgment
24 debtor's last address known to the sheriff, andsheriff.
25 b. Serve a copy of the notice of sale on the judgment debtor's agent, if
26 there is in the county a person known to the sheriff to be an agent who
27 has custody or management of, or who exercises control over, any
28 property in the county belonging to the judgment debtor."
29 SECTION 1.(b) This section becomes effective October 1, 2021, and applies to
30 executions issued on or after that date.
31
32 PART II. CLARIFY EFFECTS OF DEFAULT BIDS IN PRIVATE JUDICIAL SALES
33 AND PUBLIC OR PRIVATE PARTITION SALES
34 SECTION 2.(a) G.S. 1-339.36 reads as rewritten:
35 "§ 1-339.36. Private sale; upset bid; subsequent procedure.procedure; defaulting bidder.
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1 (a) Every private sale of real or personal property, except a sale of personal property as
2 provided by G.S. 1-339.34, is subject to an upset bid on the same conditions and in the same
3 manner as is provided by G.S. 1-339.25.
4 (b) When an upset bid is made for property sold at private sale, subsequent procedure
5 with respect to the upset bid is the same as for upset bids submitted in connection with real
6 property sold at public sale, except that the notice of any resale of personal property held pursuant
7 to an order granted under G.S. 1-339.27A need not be published in a newspaper but shall be
8 posted as provided by G.S. 1-339.17.
9 (c) Subsections (e) and (f) of G.S. 1-339.30 apply to a defaulting bidder in a private sale."
10 SECTION 2.(b) Part 3 of Article 2 of Chapter 46A of the General Statutes is
11 amended by adding a new section to read:
12 "§ 46A-84.5. Petition for revocation based on default bid.
13 If a purchaser in a partition sale defaults on the purchaser's bid, any party to the partition
14 proceeding or the officer or person designated to make the sale may at any time petition the court
15 to revoke its order confirming the partition sale. The petitioner for revocation shall serve all
16 parties required to be served under G.S. 1A-1, Rule 5, and, if the purchaser is not a party, serve
17 the purchaser under G.S. 1A-1, Rule 4(j). If the court finds that the purchaser defaulted on the
18 purchaser's bid and is unable to cure the default, the court shall revoke its order of confirmation
19 and order a resale."
20 SECTION 2.(c) G.S. 46A-83 reads as rewritten:
21 "§ 46A-83. Petition for revocation of confirmation order.
22 (a) Grounds for Revocation. – Notwithstanding G.S. 46A-76 or any other provision of
23 law, within 15 days of entry of the order confirming the partition sale of real property, the
24 purchaser or any party to the partition proceeding may petition the court to revoke its order of
25 confirmation and to order the withdrawal of the purchaser's offer to purchase the property upon
26 the following grounds:
27 (1) In the case of a purchaser, a lien remains unsatisfied on the property to be
28 conveyed.
29 (2) In the case of any party to the partition proceeding, any of the following:
30 a. Notice of the partition was not served on the petitioner for revocation
31 as required by G.S. 1A-1, Rule 4.
32 b. Notice of the sale was not mailed to the petitioner for revocation as
33 required by G.S. 46A-76(d).
34 c. The amount bid or price offered is inadequate and inequitable and will
35 result in irreparable damage to the owners of the real property.
36 In no event shall the confirmation order become final during the pendency of a petition under
37 this section. No upset bid shall be permitted after the entry of the confirmation order.
38 …
39 (c) Service; Notice of Hearing. – The party petitioning for revocation shall deliver a copy
40 of the petition to serve all parties required to be served under G.S. 1A-1, Rule 5, and shall serve
41 the officer or person designated to make the sale under G.S. 1A-1, Rule 4(j). The court shall
42 schedule a hearing on the petition within a reasonable time and shall cause a notice of the hearing
43 to be served on the petitioner, the officer or person designated to make the sale, and all parties
44 required to be served under G.S. 1A-1, Rule 5.
45 …."
46 SECTION 2.(d) This section is effective when it becomes law and applies to actions
47 or proceedings pending on or commenced on or after that date.
48
49 PART III. AMENDMENTS REGARDING COMMISSIONER'S FEES IN TAX
50 FORECLOSURE ACTIONS AND REMOVAL OF OBSOLETE LANGUAGE
51 SECTION 3.(a) G.S. 105-374 reads as rewritten:
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1 "§ 105-374. Foreclosure of tax lien by action in nature of action to foreclose a mortgage.
