Changes to Equitable Distribution Agreement Recording Law
Chris Burti, Vice President and Senior Legal Counsel

NOTE!!! Session Law 2025-25 made significant changes affecting the law regarding recording of Equitable Distribution waivers. We may no longer rely upon marital waivers included in a deed or other conveyance to effectively waive Equitable Distribution rights.

Under Section 48(a) of the Session Law N.C.G.S. Section 39-13.3 reads as rewritten:

"§ 39-13.3. Conveyances between husband and wife.

(a) A conveyance from a husband or wife to the other spouse of real property or any interest therein in real property owned by the grantor alone vests such the property or interest in the grantee. The conveyance does not waive or release any of the following rights or claims that the grantor may have acquired by marriage in the property conveyed:

(1) A right to an elective life estate under G.S. 29-30, unless the instrument of conveyance expressly waives the right, as provided in G.S. 29-30(a)(2a).

(2) A right or claim to an equitable distribution with respect to the property under G.S. 50-20. A right or claim for equitable distribution shall not be waived or released in the instrument of conveyance."

Section 48(b) G.S. 41-63 reads as rewritten:

"§ 41-63. Termination of tenancy by the entirety other than upon death of a spouse; effects of termination.

Events terminating a tenancy by the entirety other than the death of a spouse and the effects of termination include the following:

...

(4) The conveyance from one spouse to the other spouse of his or her interest in property held as tenants by the entirety. The conveyance vests the property or interest formerly held as tenants by the entirety in the other spouse. The joinder of a spouse in a conveyance made by the grantor pursuant to this subdivision is not necessary, but the conveyance is subject to the provisions of G.S. 52-10 or G.S. 52-10.1, except that an acknowledgment by the spouse of the grantor is not necessary. The conveyance does not waive or release any of the following rights or claims that the grantor may have acquired by marriage in the property conveyed:

a. A right to an elective life estate under G.S. 29-30, unless the instrument of conveyance expressly waives the right, as provided in G.S. 29-30(a)(2a). (Presumably this was intended to be G.S. 39-13.3(a)(2) - Ed.)

b. A right or claim to an equitable distribution with respect to the property under G.S. 50-20. A right or claim for equitable distribution shall not be waived or released in the instrument of conveyance."

Section 50-20, as amended by subsection (c) of this section, reads as rewritten:

"§ 50-20. Distribution by court of marital and divisible property.

...

(d) Before, during, or after marriage the parties may by written agreement, duly executed and acknowledged in accordance with G.S. 52-10 and 52-10.1, G.S. 52-10.1, or by a written agreement valid in the jurisdiction where executed, provide for distribution of the marital property or divisible property, or both, in a manner deemed by the parties to be equitable. The agreement is binding on the parties. As provided in G.S. 39-13.3(a)(2) and G.S. 41-63(4)b., the parties shall not provide for this distribution in an instrument of conveyance of real property."

N.C.G.S. Section 39-13.3(a)(1) and N.C.G.S. Section 41-63(4)(a), as enacted by this section regarding an elective life estate, apply to conveyances executed before, on, or after the effective date of this act. The remainder applies to conveyances executed on or after the effective date of this Act, October 1, 2025. The major takeaways are:

• Waivers of Equitable Distribution rights by deed are no longer effective.
• Waiver of N.C.G.S. Section 29-30 rights in a free trader deed must be explicit and not a generic wavier of marital rights or of rights of inheritance
• For a party to act as a "Free Trader" a written agreement to that effect must be recorded in the county where the real estate is located.
• Any deed conveying marital rights of a party may (should) refer to such party as a "Free Trader,"" but no deed will be effective the convey the equitable distribution rights in any case or the waiver of N.C.G.S. Section 29-30 rights unless so stated explicitly.
• Conveyances (deeds, etc.) affecting marital rights should be considered ineffective without a separate instrument such as a separation agreement, free trader agreement, pre-nuptial, post-nuptial agreement, or equitable distribution agreement also recorded in the county where the real estate is located unless drafted in strict compliance with the new statute.

When being asked to insure in reliance upon a Free-Trader deed, insurers will need to require recordation of a separate agreement explicitly waiving equitable distribution rights assuming that the Free-Trader conveyance otherwise contains adequate waivers as to NCGS 29-30

Note that with regard to inadequate NCGS 30-3 waivers insurers will need to inquire whether the Land to be insured has been conveyed by gift within the previous six months as such gifts within six months of death can be pulled back into a claim under N.C.G.S. Section 30-3.