Tax and Assessment Foreclosure FAQ

 

Link to Durham City/County Tax Office Website
Details and Minimum Bids for Upcoming Tax Foreclosure Sales

The Durham City/County Tax Office, at the direction of the Durham County Commissioners and the Durham City Council, is aggressively pursuing the collection of delinquent real and personal property taxes. At the same time, the City of Durham is also aggressively pursuing the collection of delinquent special improvement assessments. One of the collection tools used for both of these efforts is the employment of private attorneys to commence formal foreclosure proceedings under North Carolina General Statutes 105-374 against real property on which there are delinquent unpaid property taxes and/or delinquent unpaid special assessments. The text of the foreclosure statute appears below.

Reinhardt Milam & Fisher, PLLC is one of four firms employed by the Tax Office to carry out these foreclosure proceedings for taxes, and has also been employed by the City of Durham to carry out these foreclosure proceedings for special assessments. Attorney Chip Reinhardt is the primary attorney handling tax foreclosures for Reinhardt Milam & Fisher. He is assisted in this work by legal assistant Karen Davis and by paralegal Kelley Foley. Our office has been doing this work for the Tax Office since the spring of 2002, and for the City of Durham (on assessments) since the spring of 2006. Our efforts, along with those of the other attorneys, have caused a noticeable increase in the successful tax collection rate of the Durham Tax Office.

What follows below is some information, in the format of Frequently Asked Questions (FAQ), about the tax foreclosure process in Durham and in North Carolina:

What are delinquent real property taxes and/or special improvement assessments subject to foreclosure?

Everyone who owns real property in Durham County is required to list this property as of the first day of January of each year. Most times, this listing is automatic, but if there have been improvements or changes in the property, these must be reported by state law to the Tax Office with the listing forms in January. By July 1 of each year, a tax rate will be set by both the Durham County Commissioners and (if the property is within the Durham City limits) by the Durham City Council. For each parcel of taxable real state, these tax rates will be multiplied by each parcel’s listed and assessed valuation as of January 1, and the product of this multiplication is that year’s tax bill on the parcel. Usually in August, but no later than September, a tax bill will be mailed out to the last known address of the taxpayer as of January 1 for that year. The taxpayer has until the first Tuesday of the following year to pay the tax bill without penalty. After that time, if the bill remains unpaid, it becomes delinquent, and subject to penalties and interest as set forth by state law. Once the property tax is delinquent, it is subject to foreclosure prosecution.

With respect to special improvement assessments, this represents a lien for capital improvement work (street paving, sewers, water lines, etc) which are done next to a taxpayer’s property and usually for the benefit of the taxpayer’s property. Usually the work is done by the City as the result of a petition of landowners in the neighborhood, although sometimes it is done on the City’s own initiative. Once the work is complete, an assessment bill is calculated based on the linear footage of the taxpayer’s property next to the improvement. These assessment bills are sent to the landowners as part of a confirmation process by the City Council. Once the City Council confirms the assessment, a final bill is then issued, which is usually scheduled to be paid by the taxpayer over an installment period of several years. Failure to pay the installments when due renders the assessments delinquent and therefore subject to foreclosure in the same manner as delinquent real property taxes.

What if the taxpayer sells the real property after January 1, and what if a bill is not received by the new owner?

Under state law, the listing taxpayer is the responsible party for the taxes owned by the listing taxpayer as of January 1 of each year, even if the taxpayer sold the property after January 1. A change in the law was made in the summer of 2006, which provides that, for taxes which become delinquent on or after January, 2007, and only for the purpose of collecting those delinquent taxes, the listing taxpayer will be the record owner of the property at the date the taxes became delinquent. Even with this change in the law, the Tax Office has always made a good-faith effort to notify new owners of the existence of tax bills, but state law only requires that the tax bill be sent to the taxpayer as of January 1 of that year, and to the last known address of the taxpayer and/or new record owner. It is the duty of each owner of property to keep the Tax Office notified of address changes and to know that taxes are payable each year, regardless of whether a billing was received.

What does the Tax Office do with delinquent tax bills? What does the City of Durham Finance Department do with delinquent special improvement assessment bills?

