Buying auction properties in Wake County, NC

[Larry Zucker]

I have been researching the process of purchasing foreclosure properties at auction in Wake County, NC.  I understand there is an initial auction "at the courthouse steps" (announced in the local paper) in which the winner must have funds available immediately.  As I understand it, the amount of funds available is 10% of the winning bid price.  Then a 10-day upset bid process starts where the winning bid can be overtaken by a higher bid and each time a valid upset bid is placed the 10-day clock starts again.

But I still have a bunch of questions I can not find the answer to online, that I was hoping someone in the BP universe might be able to guide me through.  Things like

- How to determine what encumbrances remain with the property that a winning bidder will have to pay. 

- Why even attend the initial auction if there is a 10-day upset bid process and how does one determine what properties are in that process

- How legit are all those auction sites like auction.com.  They say they are auctioning foreclosure properties but the requirement is for auctions to occur at court.

- Is it permitted to contact the trustee of the property and negotiate a purchase prior to auction?

You get the idea, someone that has been-there-done-that who is willing to share the details.

Many thanks in advance.

[Chris Martin]

I don't know where some people get their information. I suggest you take a class from Wake Tech or Campbell University that covers foreclosures. The classes (although many years ago) I've taken were provided by attorneys in the trade, specializing in foreclosures. The process for foreclosures under a Deed of Trust (D-T) Power of Sale (PoS) are covered in the NC General Statutes, specifically NCGS Chapter 45 Mortgages and Deeds of Trust

For property  tax sales, which are a little different (about 5 pages different) than the D-T power of sale process, see Chapter 105, specifically 105-374 Foreclosure of tax lien by action in nature of action to foreclose a mortgage.

For sales under the North Carolina Condominium Act, the rules are different. See, for instance, 47C-3-116 Lien for sums due the association; enforcement. You will get a Commissioner's Deed, not a Trustee's Deed, at least in every case I am aware of.
The North Carolina Planned Community Act may be applicable depending on your association's recorded declaration.

The above sale types occur at the courthouse steps. So, different (but similar) rules depending on context. Keep in mind this business is all about details, so referencing or following the wrong statute(s) can be dangerous. Missing liens in discovery can be costly. I know from experience. 

Answers to questions
#1 unless you are skilled (or educated) in title work, get a title search done from a paralegal or attorney. Liens are resolved by lien priority, and different type of sales have different impact on liens (an example: liens by associations under NCGS 47C are unenforceable after a first D-T foreclosure per NCGS 47C-3-116(j). Another example: Unrecorded liens by municipalities attach, so do your DD.)
#2 why pay 5% more than necessary? The upset bid process is in NCGS 45-21.27
#3 I have only bought REO property online from auction.com. My purchases were legit as were the sales. They (auction.com specifically) seem to combines marketing for trustee sales and REOs. Stuart has a good response.
#4 the trustee generally won't talk to you. They will talk to your attorney (if you have a good one) so talk to your attorney first about your plan, then see if there is an angle that you can pursue. Unlikely this path will yield much since the attorney, acting in the role of substitute trustee, gets paid by following the legal process of power of sale. This path was hard after the great recession when foreclosures were rampant, so don't hold your breath. 

For facts about deposits at courthouse sales, etc., it's best to read the security instrument or the NCGS requirements, like at
NCGC 45-21.10 Requirement of cash deposit at sale before you grab a fist full of $100 bills and run to the courthouse with your 5%.

A large percentage of security instruments will be from a GSE, with Fannie Mae forms being very common. So learn D-T PoS from FNMA Form 3034 if in NC. 

There are other posts on BP Nation about NC foreclosures... just need to search.