North Carolina Real Estate Practices
- Attorney Involvement
- Cancellation/Commitment Fee
- Certificate of Release (of Mortgage)
- Joinder of Spouses
- Mortgage Tax
- Payment Customs
- Policy Countersignatures
- Real Estate Taxes
- Search and Examination Fees
- Search Requirements
- Security Instruments (Deed of Trust vs. Mortgage)
- Standard Exceptions and Requirements
- State-specific Policy Variations
- Title Insurance Form and Filing Regulations
- Transfer Taxes
- Withholding Taxes
- Witness Requirements
Please describe any requirements under applicable state law for attorney, abstractor or other special professional involvement, for example, in the search, examination, opinion of title, signing, closing, disbursement, recording, preparation of documents, and/or policy-issuance.
A North Carolina licensed attorney, who is not an employee or agent of the title company, must certify title to a title company before a title policy may be issued per North Carolina General Statute section 58-26.1. Title companies may be owned, operated by or employ attorneys, but the attorney may not certify title to the company.
Drafting of legal documents, including deeds, mortgages, and other transaction documents must be prepared by a NC attorney. NCGS § 84-2.1.
Non-attorneys may provide limited services in a real estate closing including witnessing of closing documents and receipt and disbursement of closing funds. The recent NC revised opinion on Authorized Practice now requires the supervision of the closing by a NC attorney, approval of funds for disbursement and final certification of title. See Stewart Bulletin NC2012002.
Does your state permit or require a cancellation fee or commitment fee upon cancellation?
Beginning March 1, 2012, NC has a $15 commitment fee as additional title premium where a commitment is issued. This fee is not charged if the commitment is cancelled. There are no filed cancellation fees.
Certificate of Release (of Mortgage)
If anyone other than the lender (such as a title agent, settlement agent, underwriter or attorney) has the authority to release the security instrument, please describe.
A NC attorney may serve as a satisfaction agent acting on behalf of the landowner, and upon notice to the secured creditor of the intention to satisfy the recorded mortgage. The notice must identify the satisfaction agent, identify the security instrument to be satisfied, including parties, grounds for satisfaction, and authority. The statute sets out the specifics in NCGS § 45‑36.14.
Please describe the kinds of deeds that are customary for commercial and residential transactions. Please describe the kinds of deeds that are generally not insurable.
General Warranty Deed: This is the most common deed in residential transactions between individual owners. We prefer to insure a general warranty deed since this contains all the warranties of title and the “defend” language.
Special Warranty Deed: A special warranty deed limits itself to warrant the acts of the current grantor. We use these deeds in corporate, LLC or Partnership (non-individual) entity transactions. We insure title based on special warranty deeds.
Trustee Deed: The Trustee deed limits itself to its authority (usually contained in the deed of trust) and does not contain “warrant and defend” language. However, this is the standard form from a trustee in a foreclosure. We will insure but we include exceptions to cover title matters which may affect our property.
Non-Warranty Deed: A Non-Warranty deed conveys nothing. We will not insure when used to convey title (since it really doesn’t convey anything). Non warranty or quit claim deeds are used for the purpose of clearing up a title, survey, or boundary matter. We also use non-warranty deeds with some additional language for release of marital rights of a titled or untitled spouse.
Joinder of Spouses
If a non-title holding spouse is required to join in the execution of a deed or a security instrument, please describe. Any analogous rights, such as those in a civil union or equivalent, should also be addressed.
A non-titled spouse must join in any conveyance or voluntary encumbrance after the initial purchase money deed of trust. This includes the principal residence and any recreational or investment property. A non-titled spouse should also join in the execution of any purchase money deed of trust unless (i) the non-titled spouse is unavailable for some extraordinary reason and (ii) the certifying attorney confirms that the purpose of deed of trust is solely to finance a portion of the purchase proceeds. The non-titled spouse must join on all construction loan deeds of trust and open-ended deeds of trust (such as equity lines of credit, revolving credit or other future advance deeds of trust) even if they encumber purchase money financing. In order to insure a purchase money deed of trust without the non-titled spouse’s joinder, you must obtain the approval of a Stewart Title underwriter.
Is there a mortgage tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
There is no mortgage tax in North Carolina.
Who customarily pays for:
(a) Owner’s Policy?
(b) Transfer Tax & Recording Fee?
(c) Survey Charges?
