North Carolina Secured Transactions Forms

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North Carolina Secured Transactions Forms FAQ

What is a secured transaction?

A secured transaction is created by means of a security agreement in which a lender (the secured party) may take specified collateral owned by the borrower if he or she should default on the loan. By creating a security interest, the secured party is also assured that if the debtor should go bankrupt he or she may be able to recover the value of the loan by taking possession of the specified collateral instead of receiving only a portion of the borrowers property after it is divided among all creditors.

What law governs secured transactions?

The Uniform Commercial Code is a model statute covering transactions in such matters as the sale of goods, credit, bank transactions, conduct of business, warranties, negotiable instruments, loans secured by personal property and other commercial matters. Article 9 of the Uniform Commercial Code covers most types of security agreements for personal property that are both consensual and commercial. All states have adopted and adapted the entire UCC, with the exception of Louisiana, which only adopted parts of it. General contract law principles will also apply.

What is collateral?

Collateral is the property that secures the debt and may be forfeited to the creditor if the debtor fails to pay the debt. Property of numerous types may serve as collateral, such as houses, cars, jewelry, shares of stock of a company, inventory, accounts receivable, etc.


What is a Deed of Trust?

A Deed of Trust is a legal document used in North Carolina to show that someone has taken out a loan to buy property, like a house or land. It's different from a regular mortgage because it involves three parties: the borrower (who gets the loan), the lender (who gives the loan), and a trustee (who holds the property until the loan is paid off). The borrower signs the Deed of Trust, which gives the lender the right to sell the property to pay off the loan if the borrower doesn't make their payments. It helps protect the lender's interests and ensures that the borrower follows through with their loan obligations.


Deed of Trust vs. Mortgage

In North Carolina, when you want to buy a house, there are two different ways that you can borrow money from a bank to pay for it: through a Deed of Trust or a Mortgage. These are like legal agreements between you and the bank. A Deed of Trust is a bit different from a Mortgage because it involves three parties — you, the bank, and a neutral third party called a trustee. The trustee holds the legal rights to the house until you pay off your loan. On the other hand, a Mortgage is a contract directly between you and the bank, without involving a trustee. Both of these agreements make sure that if you don't pay back the money you borrowed, the bank can take your house as a way to get their money back.


What Should I Include in a Deed of Trust?

When creating a Deed of Trust in North Carolina, there are several important elements to include. First, it should clearly identify the parties involved, such as the lender, borrower, and trustee. The Deed of Trust should also specify the property being used as collateral and provide a detailed legal description. Additionally, it is crucial to mention the amount of the loan and the terms of repayment, including the interest rate and due dates. The document should outline the rights and responsibilities of each party and define potential remedies in case of default. Lastly, it is important to properly notarize the Deed of Trust and file it with the Register of Deeds in the county where the property is located.


Who serves as a trustee for a deed of trust?

In North Carolina, a trustee for a deed of trust is usually a neutral third party who serves as a facilitator and protector of the interests of both the lender and the borrower. They play a crucial role in the real estate transaction process by overseeing the repayment of a loan secured by a property. The trustee ensures that the terms of the deed of trust are followed, safeguarding the rights of all parties involved. Their responsibilities may include collecting and distributing payments, releasing the deed of trust upon full repayment, or initiating foreclosure proceedings if necessary. Overall, the trustee acts as a fair and impartial guardian of the deed of trust agreement.


What is the amount borrowed on a mortgage?

The amount borrowed on a mortgage refers to the total sum of money that a person borrows from a bank or a lender to purchase a house or property. This amount typically includes the cost of the property, as well as any additional fees or closing costs associated with the mortgage. In North Carolina, the amount borrowed on a mortgage would vary depending on the individual's specific needs and the price of the property they are looking to buy in the state.