Marital Interest in Real Estate Transactions: What You Need to Know in North Carolina

As a real estate attorney, clients are often taken aback when informed that their spouse required to sign certain documents during a real property transaction. Some may even question the necessity of their spouse’s involvement, especially if they have no prior connection to the property. “Why do they need to sign? They’ve never had anything to do with this property!”

In North Carolina, marital rights play a significant role in real estate transactions, and it’s essential to understand the legal implications before proceeding with any sales or refinancing endeavors. So, whether you’re a seller, borrower, or simply a curious reader, let’s delve into the intricacies of marital rights in North Carolina real estate.

“One to Buy, Two to Sell”

As a general rule of thumb in North Carolina, if you’re married and looking to sell property, it’s important to know that both spouses must sign the deed. This is because, regardless of whether the property was acquired before or after marriage, a spouse acquires a legal interest in their partner’s real property. This concept is known as marital interest and is designed to benefit the surviving spouse of a deceased property owner.

The concept of marital interest in real property has its origins in English common law and is intended to provide protection to the surviving spouse of a deceased property owner. For example, if you die, your spouse can claim an elective share in that property regardless of whether their name appears on the deed to that property. Thus, in order to extinguish these marital interests during the sale of real property, the deed conveying the real property must include the signatures of both spouses.

Common Scenarios

As with any rule, exceptions do exist in North Carolina real estate transactions that may eliminate the need for both parties to sign certain documents. To help you better understand when this may be the case, we’ve compiled a list of common scenarios that our office encounters, along with the general requirements that are required for each situation:

Both spouses owning property: Both spouses are required to sign documents in purchase, sale, or refinance transactions.

A married person selling or refinancing property: The owner will need to sign documents to convey title. Meanwhile, the owner’s spouse will need to sign documents to convey the marital rights.

A separated person selling or refinancing property: When a divorced person is looking to sell or refinance a property, it’s essential to understand that marital rights may still exist unless severed by a properly drafted agreement. These rights can remain in place until a court enters an order for absolute divorce. If the former spouse still holds marital rights to the property, they also need to sign the documents to convey those rights to the new owner. Alternatively, the former spouse can sign a properly drafted and recorded document known as a Free Trader Agreement to sever their marital rights.

A person owning property invidually as a “Free Trader”: In North Carolina real estate transactions, a Free Trader refers to a married person whose spouse has already waived or severed their marital rights to a property. This can be accomplished through various legal agreements such as prenuptial, postnuptial, or separation agreements. As long as spousal rights have been addressed properly, a Free Trader can conduct real property transactions without involving their spouse.

In North Carolina, marital rights play a significant role in real estate transactions, and it’s essential to understand the legal implications before proceeding with any sales or refinancing endeavors. The concept of marital interest ensures that the surviving spouse is protected, but it can also result in both spouses being required to sign certain documents during a real property transaction. As a real estate attorney, it’s my job to ensure that my clients understand these requirements and navigate them successfully. By understanding the general rules and exceptions surrounding marital interest in North Carolina, you can avoid any unnecessary delays or legal issues during your real estate transaction.