If you sold property in North Carolina and carried the financing, you can sell that note for cash. You can sell all of it or just part of the payments. This guide covers the two ways NC deals get written, the rules that matter, and how a sale works.
I buy North Carolina notes. Here's what I look at.
Short version: Most NC owner financing uses a note and a deed of trust. Those sell well. Contracts for deed are allowed, but North Carolina has a strict law for them. A buyer will check that every step was followed.
Two kinds of NC seller financing
1. A note with a deed of trust. This is the most common setup. You deed the property to the buyer at closing. They sign a promissory note and a deed of trust that secures it. You hold the lien. This is the easiest kind of note to sell.
2. A contract for deed. You keep title until the buyer pays in full. North Carolina has a law just for these, Chapter 47H of the General Statutes. It applies when the buyer lives in the home as their main residence. It also covers manufactured homes priced at $5,000 or more.
Not sure which you have? If the buyer got a deed at closing, you likely have a deed of trust. If you still hold title, it's a contract for deed.
Notes with a deed of trust
North Carolina uses foreclosure by power of sale. It doesn't need a full lawsuit, but it isn't as quick as some states.
- A hearing comes first. The clerk of superior court holds a short hearing before the sale can happen.
- The sale stays open after. After the sale, there's a 10-day window for anyone to raise the bid. If someone does, the 10 days start over.
That process is clear and well known. It's one reason NC deed of trust notes are easy for buyers to work with.
Contracts for deed in North Carolina
Chapter 47H puts a lot of duties on the seller. Here's the short list:
- Record it fast. The seller must record the contract, or a memorandum of it, within 5 business days after it's signed.
- The buyer can cancel early. The buyer gets until midnight of the third business day to back out.
- The contract must spell out the terms. That includes the price, rate, payments, who pays taxes and insurance, and a seller property disclosure.
- Liens have limits. The seller generally can't sign one if the property has liens, with a few exceptions. If there's an existing lien, the buyer must get a separate, bold written notice.
- Send a yearly statement. At least once every 12 months, the seller sends an accounting of what's paid and what's left.
- Late fees are capped. No more than 4% of the late payment, and only after it's more than 15 days late.
Default rules are strict too. Before forfeiture, the seller must serve a written notice of default. The buyer gets at least 30 days to cure. If the buyer doesn't cure, the buyer's right to redeem only ends by a recorded mutual termination or a recorded court order. The seller can't just change the locks.
If some of these steps were missed, a sale may still work. Gaps can lead to the buyer canceling the contract or suing for damages, so they affect your price. Tell your buyer up front.
Other NC rules to know
- Attorneys handle closings. In North Carolina, a licensed attorney closes real estate deals. Plan on that when you sell.
- Licensing rules can apply. NC has licensing rules for people who make home loans. Some seller financing is exempt. A buyer will check that your deal fits.
I'm not a lawyer. For legal questions about your contract, talk with a North Carolina real estate attorney.
Why this affects your price
A note buyer is buying your right to collect. They also take on the risk that the payer stops paying. A clean deed of trust note is lower risk. A contract for deed that missed the 47H steps is higher risk.
Equity matters as much as paperwork. A payer with 20% or more equity and a year of on-time payments brings the best prices.
What a buyer will check
I look at three things on every deal: the payer, the property, and the paperwork.
- The payer. On-time history, how long they've paid, and whether they live in the home.
- The property. What it's worth, its condition, and whether taxes and insurance are current.
- The paperwork. The signed note and deed of trust, or the contract. Proof it was recorded. Your closing statement. Any title policy.
How the sale works, step by step
- Get a quote. Send the balance, rate, payment, and payment history. Start here.
- Send copies of your papers. See the documents you need to sell a mortgage note.
- Due diligence. I order a title search and a property value check, then confirm the balance with your payer. Plan on two to three weeks.
- Close. You sign an assignment of the deed of trust and endorse the note. An NC attorney handles the closing. You get paid.
- Your payer gets a letter. It tells them where to send payments. Their terms don't change. Read what happens to the payer when you sell.
Most sales close in about four to five weeks.
What your NC note is worth
Most notes sell for less than the balance, because the buyer pays you today for payments that come in over years. Typical notes sell for about 70% to 85% of the balance. Strong ones can bring more. Thin-equity notes and contracts with gaps come in lower.
Try the note value calculator for a rough range. Or get a real quote. You can also sell just part of the payments. See how a partial sale works.
Frequently asked questions
Can I sell a North Carolina contract for deed?
Usually, yes. The buyer will check that it was recorded on time and that the Chapter 47H rules were followed. Gaps can lower the price.
Is a deed of trust note easier to sell than a contract for deed in NC?
Yes, in most cases. It's the standard way to secure a home loan in North Carolina, and the foreclosure process is well known.
Do I need my payer's permission to sell?
Usually not. Most notes can be sold without the payer's consent. Check your paperwork for any clause about assigning it.
Do I need an attorney to sell my note in North Carolina?
An NC attorney usually handles the closing. The buyer typically arranges it. You don't need to hire your own, but you can.
How long does it take?
Most close in about four to five weeks from the first quote.
Will I owe taxes when I sell?
You might. North Carolina has a state income tax, and federal tax applies too. Read taxes when you sell an owner-financed note and talk with your CPA.
Selling in South Carolina instead? Read how to sell an owner-financed note in South Carolina.
Larry has invested in real estate since 2006 and has bought more than 300 mortgage notes. He runs LJH Investments, LLC, an Ohio company based in Madison, Indiana. More about Larry
This article is general information, not legal or tax advice. Laws change. Talk with your own attorney and tax adviser about your situation.