When a property tax bill becomes delinquent, the Tax Office tries various methods to notify the taxpayer and potential owners about the delinquent bill to see if the bill can be collected without the extreme remedy of foreclosure. Sometimes the Tax Office will set up a payment plan with a taxpayer, but the Tax Office is not required to do so, and can terminate payment plans at any time. The final step in the collection procedure is a pre-foreclosure letter sent by the Tax Office to the last known address of an owner and/or taxpayer. If these pre-foreclosure methods still fail, the Tax Office may assign parcels to private attorneys to commence foreclosure proceedings.

The collection procedure for delinquent special improvement assessments due the City of Durham is very similar. The City of Durham Collector of Revenue sends out bills and other collection letters, and also sends out a final pre-foreclosure letter. If these collection efforts fail, the City of Durham Collector of Revenue may assign the property to our office to commence “stand-alone” foreclosure proceedings. If there are delinquent real property taxes along with delinquent special improvement assessments, the collection procedures are usually coordinated through the Tax Office and assigned to the same private attorneys to commence combined foreclosure proceedings.

What happens when the Tax Office or the City of Durham Collector of Revenue assigns property to attorneys to foreclose?

Once the Durham Tax Office or the City of Durham Collector of Revenue assigns properties to attorneys to foreclose, the Tax Office and/or the Collector of Revenue mark their respective computer records with the assignment, and will no longer accept direct payments or payment plans from taxpayers. All tax and/or assessment payments from the point of assignment must pay the taxes, interest, fees and costs in full, and must be made through the assigned attorney. Persons interested in paying off properties in foreclosure must contact the assigned attorney directly to whom that property was assigned to secure a payoff quote. At some point after the assignment, 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 interested parties required by state law. The attorney will then prepare a complaint listing the City and County of Durham as the Plaintiffs (complaining parties), or the City of Durham as sole plaintiff in a stand-alone assessment foreclosure case. The Defendants will be all of those parties found by the record title search to be interested parties in the real estate (owners, mortgage holders, etc.) The complaint will be filed in either Durham District or Durham Superior Court (depending on the amount of taxes and/or assessments owed). The summons and complaint will be delivered to each defendant by the sheriff, or by other approved means of service of process in civil lawsuits (FEDEX, certified mail, process server, etc.). 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.

What is the legal effect of a tax or assessment foreclosure filing?

At the time the tax or assessment foreclosure complaint is filed, a companion filing called a lis pendens is also made. The lis pendens puts title searchers and other searchers of the public records on notice that the title to the property is now being foreclosed. There is no real defense to a property tax or assessment foreclosure complaint and lawsuit. The main purpose of the foreclosure process is to notify all interested parties that any legal interest they may have in the property will be terminated and extinguished if a tax or assessment foreclosure sale of the property is completed. This is because property tax liens and special improvement assessment liens are ahead of and superior to all other liens, except (in a limited extent) to filed income tax liens held by the North Carolina Department of Revenue. When a superior lien is foreclosed, it cuts off all junior liens and ownership rights.

What happens after the filing of the tax or assessment foreclosure complaint?

As noted above, each defendant has 30 days to file a written answer to the complaint if they wish. Depending upon service on the parties and any answers filed, the attorney conducting the foreclosure will eventually move for a judgment of sale. Once a judgment of sale is entered, the property is scheduled for sale at the Durham County Judicial Building. The sale is conducted by a Commissioner appointed by the Court, usually Mr. R. Douglas Davis. At the sale, the highest successful bidder puts up a 10% cash/certified check deposit with the attorney, and the sale is reported to the Clerk of Court. After that, the sale stands open for 10 days for possible increased upset bids. Upset bids are calculated and received by the Clerk of Court for each property. If no upset bids are received, the attorney notifies the high bidder at the sale that the bidder has won, and that bidder has to come up with the balance of the purchase price. The process is the same when upset bids are received, except that the final high bidder after upset bids are completed is notified to bring in the purchase price of the final high upset bid. When the purchase price is paid under either sale process, the sale is confirmed and a Commissioner’s deed is delivered to the new owner.

How do people find out about upcoming tax or assessment foreclosure sales?

