assignment of deed of trust nc

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2005 North Carolina Code - General Statutes § 47-20. Deeds of trust, mortgages, conditional sales contracts, assignments of leases and rents; effect of registration.

§ 47‑20.� Deeds of trust, mortgages, conditional sales contracts, assignments of leases and rents; effect of registration.

(a)������ No deed of trust or mortgage of real or personal property, or of a leasehold interest or other chattel real, or conditional sales contract of personal property in which the title is retained by the vendor, shall be valid to pass any property as against lien creditors or purchasers for a valuable consideration from the grantor, mortgagor or conditional sales vendee, but from the time of registration thereof as provided in this Article; provided however that any transaction subject to the provisions of the Uniform Commercial Code (Chapter 25 of the General Statutes) is controlled by the provisions of that act and not by this section. Unless otherwise stated either on the registered instrument or on a separate registered instrument duly executed by the party whose priority interest is adversely affected, (i) instruments registered in the office of the register of deeds shall have priority based on the order of registration as determined by the time of� registration, and (ii) if instruments are registered simultaneously, then the instruments shall be presumed� to have priority as determined by:

(1)������ The earliest document number set forth on the� registered instrument.

(2)������ The sequential book and page number set forth on the registered instrument if no document number is set forth on the registered instrument.

The presumption created by this subsection is rebuttable.

(b)������ For purposes of this section and G.S. 47‑20.1, the following definitions apply:

(1)������ "Rents, issues, or profits" means all amounts payable by or on behalf of any lessee, tenant, or other person having a possessory interest in real estate on account of or pursuant to any written or oral lease or other instrument evidencing a possessory interest in real property or pursuant to any form of tenancy implied by law, and all amounts payable by or on behalf of any licensee or permittee or other person occupying or using real property under license or permission from the owner or person entitled to possession. The term shall not include farm products as defined in G.S. 25‑9‑102(34), timber, the proceeds from the sale of farm products or timber, or the proceeds from the recovery or severance of any mineral deposits located on or under real property.

(2)������ "Assignment of leases, rents, issues, or profits" means every document assigning, transferring, pledging, mortgaging, or conveying an interest in leases, licenses to real property, and rents, issues, or profits arising from real property, whether set forth in a separate instrument or contained in a mortgage, deed of trust, conditional sales contract, or other deed or instrument of conveyance.

(3)������ "Collateral assignment" means any assignment of leases, rents, issues, or profits made and delivered in connection with the grant of any mortgage, or the execution of any conditional sales contract or deed of trust or in connection with any extension of credit made against the security of any interest in real property, where the assignor retains the right to collect or to apply such lease revenues, rents, issues, or profits after assignment and prior to default.

(c)������ The recording of a written document in accordance with G.S. 47‑20.1 containing an assignment of leases, rents, issues, or profits arising from real property shall be valid and enforceable from the time of recording to pass the interest granted, pledged, assigned, or transferred as against the assignor, and shall be perfected from the time of recording against subsequent assignees, lien creditors, and purchasers for a valuable consideration from the assignor.

(d)������ Where an assignment of leases, rents, issues, or profits is a collateral assignment, after a default under the mortgage, deed of trust, conditional sales contract, or evidence of indebtedness which such assignment secures, the assignee shall thereafter be entitled, but not required, to collect and receive any accrued and unpaid or subsequently accruing lease revenues, rents, issues, or profits subject to the assignment, without need for the appointment of a receiver, any act to take possession of the property, or any further demand on the assignor. Unless otherwise agreed, after default the assignee shall be entitled to notify the tenant or other obligor to make payment to him and shall also be entitled to take control of any proceeds to which he may be entitled. The assignee must proceed in a commercially reasonable manner and may deduct his reasonable expenses of realization from the collections.

(e)������ This section shall not exclude other methods of creating, perfecting, collecting, sequestering, or enforcing a security interest in rents, issues, or profits provided by the law of this State. (1829, c. 20; R.C., c. 37, s. 22; Code, s. 1254; Rev., s. 982; 1909, c. 874, s. 1; C.S., s. 3311; 1953, c. 1190, s. 1; 1959, c. 1026, s. 2; 1965, c. 700, s. 8; 1967, c. 562, s. 5; 1991, c. 234, s. 1; 2000‑169, s. 35; 2003‑219, s. 3; 2005‑212, s. 3.)

Disclaimer: These codes may not be the most recent version. North Carolina may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.

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Deed of Trust in North Carolina

There are many documents and contracts involved in real estate transactions, and trying to understand all of them can get a little overwhelming. 

One that we find people often have questions about is the deed of trust.

What is a deed of trust?

A deed of trust is a legal agreement used in real estate transactions that establishes a piece of property as collateral for a loan, much like a traditional mortgage. 

The deed of trust is signed by the borrowing party and recorded with the register of deeds where the property is located. The legal description of the property is included and used as collateral.

