Many people are surprised to find that their spouse must sign a deed when the spouse doesn’t own the property. Similarly, a spouse with no ownership interest in a property may not like the idea of signing a deed of trust that secures a promissory note that he or she did not sign with property that he or she does not own. However, if you are married, you cannot convey clear title to property held in your personal name unless your spouse signs the deed or has previously waived his or her marital rights. Evidence of such waiver, such as a premarital or postmarital agreement, must be made a part of the public record. This typically means that a memorandum must be recorded in the Register of Deeds.
This requirement makes more sense if you understand the reasoning behind it. Your spouse has certain rights in your property by virtue of marriage. The N.C. Court of Appeals describes the purpose of these rights as keeping the survivor from being rendered penniless. These spousal rights are often referred to as “inchoate,” meaning they are not fully formed or not fully developed. They sit in the background, waiting to spring into being in case you try to disinherit your spouse. An inchoate marital interest is neither an estate in land nor a vested interest, but it is still an encumbrance on real property, which must be waived in order to convey clear title.
These rights are now statutory but are based in the common law dower and curtsey. Dower was the amount of an estate to which a surviving wife was entitled, and curtsey was the amount to which a surviving husband was entitled. The purpose of the common law estates of dower and curtsey was to ensure that a spouse has a means of support. There were, however, some limitations on these common law rights. Mainly, they applied to real property only. They were also created in an era where land was the basis of wealth. By the mid-1900’s, that wasn’t necessarily the case, and spouses needed different protections. For those who died before 1960, a surviving husband received a life estate in all property of his deceased wife if they had children capable of inheriting. In contrast, a surviving wife received a life estate in 1/3 of her deceased husband’s properties, whether or not they had children. The common law estates of dower and curtsey were abolished in North Carolina in 1959 and were replaced by statutory protections. The current statutory scheme is located in Chapters 29 and 30 of the N.C. General Statutes. They have been updated occasionally.
One of the most often used protections for a surviving spouse is the spousal allowance, which only deals with personal property. However, there are four inchoate interests that do affect real estate. Real property in the name of only one spouse is potentially subject to: 1) the right to an elective share in the decedent spouse’s estate, 2) the right to elect a life estate in the marital home; 3) the right to a life estate in 1/3 of all real estate; and 4) equitable distribution upon divorce. These inchoate rights terminate upon divorce, except that equitable distribution may be preserved by filing of a lawsuit prior to divorce.
A surviving spouse’s elective share is based on the deceased spouse’s total net assets. Total assets include all property transferred during a one-year period during the marriage and before the decedent’s death. Therefore, if you transfer land without your spouse’s signature on the deed, and you die within one year, the land could end up being pulled back into your estate and transferred to your spouse. One of the exceptions to this is land that is transferred for full and adequate consideration. So, if you sell land for fair market value and don’t live another year, that property will not be considered part of your total net assets. But you can’t give it away or sell it at a discount. And this isn’t the only consideration.
Instead of an elective share or an intestate share, a surviving spouse may also choose to take a life estate in one-third in value of all the real estate of which the deceased spouse “was seised and possessed of an estate of inheritance at any time during coverture.” The legislature could have said it more plainly. But it means that if your spouse owns real property during your marriage, you can elect a life estate in 1/3 of the value in lieu of an elective share or an intestate interest. This is similar to the common law right of dower. It means that if you inherit your mother’s house, then sell it while you are married, your spouse still has rights in the property unless he or she has waived the right. It is perhaps more common for the survivor to seek a life estate in “the usual dwelling house occupied by the surviving spouse at the time of the death of the deceased spouse if such dwelling house were owned by the deceased spouse at the time of the deceased spouse’s death . . ..”
All of these rights are released when your spouse signs a deed. They may also be waived by written agreement. However, a simple quitclaim conveyance from one spouse to the other while they are still married does not release inchoate marital rights unless there is also a premarital, postmarital, or separation agreement. Such a deed would only affect record title unless it complies with several other statutes. There are also very limited circumstances under which a court may declare those rights have been waived. If neither spouse is retaining title, a deed directly from both spouses to the third party is preferable because it avoids any question at all about spousal rights in the future.