Tax and Assessment Foreclosure sales usually occur once a month, generally on the second Tuesday of the month. Notices of sale are published in the newspaper once a week for two weeks and posted at the Courthouse for at least 20 days. In addition, our office also mails out notices with the minimum bid amounts (see explanation below) to the defendants in the case as well as the owners of property adjacent to the property being sold. In addition, for property tax foreclosures, the Tax Office publishes the notices of sale with the minimum bids on their website (see link above). 

How does the public sale process work, and what about deposits?

Prior to the sale date, the Commissioner (R. Douglas Davis, 477-0280), personally visits each property up for sale, and assembles some very basic information about it (tax value, location, GIS report, etc.). This is only for informational purposes, to allow the Commissioner to tell people prior to or at the sale something about the properties and where they are located. At twelve noon on the sale date, in the lobby of the Durham County Judicial Building, Mr. Davis, as the Commissioner, will go through a detailed explanation of which properties are for sale and which have been redeemed (see below). He will also explain that all sales are “where-is, as-is,” no warranties and no representations of any kind. He will then start off the sale with a “minimum bid” which is equal to the the amount of taxes and interest under the judgment, as well as the total estimated fees and costs of the foreclosure sale. The “minimum bid” will have been advertised both at the Tax Office and on the Tax Office website. The “minimum bid” is a starting point, and most properties usually sell for a sum in excess of the “minimum bid.” NOTE: To the extent a final unredeemed sale is completed and confirmed with a sales price higher than the minimum bid, the excess is deemed surplus funds, which are deposited with the Clerk of Superior Court of Durham County. These surplus funds do not go to the City or County of Durham, but are instead the property of the defendants in the foreclosure case. Rights in any surplus funds are determined by the Clerk of Court.

At the public sale, the high bidder for a property will be required to post a deposit (equal to 10% of the high bid), payable to the trust account of the attorney handling the sale of that property. The 10% deposit has to be cash, or cash equivalent, such as certified funds or money order. Since most bidders do not have the exact cash or certified funds on them at the public sale, the bidder is allowed to deliver a temporary personal check to the attorney. The bidder then has two hours after the conclusion of the public sale to come to the attorney’s office replace and exchange the personal check for cash or cash-equivalent funds.,

When does the sale become final, and what are upset bids?

Once the public auction is completed, the Commissioner will, on the same day of the sale, file a report of sale with the Clerk of Court. This report of sale will give the name, address and phone number of the high bidder at the sale, the property sold, and the high bid for the property at the sale. As required by North Carolina General Statutes 1-339.25, the filing of this report of sale starts a ten (10) day (calendar days, not business days) waiting period called the upset-bid period. For normal tax foreclosure sales on the second Tuesday of the month, this upset period would end on Friday week after the sale took place. The purpose of the upset bid is to allow all interested bidders, including those who might not have been at the sale, to increase the bid amount by filing an upset bid with the Clerk of Court. The minimum bid is 5% of the reported sales price, or a minimum of $750, whichever is higher. For example, if a property sold at public auction for $10,000, then the minimum bid amount would be $750 (5% would be $500, the minimum is $750). In this same example, if a minimum upset bid was filed, then the new overall upset bid price would be $10,750, and another 10-day period would start to run, commencing on the date that the upset bid was filed with the Clerk of Court. Additional upset bids can be filed after that, each with the same minimum of 5%, or $750, bid increase, based on the prior upset bid amount. In the case of the first upset bid, the attorney handling the tax foreclosure sale would notify the public sale bidder of the upset bid, and make arrangements to return the 10% deposit to the original bidder. Once upset bids begin, no further bids or deposits are accepted by the foreclosing attorney. Instead, all upset bids run through the Clerk of Court. There are no limits to the amount or frequency of upset bids.

If no upset bids are filed, OR if upset bids are filed and the period for filing additional upset bids has ended with no other upset bids being filed, THEN the foreclosing attorney will contact the high bidder to inform them of the successful bid and to demand the balance of the bid price (or balance of the upset bid price) over and above the initial deposit (or upset bid deposit). These funds must be paid in cash or certified funds to the foreclosing attorney within three (3) days after the demand for the additional funds is made. If a bidder does not honor the bid (or upset bid) by paying in the balance of the additional funds, then that bidder is in default, the bid deposit (or upset bid deposit) will be held pending further orders of the court, and the property will be placed for resale. Remember that, subject to upset bid requirements, all sales are final, absolute, and unconditional - there is no “closing,” settlement statement, financing contingency or any other contingencies. That is why it is so important for bidders to fully check out a property prior to placing any bid or upset bid.

