As a general rule in North Carolina, a married individual is not required to have their join in the purchase. However, to sell or otherwise convey property owned by married individuals, both are required to join in the conveyance. Under North Carolina law, it is assumed that real property owned by a married couple is under tenancy by the entirety ownership, unless the deed that conveyed the property specifically states that a different form joint ownership is created. This acknowledgment of a spouse’s rights also extends to the context of a refinance or securing additional debt after the purchase.
What makes a tenancy by the entirety interest unique is the right of survivorship held by the spouses – upon the death of one party, the surviving spouse immediately assumes sole ownership interest in the property. Upon entry of a final decree of divorce, the tenancy by the entirety interest is immediately severed at which point the former spouses hold title to the property as tenants in common.
It is also necessary that any conveyance or mortgage clearly identifies the current marital status of the conveying party. This protects the future marketability of the title and addresses whether there is a need for a joinder of a spouse due to an attachment of a spousal right.
If property is held in the name of only one spouse, the “non-owning” spouse potentially still holds inherent rights in the property. These inherent rights include the right to an elective share in the decedent spouse’s estate, the right to elect a life estate in certain real property of the decedent spouse, equitable distribution of the property upon divorce, among others. Generally, the non-owning spouse of any individual must still join in the conveyance, or have their marital interest properly addressed and released, in order for the owning spouse to convey marketable and insurable title to the property.
These inherent marital rights may be waived by adequate premarital agreements, separation agreements, agreements during marriage, or even waivers of elective shares. In utilizing these various agreements or waivers, there are various statutory requirements and risk factors that must be considered.
If the non-owning spouse is incompetent at the time the owning spouse wishes to convey the property, the owning-spouse can convey the property with joinder of the guardian of the incompetent non-owning spouse.
If a spouse holding title to tenancy by the entirety property receives a judgment against them individually, their judgment creditor cannot attach to the tenancy by the entirety property as long as that spouse was never the sole title holder on or after entry of that judgment. Only judgments entered against both spouses together can attach to tenancy by the entirety property.
One major exception to this general rule is a federal tax lien. Federal tax liens against one spouse do attach to that spouse’s “share” of the tenancy by the entireties property.
Once a divorce severs a tenancy by the entireties interest and the spouses now hold title as tenants in common, judgment creditors of one spouse can immediately attach to that debtor-spouse’s ½ interest in the property.
As stated above, upon the death of one spouse, the surviving spouse immediately become the sole owner of the property resulting in a creditors’ judgments against the deceased spouse immediately attaching to the property.