2 (a) General Nature of Action. – The foreclosure action authorized by this section is in the
3 nature of an action to foreclose a mortgage and shall be instituted in the appropriate division of
4 the General Court of Justice in the county in which the real property is situated and shall be an
5 action in the nature of an action to foreclose a mortgage.situated.
6 (b) Tax Lien. – Taxing units may proceed under this section, either section on the original
7 tax lien created by G.S. 105-355(a) or on the lien acquired at a tax lien sale held under former
8 G.S. 105-369 before July 1, 1983, with or without a lien sale certificate; and the amount of
9 recovery in either case shall be the same. To this end, it is hereby declared that the original
10 attachment of the tax lien under G.S. 105-355(a) is sufficient to support a tax foreclosure action
11 by a taxing unit, that the issuance of a lien sale certificate to the taxing unit for lien sales held
12 before July 1, 1983, is a matter of convenience in record keeping within the discretion of the
13 governing body of the taxing unit, and that issuance of such certificates is not a prerequisite to
14 perfection of the tax lien.G.S. 105-355(a).
15 (c) Parties; Summonses. –The owner of record as of the date the taxes became delinquent
16 and spouse (if any), any subsequent owner, all other taxing units having tax liens, all other
17 lienholders of record, and all persons who would be entitled to be made parties to a court action
18 (in which no deficiency judgment is sought) to foreclose a mortgage on such property, Summons.
19 – Each of the following persons shall be made parties and shall be served with summonses a
20 summons in the manner provided by G.S. 1A-1, Rule 4.G.S. 1A-1, Rule 4:
21 (1) The owner of record and the owner's spouse, if any.
22 (2) All other taxing units having tax liens.
23 (3) All other lienholders of record.
24 (4) All persons that would be entitled to be made parties to a court action to
25 foreclose a mortgage on the property in which no deficiency judgment is
26 sought.
27 The fact that the owner of record as of the date the taxes became delinquent, any subsequent
28 owner, or any other defendant is a minor, is incompetent, or is under any other disability shall
29 not prevent or delay the tax lien sale or the foreclosure of the tax lien; and all such each of these
30 persons shall be made parties and shall be served with a summons in the same manner as in other
31 civil actions.
32 Persons who have disappeared or who that cannot be located and located, persons whose
33 names and whereabouts are unknown, and all possible heirs or assignees of such persons, these
34 persons may be served by publication; and such these persons, their heirs, and assignees may be
35 designated by general description or by fictitious names in such an the action.
36 (c1) Lienholders Separately Designated. – The word "lienholder" shall appear
37 immediately after the name of each lienholder (including trustees and beneficiaries in deeds of
38 trust, and holders of judgment liens) whose name appears in the caption of any action instituted
39 under the provisions of this section. Such This designation is intended to make clear to the public
40 the capacity of such these persons which that necessitated their having been made parties to such
41 the action. Failure to add such this designation to captions shall does not constitute grounds for
42 attacking the validity of actions an action brought under this section, section or titles the title to
43 real property derived from such actions.the action.
44 (d) Complaint as Lis Pendens. – The complaint in an action brought under this section
45 shall, from the time it is filed in the office of the clerk of superior court, serve as notice of the
46 pendency of the foreclosure action, and every person whose interest in the real property is
47 subsequently acquired or whose interest therein in the property is subsequently registered or
48 recorded shall be bound by all proceedings taken in the foreclosure action after the filing of the
49 complaint in the same manner as if those persons had been made parties to the action. It shall not
50 be is not necessary to have the complaint cross-indexed as a notice of action pending to have the
51 effect prescribed by this subsection (d).subsection.
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1 (e) Subsequent Taxes. – The complaint in a tax foreclosure action brought under this
2 section by a taxing unit shall, in addition to alleging the tax lien on which the action is based,
3 include a general allegation of subsequent taxes which that are or may become a lien on the same
4 real property in favor of the plaintiff unit. Thereafter it shall not be necessary to amend the
5 complaint to incorporate the subsequent taxes by specific allegation. In case of redemption before
6 confirmation of the foreclosure sale, the person redeeming shall be required to pay, before the
7 foreclosure action is discontinued, at least all taxes on the real property which that have at the
8 time of discontinuance become due to the plaintiff unit, plus penalties, interest, and costs thereon.