Once the balance of the purchase price is paid by the bidder (or upset bidder), then the foreclosing attorney will secure a confirmation order from the court, and record the deed to the new purchaser.

Can the tax or assessment foreclosure sale be stopped or redeemed from sale?

State law provides that any owner, mortgage holder or defendant in a filed tax or assessment foreclosure proceeding can stop the foreclosure process at any time by redeeming the property. The redemption price is equal to the taxes and/or assessments, interest, fees and costs of the foreclosure proceeding to the date of the redemption. Parties wishing to redeem property from tax or assessment foreclosure and stop the foreclosure process must contact the assigned attorney for a redemption payoff figure. Redemption can even occur after a sale, as long as the sale has not been confirmed by the Court. However, once the foreclosure property sale has been completed with a confirmation order and delivery of deed, all rights of redemption are terminated.

Bankruptcy proceedings filed by the property owner under federal law can also stop tax or assessment foreclosures, but all of the taxes and/or assessments, interest, fees and costs of the action to the date of the bankruptcy filing must be paid as a priority claim in the bankruptcy proceeding.

What is the status of title delivered by a tax or assessment foreclosure deed? Are there any warranties on the property?

The Commissioner will make it clear to all bidders present at the public sale that no representation or warranty of any kind is being made about the property or the status of title being delivered. Under state law, it is up to each bidder to carefully check out the title and status of the property being sold before placing either a public sale bid or an upset bid.

What if the successful bidder at the public sale or at upset bid doesn’t bring in the purchase price?

Any bidder at either public sale or upset bid who doesn’t bring in the purchase price upon demand by the attorney will be subject to immediate loss of all deposits, as well as civil and/or contempt prosecution for failure to make the bid. All bidders who bid at tax or assessment foreclosure sales, either public or upset bid, are required by law to be aware of the penalties for failure to honor their bid

What happens if no one bids on the property at the foreclosure sale?

The County of Durham will enter a minimum starting bid at each property tax foreclosure sale, while the City of Durham will enter a minimum starting bid for each property at an assessment foreclosure sale. The minimum bid is equal to all the taxes and/or assessments, interest, fees and costs of the judgment of sale, as well as the additional costs and fees of the sale itself. If no one bids, then the sale is usually postponed to the next sale date to see if other bidders might come forward at a later time. If, at the postponed sale, there are still no bidders, then the County (or City’s) minimum bid will be the successful bid. If no upset bids are received (see above), then the sale will be confirmed to the County of Durham (for tax foreclosure cases) or the City of Durham (for assessment foreclosure cases), and a deed will be issued to the County or City of Durham.

What happens to property which is deeded to the County or City of Durham?

After its deed is recorded, the County of Durham or the City of Durham, as the new owner, will evaluate the property to see if it wants to keep the property or dispose of it. Anyone interested in acquiring property from the County or City of Durham should contact their respective Real Estate Administrators. For more details, see our Surplus Property Page,

 

Text
North Carolina General Statutes 105-374

§ 105-374. Foreclosure of tax lien by action in nature of action to foreclose a mortgage.

(a) General Nature of Action.--The foreclosure action authorized by this section shall be instituted in the appropriate division of the General Court of Justice in the county in which the real property is situated and shall be an action in the nature of an action to foreclose a mortgage.

(b) Taxing units may proceed under this section, either on the original tax lien created by G.S. 105-355(a) or on the lien acquired at a tax lien sale held under former G.S. 105-369 before July 1, 1983, with or without a lien sale certificate; and the amount of recovery in either case shall be the same. To this end, it is hereby declared that the original attachment of the tax lien under G.S. 105-355(a) is sufficient to support a tax foreclosure action by a taxing unit, that the issuance of a lien sale certificate to the taxing unit for lien sales held before July 1, 1983, is a matter of convenience in record keeping within the discretion of the governing body of the taxing unit, and that issuance of such certificates is not a prerequisite to perfection of the tax lien.

