USA – NORTH CAROLINA Law and Practice Contributed by: John Livingston and Brittani Miller, Kilpatrick
• By operation of law. • By lease for a term of years. • By or pursuant to the provisions of a will. • By intestacy. • By gift. • If no consideration in property or money is due or paid by the transferee to the transferor. • By merger, conversion or consolidation. • By an instrument securing indebtedness. Additionally, the following seven of North Caro - lina’s 100 counties impose a local transfer tax of up to 1% of the value of the property: Camden, Chowan, Currituck, Dare, Pasquotank, Perqui - mans and Washington Counties. 2.11 Legal Restrictions on Foreign Investors There are currently no restrictions on foreign investors acquiring real estate in North Carolina. Most acquisitions of commercial real estate are financed through commercial loans with banks or other financial institutions, with the subject property acting as the collateral. Mezzanine debt is also a possibility in larger transactions. Cer - tain real estate purchases may also include tax- equity investors. 3.2 Typical Security Created by Commercial Investors The most common form of security created is a mortgage or deed of trust, which grants the lender a lien on the property as collateral for the loan. In addition to the mortgage or deed of trust, lenders often require the borrower to execute other security instruments, such as an assign - 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
ment of rents and leases, personal or corporate guaranty, and/or a fixture financing statement. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are currently no restrictions on granting security over real estate to foreign lenders in North Carolina. The applicable lender may be required to register with the Secretary of State. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Nominal recording fees will be applied to any document recorded in a North Carolina county. Notary fees vary based on the notary but are typically nominal as well. 3.5 Legal Requirements Before an Entity Can Give Valid Security Before an entity can give valid security over its real estate assets, it must have clear authority to grant the security, which typically requires authorisation from its governing body and com - pliance with its governing documents, such as operating agreements or by-laws. The entity must have clear legal title of the property being used as collateral, and the security instrument must be executed in writing, notarised, and recorded in the Register of Deeds office in the county where the property is located. 3.6 Formalities When a Borrower Is in Default A lender must typically follow the non-judicial foreclosure process under a power of sale clause, which requires the lender to provide a notice of default, file a notice of hearing with the Clerk of Superior Court in the county where the property is located, and prove the borrower’s default and the lender’s right to foreclose at a hearing. If approved, the property is sold at a public auction, with a ten-day upset bid period
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