North Carolina Deed Forms for Real Estate Transfers
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What Types of Deeds Are Recognized in North Carolina?
A property owner formally transfers North Carolina real estate to a new owner by signing a deed and recording it in the register of deeds office.1 North Carolina law recognizes several types of deeds an owner can use to transfer property during life. Each type of deed is defined by the warranty of title (if any) it provides to the new owner.
Warranty of title is the transferor’s guarantee that a deed transfers valid title with no undisclosed liens or similar problems. North Carolina’s four main deed types—listed from the weakest warranty to the strongest—are quitclaim deeds, non-warranty deeds, special warranty deeds, and general warranty deeds.
North Carolina Quitclaim Deed Form
A North Carolina quitclaim deed transfers with no warranty whatever rights or interest the person signing the deed (the grantor) holds in the real estate. The person receiving the interest (the grantee) gets whatever interest the grantor can legally transfer and nothing more or less.
A quitclaim deed places all risk of title problems on the new owner. If the transferor does not actually have an interest in the property, the new owner cannot sue for breach of warranty. Any liens, mortgages, HOA assessments, property taxes, or other title problems that reduce the property’s value are the new owner’s responsibility.
Quitclaim deeds are typically used for transfers involving no consideration—or value provided in exchange for the property. An owner might use a quitclaim deed to add a spouse to a property’s title or to transfer property to a revocable living trust.
North Carolina Non-Warranty Deed Form
A North Carolina non-warranty deed transfers real estate with no warranty of title. The current owner gives the property to the new owner but makes no promises about the property’s title. The new owner receives the property’s title if the current owner in fact owns it.
Like quitclaim deeds, non-warranty deeds place all risk of title issues with the new owner. Owners typically use non-warranty deeds to transfer property to an entity the owner controls—such as a trust or LLC. Non-warranty deeds are also common in estate planning. For example, a non-warranty deed might reserve a life estate or add a related co-owner to create a right of survivorship.
Attorney Practice Note: North Carolina quitclaim deeds and non-warranty deeds function very similarly and are often used synonymously. Both deeds give the transferee whatever title the transferor holds with no guarantee of the title’s status or validity. The legal distinction is that a quitclaim deed transfers whatever rights or interest the current owner holds, while a non-warranty deed is intended to transfer the property itself. There is little practical difference—though title insurers sometimes prefer non-warranty deeds. It’s a good idea to review existing title insurance policies before recording a deed to determine if the deed will have any effect on coverage already in place.
Special Warranty Deeds
A North Carolina special warranty deed transfers real estate with partial or limited warranty of title. The current owner guarantees a good title with no undisclosed title problems. But the warranty is limited because it only applies to issues that arose while the current owner owned the property. In other words, the limited warranty covers title problems that resulted from something the current owner did or failed to do. Any issues that arose before the current owner acquired the property are outside of the limited warranty’s scope.
Special warranty deeds—also called limited warranty deeds—split the title-related risk between the current owner and the new owner. The new owner can sue the prior owner for breach of warranty to recover losses caused by title problems that arose while the current owner held title. The owner cannot bring a breach-of-warranty lawsuit for issues that pre-date the current owner’s ownership period.
North Carolina special warranty deeds are most often used for negotiated sales of commercial real estate and transfers between business entities.
General Warranty Deeds
A North Carolina general warranty deed—sometimes shortened to warranty deed—gives the strongest warranty of title among North Carolina deeds. A general warranty deed’s guarantee comes in the form of several legal promises—called covenants of title—made by the current owner who signs the deed. A typical North Carolina warranty deed includes 4 covenants from the current owner:
- The current owner holds complete title to the property.
- The current owner has the legal power to transfer the title.
- There are no undisclosed liens, assessments, boundary disputes, chain-of-title issues, or other encumbrances affecting the property’s title.