(d) Closing/Settlement Fees?
(a) Buyer customarily pays for the Owner’s Policy
(b) Seller customarily pays the state transfer tax. Buyer pays for recording of deed and deed of trust.
(c) Buyer customarily pays for survey.
(d) Buyer customarily pays for settlement/closing fees related to the loan. Seller pays for document preparation related to the deed of conveyance and lien waivers and any costs associated with title clearance matters.
What kinds of countersignatures, if any, are required to issue the policy?
NC requires a licensed NC individual underwriter to sign policies.
NCGS 58-33-26 is the general licensing requirements. NCGS 58-33-40 requires appointment of agent by the underwriter.
Real Estate Taxes
Please describe the general tax year, due dates, and delinquency dates, including lien dates and payment cycle.
Taxes are assessed on a calendar basis; assessment beginning on January 1, due and payable by September 1 and payable without interest through January 5 of the following year. County budgets are based on fiscal year July 1 to June 30 but tax rates are applied on calendar basis.
Search and Examination Fees
Is it permissible and/or customary to charge a separate search and/or examination fee, and under what circumstances? If your jurisdiction is all-inclusive, please state that.
NC attorneys search and certify title separate and apart from any title insurance premium. Fees vary by nature (residential/commercial) and by complexity. There are no set title exam fees published in NC.
It is inappropriate for a title company to charge search and exam fees collectable for itself.
Is there a minimum period of time for a title search required: (a) by state law, (b) pursuant to marketable record title acts, or (c) by any other applicable title examination standards (e.g., state bar association)? Please respond to each category. If a minimum search period exists for any category, please state it.
A full title search of no less than 30 years with a 10 year NC judgment search and 20 year Federal judgment search. The 30 year date is based on the NC Marketable Title Act, Chapter 47B of the NC General Statutes, and this will not cover all title matters. The attorney should use his/her best judgment as to whether 30 years is sufficient.
Security Instruments (Deed of Trust vs. Mortgage)
Please describe the customary and permissible form(s) of security instruments used in your state.
Who can be listed as the trustee on the Deed of Trust (e.g., residency and/or natural person requirements, etc.)? Can an underwriter or title agent be designated as the trustee, and, if so, is it customary?
A deed of trust is the customary form of security instrument. Execution and acknowledgement is required. Power of Sale contained in the NC form deed of trust allows streamlined quasi-judicial foreclosure process.
Mortgages are allowed but will require judicial foreclosure.
Any person or entity (other than minor) may be the trustee. Failure to name a trustee is corrected by statute that allows substitution of trustee to correct missing trustee. NCGS § 45-10.
It is customary to list the closing attorney as trustee. Most banks in NC have designated entities to serve as trustee.
Standard Exceptions and Requirements
Please identify the standard exceptions and requirements that are customarily used in your state.
The Proposed Insured must notify the Company in writing of the name of any party not referred to in this Commitment who will obtain an interest in the Land or who will make a loan on the Land. The Company may then make additional Requirements or Exceptions.
Pay the agreed amount for the estate or interest to be insured.
Pay the premiums, fees, and charges for the Policy to the Company.
The Company requires the payment of all taxes and assessments and any penalties and interest, due and payable at closing.
Documents satisfactory to the Company that convey the Title or create the Deed of Trust to be insured, or both, must be properly authorized, executed, delivered, and recorded in the Public Records.
You must provide the STG Privacy Notice(s) to individuals (including buyers, sellers, and borrowers) who are buying or selling their home or obtaining a loan on their home, at the earliest to occur of the following: (A) with the title insurance commitment, if you deliver a commitment to them for an owner's or loan policy; (B) at the time of closing, if you perform closing or escrow services, and you have not previously provided the STG Privacy Notice to them; (C) with the title policy, if you issue a title policy to them, and you have not previously provided the STG Privacy Notice to them.
If the closing is a consumer or residential matter, the closing must be supervised by a licensed North Carolina attorney. A Certification of North Carolina Attorney must be obtained.
Receipt of premium and final title opinion from a non-employee, non-agent Stewart approved North Carolina licensed attorney (along with copies of the executed and recorded warranty deed and first three pages and signature pages of the deed of trust, if applicable) to issue a final policy. NCGS 58-26-1
Receipt of applicable NCLTA forms below (or substantially similar form approved by Company prior to closing), completed, executed and notarized, as follows:
NO RECENT (last 120 days) OR CONTEMPLATED CONSTRUCTION:
NCLTA FORM 1 (Owner Affidavit) from every seller (on sale) or borrower (on refinance) who has not contracted for recent or contemplated improvements on the Land or for a construction loan.
