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Issue  268
Published:  12/1/2020

2020 Real Property Legislation Part 3 - Elective Share
Chris Burti, Vice President and Senior Legal Council

As we noted in an earlier article, Session Law 2020-23 includes a complete recodification and rewrite of North Carolina's partition statute, effective October 1, 2020 N.C.G.S. the Session law also included PART IV entitled: TECHNICAL, CONFORMING, AND MODERNIZING AMENDMENTS TO THE ELECTIVE LIFE ESTATE STATUTES. Many of the changes are merely semantic or grammatical, bot a couple are significant to real property practitioners.

The first significant changes occur with the additions to the exception to the right to make an election contained in N.C.G.S. Section 29-30(a).  (The black lined version follows)

"The surviving spouse is not entitled to take a life estate in any of the following circumstances:

(1) Has The surviving spouse has waived the surviving spouse's rights by joining with the other spouse in a conveyance thereof, or of the real estate.
(1a) The surviving spouse has waived the right to take a life estate in lieu of an intestate or elective share by an express written waiver.
(2)Has released or quitclaimed The  surviving  spouse has waived, released, or conveyed the surviving spouse's interest therein in the real estate in accordance with G.S. 52-10, or G.S.52-10.
(3) Was The surviving spouse was not required by law to join in a conveyance thereof of the real estate in order to bar the elective life estate, or estate.
(3a) The surviving spouse has executed a written declaration permitting the deceased spouse to convey or encumber the real estate without the consent or joinder of the surviving spouse.
(3b) The real estate in which the deceased spouse had an interest was either apportioned to or sold to another person in a partition proceeding initiated before the deceased spouse's death.
(4) Is The surviving spouse is otherwise not legally entitled to the election provided in this section.

N.C.G.S. Section 29-30(a)(1a) explicitly permits simple written general waiver of the marital right which is broader than the language of N.C.G.S. Section 39-7. This would seem to explicitly authorize what are commonly called "free trader" agreements which have been generally recognized by the courts and practitioners.

The new N.C.G.S. Section 29-30(a)(3a) is similar in that it explicitly authorizes free trader agreements, but arguably seem grammatically to apply to specific parcels or tracts of land. It certainly encompasses language commonly used in separation, pre-nuptial and free trader agreements. As such it would seem to create a clear legislative sanction to the use of the language.

The addition of N.C.G.S. Section 29-30(a)(3b) supports the provision of the new Partition Act (see: Statewide Title Newsletter and Legal Memorandum, Issue 265, Article 417, Published:  9/1/2020) that obviates the need for joinder of a non-titled spouse in a partition proceeding.

The second major change occurs in N.C.G.S. Section 29-30(c) which added a requirement for the  "recording  of  a  notice  indicating  the  county  and  file  number  of  the  clerk's  filing  with  the register of deeds in every county where real property to be claimed under the filing is located." This requirement will provide notice to real property practitioners examining title while providing protection by imposing a notice recording requirement for those instances where notice is not filed properly.

The last major change that we will discuss occurs in N.C.G.S. Section 29-30(G) which excludes certain secured debts from the operation of the statute. N.C.G.S. Section 29-30(g)(2) and N.C.G.S. Section 29-30(g)(5) together clarify the issue of the exclusion from the requirements of the statute for purchase money deeds of trust by explicitly stating that the exception applies to deeds of trust securing loans by sellers or third party lenders from the requirement of spousal joinder. The subsection reads:

(g)Neither the household furnishings in the dwelling house nor the life estates taken by election under this section are subject to the payment of debts due from the estate of the deceased spouse, except those debts secured by such property as follows:

(1) By a mortgage or deed of trust in which the surviving spouse has waived the surviving  spouse's  rights  by  joining  with  the  other  spouse  in  the  making thereof.
(2)By a purchase money mortgage or deed of trust given by the deceased spouse to secure a loan, the proceeds of which were used to pay all or a portion of the purchase price of the encumbered real property, regardless of whether the secured party is the seller of the real property or a third-party lender , or by conditional sales contract of personal property in which title is retained by the vendor, made prior to or during the marriage.
(3)By a mortgage or deed of trust made prior to the marriage.
(4) By a mortgage or deed of trust constituting a lien on the property at the time of its acquisition by the deceased spouse either before or during the marriage.
(5) By a mortgage or deed of trust on property with respect to which the elective life estate provided for in this section does not apply as provided in subsection (a) of this section.

These amendments will certainly reduce confusion and debate, allowing for practitioners to close transactions with grater certainty.



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