Homebuyers in Charlotte have some protection against buying a “lemon” because sellers in the state are required to disclose possible defects — ranging from a faulty furnace to a leaky roof to radon gas to noise from a nearby commercial or industrial site. In addition, a homeowner who defaults on a loan must typically have at least one hearing before their lender can foreclose. Here’s what else you should know about real estate laws in Charlotte if you are considering buying in the city.
Home seller and buyer laws
Real estate property disclosure forms: Home sellers in North Carolina must complete a disclosure form for buyers that indicates any defects they know of in the property, including any damage to appliances, systems and the roof. In addition, homeowners must reveal any knowledge about radon, asbestos or other hazards, as well as any noise or odor coming from a nearby commercial, industrial or military site. Homeowners must provide buyers with the disclosure form by the time the buyers make an offer — otherwise, buyers may be able to cancel the contract.
Judicial or non-judicial foreclosure state: North Carolina allows either a judicial or non-judicial foreclosure after a homeowner defaults on their mortgage. A judicial foreclosure requires the process to go through the court system; a non-judicial foreclosure is handled by the lender. Most foreclosures in the state are non-judicial and follow the procedure established by the “power of sale” clause in a mortgage. However, a preliminary hearing is required to authorize the “power of sale” foreclosure. If the foreclosure results in a loan payoff for less than the full amount owed, the lender can typically sue the borrower to repay the remaining balance. One exception is when the purchase mortgage was financed by the seller.
Community property state or equitable distribution: North Carolina is an equitable distribution state, which means a couple can decide how to divide their assets, including property, in the case of a divorce. Equitable distribution doesn’t necessarily mean everything is divided 50/50. The decision about how to divide assets acquired during the marriage can be made by the couple or by the court.
Attorney vs. escrow state: In North Carolina, buyers typically hire a lawyer to represent them at the closing, according to the North Carolina Real Estate Commission. That attorney may also represent the seller and the lender. Attorneys are required to handle all the legal closing paperwork, but non-attorneys can help with administrative work during the closing process.
Summary of real estate transfer taxes: Real estate transfer taxes in Charlotte are typically paid by the seller, but that must be stated in the purchase contract and possibly negotiated. The state excise tax rate is $1 per every $500 in property value. In addition, in Mecklenburg County, where Charlotte is located, a fee of $64 for the first 35 pages and $4 per each additional page is charged for recording a deed of trust. Your lender will disclose the amount of transfer taxes that will be due once you identify a specific property you want to purchase.
Property tax exemptions: Charlotte homeowners may be exempt from paying some of their property taxes, depending on their income level, age or whether they are a veteran. The homestead exclusion allows homeowners who are 65 or older, or totally and permanently disabled, to exclude $25,000 or 50% of their home’s assessed value from property taxes, whichever is greater. This exclusion currently applies to households with an income of $30,200 or less.
In addition, the “property tax circuit breaker” deferment is available for homeowners who meet the above conditions, have owned their property for five years or more and have a household income of 150% of the homestead exemption limit, or up to $45,300 in 2019. This provision postpones the tax bill until the property is sold, the applicant dies with no surviving spouse or the property is no longer the applicant’s primary residence. Disabled veterans and their spouses may be eligible for an exclusion of up to $45,000 of their home value from property taxes.
You can read more about these property tax exemptions here.
Typical property taxes: While North Carolina has among the lowest property tax rates in the country, Mecklenburg County, where Charlotte is located, has one of the highest. The median property tax paid is $1,945 on a property valued at $185,000, for an average tax rate of 1.05%, according to Tax-Rates.org.
Conforming loan limits
The conforming loan limits in Charlotte are $484,350 for a one-unit residence. Conforming loans are conventional loans that are backed by government-sponsored entities Fannie Mae and Freddie Mac. Each year, the Federal Housing Finance Agency (FHFA) sets the conforming loan limit. The limit is generally $484,350 for a one-unit across the country, but some more expensive areas have higher limits.