RECENTLY COMPLETED IMPROVEMENTS:
Non-MLA project: NCLTA FORM 2 (Owner/Contractor Affidavit, Lien Waiver, and Indemnity) from every Owner and every Contractor.
(1) Receipt of proof satisfactory to the Company that prior to closing or prior to first contracting for construction (whichever occurs first),
a. A Lien Agent was designated on the LiensNC.com website, AND
b. The Appointment of Lien Agent was posted at the Land.
(2) NCLTA FORM 5 (Owner Affidavit) from every Owner; AND
(3) NCLTA FORM 6 (MLA Lien Waiver) from every PLC-MLA.
CONSTRUCTION CONTEMPLATED OR IN PROCESS:
Non-MLA project: NCLTA FORM 3 (Owner/Contractor Affidavit, Indemnity and Lien Subordination) (for lender coverage only) from every Owner and every Contractor.
(1) Receipt of proof satisfactory to the Company that prior to closing or prior to first contracting for construction (whichever occurs first):
a. A Lien Agent was designated on the LiensNC.com website, AND
b. The Appointment of Lien Agent was posted at the Land;
(2) NCLTA FORM 5 (Owner Affidavit) from every Owner; AND;
(3) NCLTA FORM 6 (MLA Lien Waiver) or NCLTA FORM 7 (MLA Subordination of Liens) from every PLC-MLA.
MLA NOT Appointed Prior to Contracting for Labor Services or Materials
In all cases in which an MLA was required but not (timely) appointed, prior approval and terms of coverage (if any) by Company underwriting counsel is required.
Attorney certification that any and all homeowners’ association dues and assessments, if any, are paid current.
Buyer/borrower’s spouse, if any, to execute Deed of Trust.
Seller’s spouse, if any, to execute deed.
- Rights or claims of parties in possession not shown by the public records.
- Easements, or claims of easements, not shown by the public records.
- Any lien, or right to a lien, for services, labor or materials heretofore or hereafter furnished, imposed by law and not shown by public records.
- Rights of dower, homestead or other marital rights of the spouse, if any, of any individual insured.
- Taxes or special assessments which are not shown as existing liens by the public records.
Such state of facts as would be disclosed by a current, accurate survey and inspection of the insured premises.
State-specific Policy Variations
If there are state-specific changes to the provisions in the ALTA policies (e.g., Arbitration, Minerals), please describe.
ALTA policies and endorsements are filed with the NC Department of Insurance and are the approved forms for use in NC.
Title Insurance Form and Filing Regulations
Please describe the form and/or rate filing requirements, if any, related to policies and endorsements. Please describe any applicable rating bureau.
Is there a transfer tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
Transfer taxes are collected on deeds at rate of $2 per $1000 in consideration ($1/$500). Deeds must show the amount of tax due on the face of the instrument. No transfer tax on deeds of trust or mortgages.
Three counties, Pasquotank, Perquimans, and Washington, are authorized to collect an additional $1 per $100 as a land transfer tax on certain transactions. Those tax authorities should be contacted for specifics.
Is usury coverage available?
Usury coverage is available by endorsement. NC has statutory limitations on interest on consumer loans, mortgages, HELOCS and high cost loans: NC General Statutes § 24 1.1A. et seq.
Interest rates are limited for loans to natural persons for personal, family or household purposes secured by manufactured homes or structures used as principal residence.
A high cost loan is limited to $300,000 or less or the conforming loan size established by Fannie Mae.
A loan made to a non-natural person, for $300,000 or more, obtained by a natural person for purpose other than personal, family or household purpose is exempt from application of usury regulations.
What are your state’s requirements, if any, with regard to withholding proceeds from a sale, similar to but not including FIRPTA?
NC does not currently require closing agents or attorneys to withhold capital gains taxes for real estate transactions. There is a proposal to require such a withholding requirement for non-resident sellers similar to FIRPTA but it has not passed the NC legislature at this time.
Are witnesses required on a deed or security instrument? If so, please describe.
Standard execution and acknowledgement is required for recorded instruments. No additional witnesses are required.