1. The action and who is a party
G.S. 105-374(a) describes the action as in the nature of an action to foreclose a mortgage. It is brought in the appropriate division of the General Court of Justice in the county where the real property is situated.
Subsection (c) makes these parties: the owner of record and the owner’s spouse; all other taxing units having tax liens; all other lienholders of record; and all persons who would be entitled to be parties to a court action to foreclose a mortgage in which no deficiency judgment is sought. A trustee in a deed of trust shall not be made a party. Persons who cannot be located, whose names and whereabouts are unknown, and possible heirs or assignees may be served by publication.
2. The order in G.S. 105-374(q)
After delivering the deed and collecting the price, the commissioner applies the proceeds in this order:
- The costs of the action, including the commissioner’s fee and the attorney’s fee.
- The taxes, penalties, and interest for which the property was ordered sold. If the funds are insufficient, those amounts are paid pro rata.
- Special benefit assessments for which the property was ordered sold, pro rata, with interest and costs.
- Pro rata, the taxes, penalties, interest, and costs of taxing units that were parties but filed no answers.
- Pro rata, the special benefit assessments of those non-answering units, with interest and costs.
- Any balance, paid as the court directs. If the court gives no directions, the balance is paid into court for the persons entitled to it.
3. Doubt or adverse claims
Subsection (q)(6) says that if the clerk is in doubt as to who is entitled to the surplus, or if adverse claims are asserted, the clerk holds the surplus until the rights are established in a special proceeding pursuant to G.S. 1-339.71. This page does not summarize that proceeding. Within five days after delivering the deed, the commissioner makes a full report.
4. The commissioner’s fee cap
Under G.S. 105-374(i), when property is actually sold after judgment, the costs include a commissioner’s fee fixed by the court, not exceeding five percent of the purchase price. Those costs are paid first under subsection (q), so the fee reduces what can remain as the balance paid into court.
5. What a recovery team can take from the statute
- The balance is paid into court. The clerk holds it when the clerk is in doubt or when adverse claims are asserted, until the special proceeding sets the rights.
- The parties in subsection (c) are the starting list, including the owner of record and spouse and the lienholders of record. A trustee in a deed of trust is not made a party.
- The statute sends a disputed surplus to the special proceeding. It does not describe a finder’s contract.
Locate Next “does not file claims, hold funds or decide who’s owed money.” Check each number’s Do Not Call status before outreach. A status does not decide what contact is allowed. See DNC scrubbing. Michigan’s remaining-proceeds statute is a different section. See Michigan remaining proceeds.
Common questions
Where does a North Carolina tax foreclosure balance go?
G.S. 105-374(q)(6) pays any balance as the court directs or, absent directions, into court for the persons entitled to it.
What if the clerk cannot tell who is entitled?
If the clerk is in doubt, or adverse claims are asserted, the clerk holds the surplus until rights are established in a special proceeding under G.S. 1-339.71.
What is paid before any balance?
Costs, including the commissioner’s fee and the attorney’s fee; the taxes, penalties, and interest the property was sold for, pro rata if the funds are short; special benefit assessments; and the pro rata taxes and assessments of taxing units that were parties and filed no answer.
Who is joined in a G.S. 105-374 action?
The owner of record and the owner’s spouse, other taxing units with tax liens, other lienholders of record, and persons entitled to be parties to a mortgage foreclosure in which no deficiency judgment is sought. A trustee in a deed of trust shall not be made a party.
Sources
- N.C. Gen. Stat. 105-374, foreclosure of tax lien. Read October 22, 2026.
This page is general information, not legal advice. Have counsel review the statute before you rely on it.