Are you a creditor trying to recover personal property collateral after a borrower’s default? In North Carolina, creditors generally have the right to repossess and sell personal property once a borrower fails to meet their loan obligations. However, this right has limits. A creditor can only use self-help repossession if it can be done without breaching the peace.
For instance, if a borrower tells the creditor to stop repossessing the property or the property is locked up, continuing with the repossession could be considered a breach of the peace. When that happens, the creditor may turn to a legal process known as claim and delivery.
What is Claim and Delivery?
Claim and delivery, called replevin in other states, is a court process that allows a creditor to recover collateral when self-help repossession is not possible. It is connected to a larger lawsuit and cannot be filed on its own. It is also considered a pre-judgment remedy, meaning that the claim and delivery process occurs—and is only available—before the underlying lawsuit’s resolution.
How the Process Works
To start a claim and delivery action, the creditor files a complaint and an accompanying affidavit attesting to its perfected security interest in the property, the borrower’s default, and the property’s estimated value. Once filed, a hearing is scheduled before the Clerk of Superior Court.
The Clerk has the authority to issue an Order of Seizure, which authorizes the sheriff to take possession of the property for the creditor. Notably, a sheriff acting pursuant to an Order of Seizure, unlike a creditor attempting to exercise self-help repossession, has the statutory authority to breach the peace if necessary to recover the collateral. Before the sheriff can proceed with seizing the property, the creditor must post a bond equal to twice the value of the property to protect the borrower in case of a wrongful seizure. After the sheriff seizes the property, it is held for three days to give the borrower a chance to post their own counterbond to reclaim it.
The Law and Local Practices
Claim and delivery is governed by N.C. Gen. Stat. § 1-472 et seq., but the process can look different in each county. Filing requirements and scheduling often vary depending on where the case is filed.
At Blanco Tackabery, we have experience handling claim and delivery matters across North Carolina. If you are a creditor seeking to recover your property, our firm is ready to help you navigate the process and protect your rights.
Taylor Gibbs works with the Civil Litigation Practice Group at Blanco Tackabery. Taylor represents individuals and businesses in civil litigation. In addition, she practices in other areas such as business bankruptcy and creditors’ rights, property management, and fiduciary litigation.