- The current owner agrees to take responsibility for title problems and defend the title against legal claims brought by third parties.2
An owner who signs a warranty deed agrees to bear the risk of all title problems that are not expressly excluded from the warranty. A buyer who takes title under a general warranty deed has a legal right to sue the seller for breach of warranty if a title problem arises. A buyer who receives an invalid title, for example, can recover the purchase price from the seller.3
Sellers typically use North Carolina general warranty deeds to transfer residential real estate to purchasers for fair market value.
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What Types of Estate Planning Deeds Are Used in North Carolina?
Deeds that arrange for transfer of property at the owner’s death can be a valuable estate-planning tool. North Carolina estate planning deeds let property avoid probate and are named for their defining features—not their warranties. North Carolina estate-planning deeds can (but do not have to) transfer real estate with warranty of title.
North Carolina Transfer on Death Deed
North Carolina law does not recognize transfer-on-death (TOD) deeds—which (where recognized) allow property to pass to a named beneficiary effective on the owner’s death. North Carolina allows transfer-on-death or similar payable-on-death designations for some other assets like bank accounts and securities but not real estate.4
North Carolina Life Estate Deed Form
A North Carolina life estate deed creates two interests in the same property:
- Life estate. The life estate is a present right to own the property until the interest holder (the life tenant) dies.
- Remainder. The remainder is a future interest that gives the holder (the remainderman or remainder beneficiary) the right to take title to the property after the life tenant’s death.5
A property owner who creates a life estate as part of an estate plan typically retains or reserves the life estate to him or herself and gives the remainder to a family member or other heir. The owner holds title and possesses the property for life. When the owner dies, the remainderman receives complete title with no need for probate.
A disadvantage of traditional life estate deeds is that an owner who becomes a life tenant loses some power over the property. A life tenant has possession of the property but cannot transfer complete ownership without the remainderman’s consent. This is because the remainder is a vested future interest after the deed is recorded.
North Carolina Lady Bird Deed Form
North Carolina is one of only a handful of states that recognize a modified version of life estate deeds that lets the owner retain full control over the property. The variation goes by several names:
- Life estate deed with powers;
- Ladybird deed (or Lady Bird deed);
- Enhanced life estate deed.
The first two names are the most common in North Carolina.
A North Carolina ladybird deed does everything a regular ladybird deed does but also adds another key characteristic. The property owner reserves along with the life estate a power of appointment—or power of disposition—over the property.6 The retained power means the life tenant keeps the right to name a different remainder beneficiary or transfer complete title to someone else without the current remainder beneficiary’s consent. If the life tenant never uses the reserved power, the property transfers at the owner’s death like a regular life estate deed.7
Along with the retained control, Ladybird deeds can also offer state property tax and federal gift and estate tax advantages—depending on the owner’s situation.
North Carolina Survivorship Deed Form
A survivorship deed creates a right of survivorship in property by naming two or more co-owners as joint tenants. A surviving joint tenant takes complete title upon the other co-owner’s death—which lets the property bypass probate. Joint tenants must own equal shares in most states. However, North Carolina is an exception and allows unequal shares.8
Because North Carolina allows unequal shares, a property owner can record a survivorship deed giving a 99 percent interest to the owner and a 1 percent interest to the owner’s child or other heir. This approach lets the owner continue to control the property while still allowing it to avoid probate.
What Are the Ways in Which Multiple Owners Can Jointly Own North Carolina Real Estate?
North Carolina recognizes the three principal forms of co-ownership available under common law: tenancy in common, joint tenancy, and tenancy by the entirety.
Tenancy in Common
Tenants in common own distinct interests that are usually described as a fraction or percentage of the property. For example, three tenants in common might each have a one-third interest—though tenants in common can also own unequal shares. Each co-owner can transfer their interests separately during life. When a co-owner dies, his or her interest goes through probate.
A deed transferring North Carolina real estate to two or more persons creates a tenancy in common unless the deed declares another co-ownership form or the new owners are married to each other.9
The key feature of a North Carolina joint tenancy is the right of survivorship—which means that a deceased co-owner’s interest automatically vests in the surviving co-owner.10 A joint tenant’s interest never goes through probate due to the right of survivorship.
