In North Carolina, the Subordination of Lien (Deed of Trust/Mortgage) is a legal process that allows a party to prioritize their lien or mortgage over another party's lien or mortgage. This process is commonly used in real estate transactions, especially when there are multiple lenders involved. The North Carolina Subordination of Lien is typically initiated when a property owner wishes to refinance their existing mortgage or obtain a new loan, but there is already an existing lien or mortgage on the property. By obtaining a subordination agreement, the property owner can ensure that the new lien or mortgage will have a higher priority over the existing lien or mortgage. There are two main types of North Carolina Subordination of Lien: Deed of Trust Subordination and Mortgage Subordination. Both types serve the same purpose of establishing the priority of liens or mortgages, but the specific process may vary depending on the type of security instrument used. 1. Deed of Trust Subordination: In North Carolina, deeds of trust are commonly used as security instruments in real estate transactions. When initiating a Deed of Trust Subordination, the property owner or the new lender will request the existing lender to subordinate their lien position to the new lien or mortgage. This process requires a formal agreement between the parties involved, outlining the terms and conditions of the subordination. 2. Mortgage Subordination: Although less common in North Carolina, mortgages can also be used as security instruments. Similar to a Deed of Trust Subordination, Mortgage Subordination involves obtaining an agreement from the existing mortgage lender to subordinate their lien position to the new lien or mortgage. This agreement must be executed in writing and may require the involvement of legal professionals. The North Carolina Subordination of Lien process is crucial in situations where a property owner needs additional financing but wants to maintain the stability of their existing mortgage or lien. By obtaining subordination, the property owner ensures that the new lien or mortgage will have priority in the event of foreclosure or financial distress. It is important to note that the North Carolina Subordination of Lien process is governed by state laws and regulations. Parties involved in such transactions should consult with legal professionals who specialize in real estate to ensure compliance with all necessary procedures and requirements.
North Carolina Subordination of Lien (Deed of Trust/Mortgage)
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FAQ
Because North Carolina is not a super lien state, a bank foreclosure will take priority over a community association's lien and does not require the lender to provide any compensation to the association for unpaid assessments.
South Carolina is a race-notice state. This means that the first person recording the title to a particular piece of land is considered to be the landowner. It is imperative that you record the deed as soon as possible. A plat has no time limit unless the property is being subdivided for sale.
The majority of the time a deed of trust is used in a real estate transaction in North Carolina, it will be a purchase money mortgage, or a mortgage issued to the borrower by the seller of the home as part of the purchase transaction, unlike a traditional mortgage which is obtained through a bank.
Race statutes are extremely rare because it is generally viewed as unfair to protect a party who had actual notice of a prior conveyance. Currently, Delaware, North Carolina, and Louisiana are the only jurisdictions where a race statute is in effect.
Subordination is the process whereby one party is allowed to have a higher priority in potentially competing claims. Thus, the title insurance company and/or bank want to be ahead of any other potential claimant who has provided labor and/or materials.
Delaware, Louisiana, and North Carolina are Race statute states. This means that the first to record without notice wins. In these states, Buyer 1 would prevail.
It is considered a tax lien state. The rules are different. To be successful, auction buyers must understand and investigate the process for each state and each county. For example, at the North Carolina auctions the highest bidder will receive a notice they have won the auction.
When you get a mortgage loan, the lender will likely include a subordination clause essentially stating that their lien will take precedence over any other liens placed on the house. A subordination clause serves to protect the lender if a homeowner defaults.