Unlike a mortgage, a deed of trust involves three parties instead of two:

• The borrower, aka the trustor
• The lender, aka the beneficiary
• The third party who holds the title, aka the trustee

While with a mortgage the borrower holds the title to the property, with a deed of trust title is held by the third party trustee until the loan is paid off or the trustor defaults. In North Carolina, this third party is typically a title company.

Should the borrower default on the loan, the trustee forecloses on the property, sells it, and then distributes the money from the sale to the proper party accordingly.

Deeds of trust are usually most beneficial for the lender, or beneficiary, in the transaction. This is because a deed of trust typically makes it easier for a lender to foreclose on a property because most have a “non-judicial foreclosure” clause, which allows the lender to foreclose on the property without having to wait for the court system to review and approve the foreclosure process.

Most institutional lenders include an acceleration clause on a deed of trust, which allows them to demand that the buyer pay the loan off in full if they default or convey the property without written consent of the lender. Once the loan is accelerated, it can no longer be paid in installments.

Deeds of Trust in Real Estate Transactions

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. A purchase money mortgage is typically used in situations where the buyer cannot qualify for a loan through a traditional lender, or in situations where the buyer takes over the seller’s mortgage. 

Race Notice State

North Carolina is a pure race jurisdiction , which NC General Statute 47-18 defines as a jurisdiction “in which the first to record an interest in land holds an interest superior to all other purchases for value, regardless of actual or constructive notice as to other, unrecorded conveyances,” meaning that the first person or entity to record a deed or a lien against a property has priority against all subsequent grantees and/or lien holders, with the exception of liens for State taxes, which North Carolina grants “super priority.” 

If a beneficiary records a deed of trust as soon as the loan transaction is settled, the deed of trust will hold priority over any other lien recorded against the same property after that. Most lenders will require that they are “first in lien” before providing a loan, meaning that they hold the first lien position and require all other liens on the property to be satisfied prior to theirs. This is one of the many reasons why lenders require a title search prior to closing, as well as title insurance.

Let Starling, Rodriguez & Associates Guide You

Navigating the different kinds of documents and contracts involved in real estate transactions can get confusing quickly. The experienced real estate attorneys at Starling, Rodriguez & Associates can help explain them to you and help you figure out what’s best for your needs. Contact our office to make an appointment today and put our guidance on your side.

Assignment of Deed of Trust and Note (Commercial) (NC)

This template is an assignment of deed of trust and note that may be used to assign and transfer an existing deed of trust on North Carolina real property from the current lender to a new lender. This template includes practical guidance and drafting notes. Assignment of deeds of trust should be recorded in the same place as the deed of trust was originally recorded, which is in the office of the county clerk in the county where the subject property is located. See N.C. Gen. Stat. § 47-20.1. With respect to formatting, North Carolina law states that the recorder's office may charge an additional fee if a document submitted for recording does not comply with the following requirements: • Be on 8.5 x 11 or 8.5 x 14 inch white paper • Contain legible print • Be in black ink typed or printed in a font size no smaller than 9 points • Have a three-inch blank margin at the top of the first page • Have blank margins of at least one-half inch on the remaining sides of the first page and on all ...

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LIVING TRUST

What is an assignment of trust deed.

By Tom Streissguth

• What Is a Corporate Assignment of Deed of Trust?

If you own a home, you may have signed a trust deed that gives the mortgage lender a claim on the property. A default on the loan gives the lender the legal authority to foreclose on the loan and take possession of the house. An assignment of a trust deed conveys that claim to another party.

Considerations

Lenders have the right to sell their home loans. This can happen once or several times over the long life of a mortgage. The usual customers for mortgages are banks and other companies that are seeking safe and stable investment returns. This "secondary" market for mortgages is quite active, and a lender has plenty of opportunity to sell a mortgage and turn a profit. Read More: What Is a Corporate Assignment of Deed of Trust?

When a lender sells the loan, it assigns the trust deed to the buyer. “Assignment” means to convey a claim or a right to another party, known as the “assignee.” This is done by creating another legal document — the assignment of trust deed — and having it signed by both buyer and seller. The trust deed, and other documents associated with the loan, become the property of the buyer.

The assignment of trust deed is a short, usually single-page document. The body text gives the names of the deed buyer and the property owner, the date of the original trust deed, and the legal description of the property for which the original deed was executed. It may also give the terms of the deed sale. The seller signs and dates the document, and has it notarized. The buyer then has the assignment of trust deed recorded with the registrar of the county where the property is located.

A borrower has no legal right to block or negotiate the terms of an assignment of trust deed. The assignment does not affect the terms of the loan. The monthly payments remain the same, although the borrower will have to send them to a new address. The new owner of the trust deed becomes the lender and collects all mortgage payments, sometimes on its own and sometimes through a servicing company. If a default occurs, the latest assignee has the right to foreclose and repossess the home.

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Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.

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