When Family Law Meets Real Estate

Family law intersects with myriad areas of law with real estate being no exception.  When a separation starts, real property inevitably becomes the subject of heated debates between separating spouses.  Say you enter into a separation agreement and work out what to do with the marital home.  That's great, but what should you do to ensure you are able to move on with your life and obtain a new home without waiting for the year long separation period to be over?

WHAT DOES IT MEAN IF ONE SPOUSE OWNED THE MARITAL HOME PRIOR TO THE ACTUAL MARRIAGE?

Well, first off you will notice that only the spouse who owned the marital home prior to the marriage is actually on the deed (exception would be if the other spouse was added to the deed).  This is where real estate starts to creep into family law. 

Although only one spouse is actually on the deed, the other spouse has a marital right non-possessory interest under North Carolina General Statute section § 29-30.  The relevant portion of the statute states, "(a) In lieu of the intestate share provided in G.S. 29-14 or G.S. 29-21, or of the elective share provided in G.S. 30-3.1, the surviving spouse of an intestate or the surviving spouse who has petitioned for an elective share shall be entitled to take as the surviving spouse's intestate share or elective share 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, except that real estate as to which the surviving spouse: (1) Has waived the surviving spouse's rights by joining with the other spouse in a conveyance thereof, or (2) Has released or quitclaimed the surviving spouse's interest therein in accordance with G.S. 52-10, or (3) Was not required by law to join in conveyance thereof in order to bar the elective life estate, or (4) Is otherwise not legally entitled to the election provided in this section."

WHAT IF I ACTUALLY SURVIVED MY MARRIAGE AND STARTED THE SEPARATION PROCESS?

This is where a separation agreement will come in handy.  The spouses will figure out what to do with the marital home as well as any other property, real or personal, child custody, and/or child support.  If the separation agreement includes a transfer of real property, then the separation agreement should be recorded in the register of deeds office in the county where the real property is located.  

I'M SEPARATED BUT I JUST FOUND A PIECE OF PROPERTY INSIDE THE BELTLINE FOR UNDER $4 MIL.  HOW DO I KEEP MY SPOUSE OFF THE DEED?

Congrats on the great deal.  Every separation agreement should have a section called a "Free Trader Provision".  A free trader provision allows for the separated spouses to freely acquire property without the other spouse claiming any marital interest.  This is specifically important as it pertains to acquiring real property. 

NCGS 39-13.4 governs free trader provisions and requires that the separation agreement with the free trader provision be recorded with the register of deeds office in the county where the real property is located.  If you have a free trader provision within your separation agreement and you have not recorded it, you will have problems obtaining financing, among other things.

But wait, here's another kicker.  If you purchase real property during the separation period without having a separation agreement with free trader provision properly recorded, then your separated spouse has a non-possessory interest in your real property and must sign the deed over if you transfer the property to a third party (see NCGS 29-30 above for discussion on the life interest).  The reason for this requirement is that the separated spouse's non-possessory interest is technically an encumbrance that prevents the real property from having marketable title.  You will also not be able to obtain financing on any real property purchase without providing proof to your lender that the separation agreement w/ free trader provision was properly recorded.  So yeah, this is important.

HOW DO I KEEP ANY PERSONAL/FINANCIAL INFORMATION FROM BECOMING PUBLIC RECORD WHEN I RECORD MY SEPARATION AGREEMENT?

If the parties have dates of birth of their children (typical for parenting agreement provision), financial information, or other sensitive information contained in the separation agreement they can execute a "Memorandum of Separation Agreement" that outlines the separation agreement contents sans any sensitive information.  The memorandum of separation agreement is signed and notarized by both parties then recorded with the register of deeds office in the county where the real property is located.  

HOW IS THE PROPERTY DEEDED IF I'M HAPPILY MARRIED AND WE PURCHASE REAL PROPERTY AFTER OUR NUPTIALS?

If you are married, happily or not, and you purchase real property prior to separation, you and your spouse own the property as one single tenancy by the entirety as that term is defined under NCGS 41-2(b).  What that means is that if one spouse passes away and the other spouse survives more than 120 hours after the deceased spouse's death, then the surviving spouse takes the property interest of the deceased spouse in addition to their own property interest.  If only the married couple is listed on the deed then the surviving spouse owns the real property himself/herself (assuming no encumbrances on the property).

*THIS BLOG POST DO NOT ESTABLISH AN ATTORNEY-CLIENT RELATIONSHIP AND IS FOR INFORMATIONAL PURPOSES ONLY.  IT IS NOT TO BE CONSIDERED LEGAL ADVICE.