North Carolina Homestead Laws

People going through tough financial times often fear they will lose their homes. Fortunately, North Carolina has what are known as “homestead protections” to help prevent people from becoming homeless in the event of a financial loss or change in economic stature. More specifically, these laws can allow individuals to register a limited portion of their property as a "homestead" and generally off-limits to creditors. Here is a summary of homestead laws in North Carolina.

Homestead Laws

Homestead laws allow homeowners to declare a limited portion of their property as a "homestead," thus sparing it from creditors in the event of a bankruptcy or other financial hardship. These laws originally were intended to protect families from losing their farms. North Carolina differs from most state homestead laws by not specifying an acreage limit, but only allowing up to $1,000 worth of property to be declared a homestead.

North Carolina Homestead Statutes

Learn more about North Carolina homestead laws in the table below.

Despite North Carolina’s homestead protections, there remain four kinds of creditors who could still force the sale of a homestead to collect debts owed to them:

• The State of North Carolina, counties, or municipalities, if they are collecting past due property taxes;
• Mortgage creditors to whom the homestead property was specifically guaranteed as credit for the mortgage;
• Contractors, builders, or mechanics who are owed money for work performed in maintaining, improving, or repairing the property; and
• Any creditor with a pre-existing lien on the property before the homestead was established.

Also, the homestead exemption is a state law subject to the Supremacy Clause of the United States Constitution. Therefore, federal law can override it. Federal income tax liens are superior to North Carolina’s state homestead protection laws. In most cases, however, the Internal Revenue Service is reluctant to foreclose on or force the sale of a taxpayer's home to enforce tax liens. Normally, the federal government will only get involved if the property is sold or mortgaged before expiration of the tax lien.

North Carolina Homestead Laws: Related Resources

Real estate laws in North Carolina can be difficult to understand. You can contact a North Carolina real estate attorney to schedule a consultation regarding your case. You can also find more introductory information on this topic in FindLaw’s Bankruptcy Basics section.