“Why does my spouse have to sign the deed when I sell property I inherited from my parents? It’s in my name alone.” Domestic lawyers and real estate lawyers get this question often. The quick answer is that the bank financing the purchase of the property says so. A more precise answer involves an understanding of “marital property.” Finally, there is a law that requires it.
Let’s start with the North Carolina General Statutes. One of those statutes (N.C.G.S. 39-7) says that in order for a married person to convey good title to real estate, both spouses must sign the deed. Part of the reason for this statute is that spouses have certain inheritance rights and unless both sign the deed, those inheritance rights are not waived.
However, there is another reason why both spouses must sign the deed. One spouse can acquire a “marital property” interest in real estate even if the property is only in the name of the other spouse. Banks that loan money for the purchase of property want to make sure that good title is passing to the purchaser, but more importantly, the bank wants to know good title is passing in case it must foreclosure on the purchaser.
Another question we often hear relates to whether the property must be in both spouses’ names in order to refinance a mortgage debt on the property. For instance, suppose Sally inherited her home from her father and it is solely in her name. The property is subject to a mortgage. Sally marries Joe and they decide to refinance the property. We occasionally have clients come to us after having put the property in both spouses’ names because they were told it was required to refinance the debt. This is wrong! There are two primary documents in any mortgage transaction: (1) the promissory note and (2) the deed of trust. In the promissory note, the borrowers promise to repay the debt over time, usually with a stated interest rate. In the deed of trust, the borrowers pledge real estate to secure the debt. If Sally and Joe are refinancing the debt, the bank will likely require that both sign the promissory note and will most certainly require that both sign the deed of trust. This does not transfer any ownership to Joe. More importantly, it is not necessary for Sally to deed an interest in the property to Joe in order to refinance the debt. If she does so, she may turn her separate property into marital property.
If you have concerns about whether you must or should convey an interest in your separate property to your spouse, you should consult an attorney. This is not to say that sharing everything with your spouse is not a noble and loving gesture, but you need to know the legal consequences before doing so. Contact Irvine Law Firm with your questions.