A deed must expressly declare an intent to create a joint tenancy. North Carolina law assumes that joint tenants have equal shares but allows deeds to specify unequal joint tenancy interests.11 Joint tenants in North Carolina can transfer their interests separately. But if a joint tenant transfers an interest, the joint tenancy is automatically destroyed and becomes a tenancy in common.12
Tenancy by the Entirety
Tenancy by the entirety—also called tenancy in the entirety—has a right of survivorship like a joint tenancy but is only possible for two married co-owners.13 A deed that transfers North Carolina real estate to spouses during their marriage creates a tenancy by the entirety unless it expressly designates a different co-ownership form.14 North Carolina assumes a deed creates a tenancy by the entirety if it transfers real estate to a named individual “and wife,” “and husband,” or “and spouse.”
The other differences between a joint tenancy and tenancy by the entirety are that:
- Tenancy by the entirety requires equal shares and equal right to possess and control the property.15
- Tenants by the entirety cannot transfer or mortgage the property without both spouses’ consent.16
- Property held by tenants in the entirety receives heightened protection against creditors.17
If co-owner spouses divorce, a tenancy by the entirety ceases and instead becomes a tenancy in common.18
Real Estate Ownership Through Trusts
Another option for potential co-owners of North Carolina real estate is to hold title through a revocable living trust. North Carolina trust law lets the same two or more individuals to be a trust’s co-trustees and co-beneficiaries.19 The trust lets them control and continue to benefit from the property while the trust itself holds legal title.20 A living trust also promotes privacy by allowing property to avoid probate.
What Are the Rules for Spousal Ownership of North Carolina Real Estate?
North Carolina has rules affecting ownership and transfer of real estate by spouses. Owners who are married or who will be getting married should consider spousal property rights when creating deeds and estate plans.
North Carolina Dower and Curtsey
The traditional common law rights of dower and curtesy gave spouses rights in each other’s assets. North Carolina has long-since abolished dower and curtsey with one important exception.21 North Carolina law gives a surviving spouse a waivable right to claim a life estate in one-third of all real estate the deceased spouse owned during the marriage.22 A surviving spouse’s life estate is an alternative to the spouse’s intestate share or elective share.
Title insurance companies and lawyers are wary of the potential for future title problems that a spouse’s life estate rights can cause. It is therefore usually a good idea for both spouses to sign a deed that transfers North Carolina real estate that a married person owns individually. A nonowner spouse’s signature waives the spouse’s rights in the transferred property.23
Attorney Practice Note: North Carolina law allows an owner spouse to sign a deed as agent under power of attorney (POA) for a non-owner spouse to waive the non-owner spouse’s rights in transferred real estate.24 The POA form must include the non-owner spouse’s notarized signature and expressly authorize the owner spouse to waive the non-owner spouse’s real estate rights.25 The POA form should be recorded in the county land records along with the deed.
One or both spouses can also waive their life estate interests by signing an express written waiver in a prenuptial agreement or other agreement signed by the spouses.26 However, a title company may still require both spouses’ signatures on the deed so that the waiver is recorded in the county land records.
North Carolina law does not strictly require both spouses to sign a deed transferring a homestead owned by one spouse. However, a homestead will likely be part of the property to which a surviving spouse’s life estate interest attaches, as discussed above. So, signing by both spouses is generally considered the best practice.
Spousal Intestate Share
A surviving spouse’s intestate share is the portion of the estate the surviving spouse receives when the deceased spouse has no will. The spousal elective share in North Carolina depends on whether the deceased spouse has surviving parents or children.27 Surviving grandchildren descended from a deceased child are treated like surviving children for purposes of North Carolina’s spousal intestate share rules.
A surviving spouse’s elective share in a deceased spouse’s North Carolina real estate is as follows:
- The surviving spouse receives all of the real estate if the deceased spouse has no surviving children or parents.
- The surviving spouse receives one-half if the deceased spouse has no surviving children and has a surviving parent.
