North Carolina Commercial Real Estate Loans: Excise Tax & C-PACE

Commercial property loans in North Carolina use the same programs as every other state — SBA 504, DSCR loans, bridge loans, bank and life-company permanent loans. What North Carolina changes is a short list: a low excise tax on the deed (and a much higher one in several northeastern counties), a flat fee instead of a tax on the loan, a foreclosure that runs through the clerk of superior court, an upset-bid period after every foreclosure sale, and a statewide C-PACE program authorized in 2024, which counties began joining in 2025.

Closing costs: the deed excise tax and a flat loan fee

North Carolina taxes the deed, not the loan. The excise tax is $1.00 for each $500 of the consideration or value conveyed, with any fraction of $500 counted as a full $500, and the transferor — the seller — pays it to the register of deeds before the deed is recorded. The deed of trust carries no tax tied to the loan amount: it records for a flat $64 for the first 35 pages, plus $4 for each additional page, and the deed records for $26 for the first 15 pages.

Example: a $2,000,000 commercial building bought with a $1,400,000 loan.

• Excise tax, paid by the seller: $2,000,000 ÷ $500 × $1.00 = $4,000
• Recording the deed of trust (35 pages or fewer): $64 — the same at $400,000 or $14,000,000
• Recording the deed (15 pages or fewer): $26
• All together: $4,090

Several counties in the northeast — including Camden, Chowan, Currituck, Dare, Pasquotank and Perquimans — add a local land transfer tax of $1.00 per $100, or 1% rounded up to the next dollar, paid to the register of deeds at recording. On the same sale that is another $20,000, five times the state tax. The same example carries $6,200 in combined deed and loan taxes in Georgia (on a loan of more than 62 months), $9,007.70 in Tennessee and $13,333.34 in Virginia, against North Carolina’s $4,000 — because those states tax the loan too. Who pays which line is a term of the purchase agreement; put it in the closing budget before you sign.

Foreclosure: a hearing before the clerk

When a deed of trust or mortgage contains a power of sale, the lender does not have to file a lawsuit to foreclose — but it does have to go through the clerk of superior court. The trustee files a notice of hearing with the clerk and serves it on the borrower and every record owner at least 10 days before the hearing. At the hearing, the clerk authorizes the sale only on finding a valid debt held by the party foreclosing, a default, a right to foreclose under the deed of trust and notice to everyone entitled to it.

The sale itself needs its own notice: posted where the clerk posts public notices at least 20 days before the sale, published once a week for at least two successive weeks, and mailed at least 20 days ahead to the parties entitled to notice of the hearing. A borrower who does not dispute the default does not have to attend the hearing, and can still pay off the debt to stop the sale. If a sale or refinance is your way out of a troubled loan, start at the first missed payment, and use DSCR to see how far the property’s income has fallen short.

The 10-day upset bid

A North Carolina foreclosure sale is not final on sale day. For 10 days after the sale is reported, anyone can file an upset bid with the clerk that beats the reported price by at least 5%, with a minimum increase of $750, and must deposit at least 5% of the new bid. Each upset bid opens a new 10-day period. Only when a period passes without one do the rights of the parties become fixed.

Example: the building sells at the foreclosure sale for $1,100,000. An upset bid must be at least $1,100,000 × 1.05 = $1,155,000, with a deposit of at least $1,155,000 × 5% = $57,750. If someone files it, the sale stays open another 10 days at the new price. For a buyer, that means a foreclosure purchase cannot close on a fixed date; for a borrower, every upset bid reduces what is left owing.

Deficiency: who bought — and who lent — matters

North Carolina has two deficiency rules that turn on who bought at the sale and who made the loan. If the lender itself buys the property at its own power-of-sale foreclosure and then sues the borrower for the shortfall, the borrower can defend by showing that the property was fairly worth the debt at the time of the sale, or that the bid was substantially less than its true value — and defeat or reduce the deficiency in whole or in part. This defense does not apply to sales made under a court order.

The second rule covers seller financing. When the deed of trust secures the balance of the purchase price owed to the seller, and the note shows on its face that it is for purchase money, the seller gets no deficiency judgment after foreclosure — the property is the seller’s only recovery. A bank loan used to buy a building is not covered; it secures money owed to the bank, not to the seller. If you signed a personal guarantee, how these rules apply to it is a question for your loan documents and your attorney.

C-PACE: a statewide program, joined county by county

North Carolina authorized C-PACE in Session Law 2024-44, which added the Commercial Property Assessed Capital Expenditure (C-PACE) Act to Chapter 160A. It covers commercial, industrial, agricultural, nonprofit and multifamily properties with five or more units, for energy efficiency, water conservation, renewable energy and resilience improvements. There is one statewide program, run by the Economic Development Partnership of North Carolina under the Department of Commerce, and each county or city opts in by resolution after a public hearing — a city’s resolution takes effect only with its county’s concurrence. New Hanover County was the first county to join, in February 2025, and the City of Raleigh joined in December 2025.

The statute sets the terms that matter for your mortgage. C-PACE financing is capped at 35% of the property’s expected stabilized value with the improvements installed, and its term cannot exceed the weighted average useful life of the improvements. The C-PACE lien ranks behind taxes but ahead of all other liens, including an existing deed of trust — which is why every holder of a mortgage or deed of trust must sign a written consent, stating that the assessment is not a default, before the assessment agreement is signed. The statewide administrator charges an application fee of up to $750 and a processing fee of 1% of the amount financed, capped at $25,000.

Example: a building with an expected stabilized value of $2,000,000 after the upgrade can carry at most $2,000,000 × 35% = $700,000 of C-PACE financing, with a processing fee of $700,000 × 1% = $7,000. Raise C-PACE with your mortgage lender before you sign the loan, not after.

Where to start

Choose the program — SBA 504 for an owner-occupied building, a DSCR loan or permanent loan for an income property, a bridge loan for a transition — and check with the county register of deeds whether the property is in a county with a local transfer tax. Size the loan with the commercial mortgage calculator. For financing that isn’t tied to real estate, the North Carolina business loan guide covers SBA offices and state programs.

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Sources: N.C. Gen. Stat. § 105-228.30; Perquimans County, Land Transfer Tax; N.C. Gen. Stat. § 161-10; N.C. Gen. Stat. §§ 45-21.16, 45-21.17, 45-21.27, 45-21.36, 45-21.38; Session Law 2024-44 (N.C. Gen. Stat. §§ 160A-239.11 to 160A-239.21); New Hanover County, “New Hanover County joins C-PACE program” (February 2025); Economic Development Partnership of North Carolina, “Automated Parking Garage in Raleigh Moves Forward with C-PACE Financing” (March 2026). Checked 2026-10-26.