(c) Parties; Summonses - The owner of record as of the date the taxes became delinquent and spouse (if any), any subsequent owner, all other taxing units having tax liens, all other lienholders of record, and all persons who would be entitled to be made parties to a court action (in which no deficiency judgment is sought) to foreclose a mortgage on such property, shall be made parties and served with summonses in the manner provided by G.S. 1A-1, Rule 4. The fact that the owner of record as of the date the taxes became delinquent, any subsequent owner, or any other defendant is a minor, is incompetent, or is under any other disability shall not prevent or delay the tax lien sale or the foreclosure of the tax lien; and all such persons shall be made parties and served with summons in the same manner as in other civil actions.

Persons who have disappeared or who cannot be located and persons whose names and whereabouts are unknown, and all possible heirs or assignees of such persons, may be served by publication; and such persons, their heirs, and assignees may be designated by general description or by fictitious names in such an action."

(c1) Lienholders Separately Designated.--The word "lienholder" shall appear immediately after the name of each lienholder (including trustees and beneficiaries in deeds of trust, and holders of judgment liens) whose name appears in the caption of any action instituted under the provisions of this section. Such designation is intended to make clear to the public the capacity of such persons which necessitated their having been made parties to such action. Failure to add such designation to captions shall not constitute grounds for attacking the validity of actions brought under this section, or titles to real property derived from such actions.

(d) Complaint as Lis Pendens.--The complaint in an action brought under this section shall, from the time it is filed in the office of the clerk of superior court, serve as notice of the pendency of the foreclosure action, and every person whose interest in the real property is subsequently acquired or whose interest therein is subsequently registered or recorded shall be bound by all proceedings taken in the foreclosure action after the filing of the complaint in the same manner as if those persons had been made parties to the action. It shall not be necessary to have the complaint cross-indexed as a notice of action pending to have the effect prescribed by this subsection (d).

(e) Subsequent Taxes.--The complaint in a tax foreclosure action brought under this section by a taxing unit shall, in addition to alleging the tax lien on which the action is based, include a general allegation of subsequent taxes which are or may become a lien on the same real property in favor of the plaintiff unit. Thereafter it shall not be necessary to amend the complaint to incorporate the subsequent taxes by specific allegation. In case of redemption before confirmation of the foreclosure sale, the person redeeming shall be required to pay, before the foreclosure action is discontinued, at least all taxes on the real property which have at the time of discontinuance become due to the plaintiff unit, plus penalties, interest, and costs thereon. Immediately prior to judgment ordering sale in a foreclosure action (if there has been no redemption prior to that time), the tax collector or the attorney for the plaintiff unit shall file in the action a certificate setting forth all taxes which are a lien on the real property in favor of the plaintiff unit (other than taxes the amount of which has not been definitely determined).

Any plaintiff in a tax foreclosure action (other than a taxing unit) may include in his complaint, originally or by amendment, all other taxes and special assessments paid by him which were liens on the same real property.

(f) Joinder of Parcels.--All real property within the taxing unit subject to liens for taxes levied against the same taxpayer for the first year involved in the foreclosure action may be joined in one action. However, if real property is transferred by the listing taxpayer subsequent to the first year involved in the foreclosure action, all subsequent taxes, penalties, interest, and costs (for which the property is ordered sold under the terms of this Subchapter) shall be prorated to such property in the same manner as if payments were being made to release such property from the tax lien under the provisions of G.S. 105-356(b).

(g) Special Benefit Assessments.--A cause of action for the foreclosure of the lien of any special benefit assessments may be included in any complaint filed under this section.

(h) Joint Foreclosure by Two or More Taxing Units.--Liens of different taxing units on the same parcel of real property, representing taxes in the hands of the same tax collector, shall be foreclosed in one action. Liens of different taxing units on the same parcel of real property, representing taxes in the hands of different tax collectors, may be foreclosed in one action in the discretion of the governing bodies of the taxing units.

The lien of any taxing unit made a party defendant in any foreclosure action shall be alleged in an answer filed by the taxing unit, and the tax collector of each answering unit shall, prior to judgment ordering sale, file a certificate of subsequent taxes similar to that filed by the tax collector of the plaintiff unit, and the taxes of each answering unit shall be of equal dignity with the taxes of the plaintiff unit. Any answering unit may, in case of payment of the plaintiff unit's taxes, continue the foreclosure action until all taxes due to it have been paid, and it shall not be necessary for any answering unit to file a separate foreclosure action or to proceed under G.S. 105-375 with respect to any such taxes.

