North Carolina Enacts Prohibition on Attorneys Serving as Trustees from Representing Noteholders or Borrowers while Initiating a Foreclosure Proceeding
North Carolina recently enacted House Bill 770, effective immediately.
The Bill amends North Carolina General Statues § 45-10, Substitution of trustees in mortgages and deeds of trust.
§ 45-10(a) as amended states that noteholders may, in their discretion, substitute a trustee.
The section now prohibits an attorney serving as trustee or substitute trustee from representing either the noteholders or the interests of the borrower while initiating a foreclosure proceeding.
An attorney may serve as the trustee in a foreclosure proceeding while simultaneously representing the noteholders on unrelated matters and others within the attorney’s firm may also continue to represent the noteholders on unrelated matters.
Additionally, an attorney who has as trustee initiated a foreclosure proceeding may resign as trustee after the foreclosure is contested and act as counsel to the noteholders.
The term “noteholders” is defined for purposes of § 45-10 to mean “the holders or owners of a majority in the amount of the indebtedness, notes, bonds, or other instruments evidencing a promise to pay money and secured by mortgages, deeds of trust, or other instruments conveying real property, or creating a lien thereon.”
For the full text of House Bill 770, please refer to: