Jan262026
Real Estate Q&A Series

Can I buy or take an assignment of an existing deed of trust from the current lender or holder? – North Carolina

Short Answer

Yes—under North Carolina law, a deed of trust generally follows the promissory note, so buying the loan (the note) from the current lender typically carries the deed of trust with it. A separate, recorded “assignment of deed of trust” is often used to clean up the public record, but North Carolina does not require recording an assignment to make the transfer effective between the parties. The practical issue is proving who owns the note and confirming the property’s current ownership after a spouse’s death before relying on the lien.

Understanding the Problem

In North Carolina, can an investor buy an existing mortgage loan by taking an assignment from the current lender or holder, when the property is subject to a deed of trust and one spouse has died? The decision point is whether the “deed of trust” can be transferred and enforced by a new holder, even though the deed references joint ownership concepts like joint tenancy or tenancy by the entirety and the current owner of the property may have changed by survivorship.

Apply the Law

In North Carolina, the key concept is that the deed of trust is the real estate security instrument for the underlying debt (the promissory note). State law provides that an effective transfer of the promissory note generally operates as an effective assignment of the deed of trust as well, and the assignee of the note can enforce the rights in the deed of trust (including foreclosure rights and trustee substitution rights). Separately, if the property was held as tenants by the entirety, North Carolina law generally provides that the surviving spouse becomes the sole owner by survivorship upon the other spouse’s death—meaning the lien may remain, but the identity of the current owner/borrower side of the equation can change.

Key Requirements

  • Acquire the debt (the note), not just paperwork: The enforceable rights usually track ownership/holder status of the promissory note; the deed of trust is tied to that obligation.
  • Confirm the chain of authority: The selling lender/holder must have the legal right to transfer the note (and therefore the deed of trust rights) to the buyer.
  • Confirm current title after the death: If the property was owned as tenants by the entirety, the surviving spouse typically owns the whole property by survivorship, which affects who must receive notices and who can sign modifications, payoffs, or other lien-related documents.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The facts suggest an investor is considering buying into an existing deed of trust situation where a spouse has died and the deed references joint ownership. Under North Carolina law, the cleaner path is typically to purchase the underlying note from the current holder, because the deed of trust generally follows the note. At the same time, if the property was held as tenants by the entirety, the surviving spouse likely became the sole owner by survivorship, which can affect who must be dealt with for notices, payoff discussions, or any workout.

Process & Timing

  1. Who transfers: The current holder/owner of the promissory note. Where: The transfer itself is contractual; any recording is done with the Register of Deeds in the county where the property is located. What: A loan sale/assignment agreement and note transfer (often with an endorsement/allonge), and commonly a separate “Assignment of Deed of Trust” for the land records. When: Before attempting to enforce the deed of trust (for example, before directing a trustee action or starting a foreclosure).
  2. Title follow-up: Confirm how title passed after the spouse’s death (for example, survivorship under tenancy by the entirety versus an estate/probate transfer). This step often drives what documents a closing attorney or title insurer will require before relying on the lien position.
  3. Enforcement setup (if needed): If enforcement is contemplated, the noteholder may need to appoint or substitute a trustee by a recorded instrument, and then follow North Carolina’s foreclosure procedures if a default exists.

Exceptions & Pitfalls

  • Buying only an “assignment of deed of trust” without the note: This is a common mistake. North Carolina law ties enforcement rights to the note; acquiring only a recorded assignment can create disputes about standing and enforceability.
  • Unclear ownership after death: If the deed references joint tenancy/tenancy by the entirety, survivorship may have changed the owner automatically, but the public record may still need cleanup. Title issues can delay payoff, modification, or enforcement.
  • Chain-of-title/chain-of-transfer gaps: If the loan has been sold multiple times, missing endorsements, lost note issues, or inconsistent names can create practical and legal hurdles.
  • Servicing and notice problems: Even with a valid transfer, misdirected notices (for example, sent to a deceased borrower) can create avoidable disputes and delays.

Conclusion

In North Carolina, an investor can buy an existing deed of trust position, but the key is acquiring the underlying promissory note from the lawful holder—because a valid note transfer generally carries the deed of trust with it. Recording a separate assignment is often helpful for the land records, even though it is not always required for validity. The most important next step is to document the note transfer and record any needed trustee/assignment paperwork with the county Register of Deeds before attempting enforcement.

Talk to a Real Estate Attorney

If you’re dealing with buying an existing deed of trust position where a spouse has died and ownership or lien rights are unclear, our firm has experienced attorneys who can help you understand your options and timelines. 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.

Category: Real Estate Q&A Series

Author: Pierce Law

Pierce Law Group is a North Carolina law firm focused on probate administration, real estate partition matters, and surplus funds claims across North Carolina. We know these situations often come with stress, family dynamics, and time-sensitive decisions—so we prioritize clear communication, steady guidance, and a practical plan from day one. Our goal is to make a complicated process feel manageable, while protecting what matters most to you.