If a taxing unit properly served as a party defendant in a foreclosure action fails to answer and file the certificate provided for in the preceding paragraph, all of its taxes shall be barred by the judgment of sale except to the extent that the purchase price at the foreclosure sale (after payment of costs and of the liens of all taxing units whose liens are properly alleged by complaint or answer and certificates) may be sufficient to pay such taxes. However, if a defendant taxing unit is plaintiff in another foreclosure action pending against the same property, or if it has begun a proceeding under G.S. 105-375, its answer may allege that fact in lieu of alleging its liens, and the court, in its discretion, may order consolidation of such actions or such other disposition thereof (and such disposition of the costs therein) as it may deem advisable. Any such order may be made by the clerk of the superior court subject to appeal in the same manner as appeals are taken from other orders of the clerk.

(i) Costs.--Subject to the provisions of this subsection (i), costs may be taxed in any foreclosure action brought under this section in the same manner as in other civil actions. When costs are collected, either by payment prior to the sale or upon payment of the purchase price at the foreclosure sale, the fees allowed officers shall be paid to those entitled to receive them. In foreclosure actions in which the plaintiff is a taxing unit, no prosecution bond shall be required.

The word "costs," as used in this subsection (i), shall be construed to include one reasonable attorney's fee for the plaintiff in such amount as the court shall, in its discretion, determine and allow. When a taxing unit is made a party defendant in a tax foreclosure action and files answer therein, there may be included in the costs an attorney's fee for the defendant unit in such amount as the court shall, in its discretion, determine and allow. The governing body of any taxing unit may, in its discretion, pay a smaller or greater sum than that allowed as costs to its attorney as a suit fee, and the governing body may allow a reasonable commission to its attorney on taxes collected by him after they have been placed in his hands; or the governing body may arrange with its attorney for the handling of tax foreclosure suits on a salary basis or may make any other reasonable agreement with its attorney or attorneys. Any arrangement made between a taxing unit and its attorney may provide that attorneys' fees collected as costs in foreclosure actions be collected for the use of the taxing unit.

In any foreclosure action in which real property is actually sold after judgment, costs shall include a commissioner's fee to be fixed by the court, not exceeding five percent (5%) of the purchase price; and in case of redemption between the date of sale and the order of confirmation, the fee shall be added to the amount otherwise necessary for redemption. In case more than one sale is made of the same property in any action, the commissioner's fee may be based on the highest amount bid, but the commissioner shall not be allowed a separate fee for each such sale. The governing body of any plaintiff unit may request the court to appoint as commissioner a salaried official, attorney, or employee of the unit and, when the requested appointment is made, may require that the commissioner's fees, when collected, be paid to the plaintiff unit for its use.

(j) Contested Actions.--Any action brought under this section in which an answer raising an issue requiring trial is filed within the time allowed by law shall be entitled to a preference as to time of trial over all other civil actions.

(k) Judgment of Sale.--Any judgment in favor of the plaintiff or any defendant taxing unit in an action brought under this section shall order the sale of the real property or so much thereof as may be necessary for the satisfaction of:

(1) Taxes adjudged to be liens in favor of the plaintiff (other than taxes the amount of which has not been definitely determined) together with penalties, interest, and costs thereon; and

(2) Taxes adjudged to be liens in favor of other taxing units (other than taxes the amount of which has not yet been definitely determined) if those taxes have been alleged in answers filed by the other taxing units, together with penalties, interest, and costs thereon.

The judgment shall appoint a commissioner to conduct the sale and shall order that the property be sold in fee simple, free and clear of all interests, rights, claims, and liens whatever except that the sale shall be subject to taxes the amount of which cannot be definitely determined at the time of the judgment, taxes and special assessments of taxing units which are not parties to the action, and, in the discretion of the court, taxes alleged in other tax foreclosure actions or proceedings pending against the same real property.

In all cases in which no answer is filed within the time allowed by law, and in cases in which answers filed do not seek to prevent sale of said property, the clerk of the superior court may render the judgment, subject to appeal in the same manner as appeals are taken from other judgments of the clerk.

