What paperwork is needed to place a lien or deed of trust on a property for collateral purposes? – North Carolina

Short Answer

In North Carolina, using real property as collateral is usually done with a written promissory note (the debt) and a deed of trust (the real-estate security instrument), signed and notarized, then recorded with the Register of Deeds in the county where the property is located. Many collateral situations also require a current deed/legal description, proof of ownership, and sometimes an appraisal because the decision-maker wants a value opinion. If someone is signing for an owner under a power of attorney, the power of attorney generally must be recorded as well.

Understanding the Problem

In North Carolina, when a property owner can use real property as collateral to satisfy a third party’s requirement, the practical question becomes: what documents must be prepared, properly signed, and recorded so the collateral arrangement actually attaches to the property. The common decision point is whether the collateral will be documented as a recorded deed of trust against the property (rather than an informal “lien” or a private agreement). Timing often matters because the party requiring collateral may need proof of recordation before acting.

Apply the Law

North Carolina commonly uses a deed of trust (sometimes called a “DOT”) to pledge real property as security for an obligation. A deed of trust is typically signed by the property owner (grantor/borrower), names a trustee, and identifies the party receiving the security interest (beneficiary/lender). To be accepted for recording, the deed of trust generally must be acknowledged (notarized) before an officer authorized to take acknowledgments, and the Register of Deeds will check that the notarial certificate appears complete on its face before recording. Recording occurs in the county where the land is located, and recordation is the key step that puts the public on notice of the lien.

Key Requirements

A written debt obligation: Usually a promissory note or other written agreement describing the obligation being secured and who must pay it.
A deed of trust with a legal description: A recordable deed of trust that identifies the parties, states the secured obligation, and accurately describes the property (often by referencing the prior deed book/page and attaching a full legal description).
Proper execution for recording: The deed of trust must be signed and include a proper notarial acknowledgment so the Register of Deeds can record it.

What the Statutes Say

N.C. Gen. Stat. § 47-1 (Officials authorized to take acknowledgments) – Lists North Carolina officials (including notaries) who can take acknowledgments for deeds of trust and other recordable real estate instruments.
N.C. Gen. Stat. § 47-14 (Register of Deeds verification before recording) – Requires the Register of Deeds to refuse instruments that need an acknowledgment unless the acknowledgment appears to be taken by an authorized officer and includes required notary details (signature, commission expiration, and seal if required).
N.C. Gen. Stat. § 47-28 (Recording powers of attorney affecting real property) – Generally requires a power of attorney (or certified copy) to be recorded before an agent uses it to sign a real property instrument, and requires recording reference information in certain situations.
N.C. Gen. Stat. § 47-17.2 (Assignments of deeds of trust) – Explains that transferring the secured note can operate as an effective assignment of the deed of trust, and that recordation of a written assignment is permitted but not always required to make the assignment effective between the parties.

Analysis

Apply the Rule to the Facts: Here, the goal is to use North Carolina real property as collateral to help satisfy a release/bond requirement, and the described approach is a deed of trust plus an appraisal. Under North Carolina practice, that usually means preparing (1) a written obligation that the property will secure (often a promissory note or indemnity-type agreement depending on what the decision-maker requires), and (2) a deed of trust that accurately describes the property and is signed and notarized so it can be recorded with the Register of Deeds. The appraisal is not what creates the lien; it is typically support paperwork requested to evaluate value and risk.

Process & Timing

Who files: Typically the beneficiary/lender or the closing/real estate attorney on behalf of the parties. Where: The Register of Deeds in the North Carolina county where the property is located. What: The signed and notarized deed of trust (and, if applicable, a recorded power of attorney or certified copy). When: As soon as the deed of trust is fully executed and notarized; many third-party collateral decisions depend on confirmation that the deed of trust has been recorded.
Confirm recordability before submission: The notarial acknowledgment should appear complete on its face (including the notary’s signature and commission expiration date, and seal if required) because the Register of Deeds can refuse a deed of trust that lacks a proper acknowledgment.
Obtain proof of recordation: After recording, the Register of Deeds provides book/page (or instrument number) information. That recording information is commonly what gets provided to the party requiring collateral, along with a copy of the recorded deed of trust and any appraisal they require.

Exceptions & Pitfalls

“Lien” versus deed of trust: Many people use the word “lien” loosely. A deed of trust is a specific, recordable instrument that creates a real estate security interest. A private agreement to “put a lien on the house” may not create an enforceable recorded lien without the deed of trust (or another recognized lien type) and proper recording.
Title/ownership problems: If the property is owned by multiple owners, held in a trust, or owned by an entity, the deed of trust must be signed by the correct owner(s) in the correct capacity. Missing an owner can leave the collateral incomplete.
Power of attorney issues: If an agent signs for an owner, North Carolina generally requires recording the power of attorney (or certified copy) and including the proper recording reference in the deed of trust when required.
Notary/acknowledgment defects: If the notarial certificate is incomplete, the Register of Deeds may refuse the document. Even when a document records, acknowledgment issues can still create disputes later, so careful execution matters.
Wrong county: Recording must occur in the county where the land is located. Recording in a different county generally does not accomplish the goal for that property.

Conclusion

In North Carolina, the usual paperwork to place a real-estate lien for collateral purposes is a written debt obligation (often a promissory note) and a signed, notarized deed of trust that includes an accurate legal description, then recorded with the Register of Deeds in the county where the property sits. The deed of trust—not an appraisal—creates the lien. A key next step is to record the deed of trust with the correct Register of Deeds as soon as it is properly executed and notarized.

Talk to a Real Estate Attorney

If real property is being used as collateral and the goal is to get a deed of trust prepared and recorded correctly in North Carolina, a real estate attorney can help identify the right documents, confirm the correct owner/signature authority, and avoid recording rejections. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.