9 costs. Immediately prior to judgment ordering sale in a foreclosure action (if action, if there has
10 been no redemption prior to that time), time, the tax collector or the attorney for the plaintiff unit
11 shall file in the action a certificate setting forth all taxes which that are a lien on the real property
12 in favor of the plaintiff unit (other unit, other than taxes the amount of which has not been
13 definitely determined).determined.
14 (e1) Taxes Paid by Plaintiff. – Any plaintiff in a tax foreclosure action (other action, other
15 than a taxing unit) unit, may include in his the complaint, originally or by amendment, all other
16 taxes and special assessments paid by him which the plaintiff that were liens on the same real
17 property.
18 (f) Joinder of Parcels. – All real property within the taxing unit subject to liens for taxes
19 levied against the same taxpayer for the first year involved in the foreclosure action may be joined
20 in one action. However, if real property is transferred by the listing taxpayer subsequent to the
21 first year involved in the foreclosure action, all subsequent taxes, penalties, interest, and costs
22 (for for which the property is ordered sold under the terms of this Subchapter) this Subchapter
23 shall be prorated to such the property in the same manner as if payments were being made to
24 release such the property from the tax lien under the provisions of G.S. 105-356(b).
25 (g) Special Benefit Assessments. – A cause of action for the foreclosure of the lien of any
26 special benefit assessments may be included in any complaint filed under this section.
27 (h) Joint Foreclosure by Two or More Taxing Units. – Liens of different taxing units on
28 the same parcel of real property, representing taxes in the hands of the same tax collector, shall
29 be foreclosed in one action. Liens of different taxing units on the same parcel of real property,
30 representing taxes in the hands of different tax collectors, may be foreclosed in one action in the
31 discretion of the governing bodies of the taxing units.
32 The lien of any taxing unit made a party defendant in any foreclosure action shall be alleged
33 in an answer filed by the taxing unit, and the tax collector of each answering unit shall, prior to
34 judgment ordering sale, file a certificate of subsequent taxes similar to that filed by the tax
35 collector of the plaintiff unit, and the taxes of each answering unit shall be of equal dignity with
36 the taxes of the plaintiff unit. Any answering unit may, in case of payment of the plaintiff unit's
37 taxes, continue the foreclosure action until all taxes due to it have been paid, and it shall not be
38 is not necessary for any answering unit to file a separate foreclosure action or to proceed under
39 G.S. 105-375 with respect to any such the taxes.
40 If a taxing unit properly served as a party defendant in a foreclosure action fails to answer
41 and file the certificate of subsequent taxes provided for in the preceding paragraph, this
42 subsection, all of its taxes shall be barred by the judgment of sale except to the extent that the
43 purchase price at the foreclosure sale (after sale, after payment of costs and of the liens of all
44 taxing units whose liens are properly alleged by complaint or answer and certificates) may be
45 certificates, is sufficient to pay such the taxes. However, if a defendant taxing unit is plaintiff in
46 another foreclosure action pending against the same property, or if it has begun a proceeding
47 under G.S. 105-375, its answer may allege that fact in lieu of alleging its liens, and the court, in
48 its discretion, may order consolidation of such the actions or such other disposition thereof (and
49 such disposition of the costs therein) of the actions, including disposition of the costs, as it may
50 deem deems advisable. Any such The order may be made by the clerk of the superior court,
51 subject to appeal as provided in G.S. 1-301.1.
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1 (i) Costs. – Subject to the provisions of this subsection (i), Except as modified by this
2 subsection, costs may be taxed in any foreclosure action brought under this section in the same
3 manner as in other civil actions. When costs are collected, either by payment prior to the sale or
4 upon payment of the purchase price at the foreclosure sale, the fees allowed officers shall be paid
5 to those entitled to receive them. In foreclosure actions in which the plaintiff is a taxing unit, no
6 prosecution bond shall be required.
7 The word "costs," as used in this subsection (i), shall be construed to include one subsection,
8 includes a reasonable attorney's fee for the plaintiff in such amount as the court shall, in its
9 discretion, de