(l) Advertisement of Sale.--The sale shall be advertised, and all necessary resales shall be advertised, in the manner provided by Article 29A of Chapter 1 of the General Statutes or by any statute enacted in substitution therefor.

(m) Sale.--The sale shall be by public auction to the highest bidder and shall, in accordance with the judgment, be held at the courthouse door on any day of the week except a Sunday or legal holiday. (In actions brought by a municipality that is not a county seat, the court may, in its discretion, direct that the sale be held at the city or town hall door.) The commissioner conducting the sale may, in his discretion, require from any successful bidder a deposit equal to not more than twenty percent (20%) of his bid, which deposit, in the event that the bidder refuses to take title and a resale becomes necessary, shall be applied to pay the costs of sale and any loss resulting. (However, this provision shall not deprive the commissioner of his right to sue for specific performance of the contract.) No deposit shall be required of a taxing unit that has made the highest bid at the foreclosure sale.

(n) Report of Sale.--Within three days following the foreclosure sale the commissioner shall report the sale to the court giving full particulars thereof.

(o) Exceptions and Increased Bids.--At any time within 10 days after the commissioner files his report of the foreclosure sale, any person having an interest in the real property may file exceptions to the report, and at any time within that 10-day period an increased bid may be filed in the amount specified by and subject to the provisions (other than provisions in conflict herewith) of Article 29A of Chapter 1 of the General Statutes or the provisions (other than provisions in conflict herewith) of any law enacted in substitution therefor. In the absence of exceptions or increased bids, the court may, whenever it deems such action necessary for the best interests of the parties, order resale of the property.

(p) Judgment of Confirmation.--At any time after the expiration of 10 days from the time the commissioner files his report, if no exception or increased bid has been filed, the commissioner may apply for judgment of confirmation, and in like manner he may apply for such a judgment after the court has passed upon exceptions filed, or after any necessary resales have been held and reported and 10 days have elapsed. The judgment of confirmation shall direct the commissioner to deliver the deed upon payment of the purchase price. This judgment may be rendered by the clerk of superior court subject to appeal in the same manner as appeals are taken from other judgments of the clerk.

(q) Application of Proceeds; Commissioner's Final Report.--After delivery of the deed and collection of the purchase price, the commissioner shall apply the proceeds as follows:

(1) First, to payment of all costs of the action, including the commissioner's fee and the attorney's fee, which costs shall be paid to the officials or funds entitled thereto;

(2) Then to the payment of taxes, penalties, and interest for which the real property was ordered to be sold, and in case the funds remaining are insufficient for this purpose, they shall be distributed pro rata to the various taxing units for whose taxes the property was ordered sold;

(3) Then pro rata to the payment of any special benefit assessments for which the property was ordered sold, together with interest and costs thereon;

(4) Then pro rata to payment of taxes, penalties, interest, and costs of taxing units that were parties to the foreclosure action but which filed no answers therein;

(5) Then pro rata to payment of special benefit assessments of taxing units that were parties to the foreclosure action but which filed no answers therein, together with interest and costs thereon;

(6) And any balance then remaining shall be paid in accordance with any directions given by the court and, in the absence of such directions, shall be paid into court for the benefit of the persons entitled thereto. (If the clerk is in doubt as to who is entitled to the surplus or if any adverse claims are asserted thereto, the clerk shall hold the surplus until rights thereto are established in a special proceeding pursuant to G.S. 1-339.71.)

Within five days after delivering the deed, the commissioner shall make a full report to the court showing delivery of the deed, receipt of the purchase price, and the disbursement of the proceeds, accompanied by receipts evidencing all such disbursements.

(r) Purchase and Resale by Taxing Unit.--The rights of a taxing unit to purchase real property at a foreclosure sale and resell it are governed by G.S. 105-376. (1939, c. 310, s. 1719; 1945, c. 635; 1947, c. 484, ss. 3, 4; 1951, c. 300, s. 1; c. 1036, s. 1; 1953, c. 176, s. 2; 1955, c. 908; 1967, c. 705, s. 1; 1971, c. 806, s. 1; 973, c. 788, s. 1; 1981, c. 580; 1983, c. 808, s. 8.)