- The surviving spouse receives one-half if the deceased spouse has only one surviving child.
- The surviving spouse receives one-third if the deceased spouse has 2 or more surviving children.28
Spousal Elective Share
North Carolina’s elective share law is designed to protect married individuals from disinheritance by their spouses. The spousal elective share is a share of a deceased spouse’s estate that a surviving spouse can claim instead of the share provided under the deceased spouse’s will. One or both spouses can waive their right to an elective share by signing a written waiver.29
A surviving spouse’s elective share is between 15 and 50 percent of the value of the deceased spouse’s net assets.30 The percentage depends on the length of the marriage.
A deceased spouse’s net assets include probate assets and some non-probate assets—like real estate that is held in a revocable trust or jointly owned with a right of survivorship—minus funeral and administrative expenses and estate liabilities.31 The value of other assets transferred to the surviving spouse—through a trust, POD designation, or life insurance proceeds, for example—is subtracted from the elective share amount actually distributed from the estate.32
Where Are Deeds Filed in North Carolina?
Each North Carolina county’s register of deeds maintains the county’s real estate records. A person who wishes to record a deed presents the deed to the register of deeds for the county where the property is located.33 Recording a deed—also called registering a deed—provides constructive notice of the transfer to third parties.34
Does North Carolina Allow Electronic Recording?
North Carolina law authorizes electronic recording (e-recording) of deeds in counties that have implemented an e-recording procedure.35 A deed in electronic form with a legally sufficient “electronic signature” complies with laws that require deeds to be signed, original documents.36 Counties that offer e-recording must still accept deeds in paper form.37
What Is the Cost to File a North Carolina Deed?
The register of deeds office charges $26.00 to record a deed up to 15 pages.38 Deeds over 15 pages cost an extra $4.00 per page for each page over 15. A deed with more than 20 names to be indexed requires $2.00 extra for each name over 20.39
Does North Carolina Charge a Transfer Tax for Real Estate Transfers?
North Carolina charges an excise tax for transfers of North Carolina real estate.40 The excise tax—which is like transfer taxes in other states—is assessed on deeds and other instruments that transfer interests in real estate.41
The excise tax rate is $1.00 for each $500.00 of the consideration for the transfer.42 The person transferring property must pay the tax to the register of deeds before the deed is recorded.43 The person who requests recording reports the correct excise tax amount to the register of deeds—typically by listing the tax amount at the top of the deed’s first page.44
Attorney Practice Note: Some North Carolina counties charge a local transfer tax in addition to the state excise tax. The local tax is assessed at 1.00 percent of the sale price or property value. Some counties require payment of local transfer tax to the county tax office before submitting the deed to the register of deeds. The seven counties with local transfer tax are Camden, Chowan, Currituck, Dare, Pasquotank, Perquimans, and Washington. County transfer tax exemptions mostly match state excise tax exemptions.
Which Deeds are Exempt from North Carolina’s Transfer Tax?
North Carolina’s excise tax on real estate transfers does not apply to transfers that occur:
- By operation of law;
- Under a lease for a term of years;
- Through or under the terms of a will;
- Due to inheritance from an owner who had to will;
- By gift;
- For no consideration paid or to be paid by the transferee; or
- By an instrument securing indebtedness such as a deed of trust.45
Does North Carolina Require Any Additional Forms When Recording a Deed?
North Carolina does not require a transfer tax return or other additional forms when filing a deed with the register of deeds. Some counties with local transfer tax publish a standard affidavit of consideration or value that is required for non-exempt deeds. The form gives the county tax office the information it needs to compute the tax.
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- See New Home Building Supply, Inc. v. Nations, 131 S.E.2d 425 (N.C. 1963).
- Ram of Eastern N.C., LLC v. Weyerhaeuser Real Est. Development, No. 4:09-CV-20-D (E.D.N.C. Aug. 23, 2011).
- Pridgen v. Long, 98 S.E. 451 (N.C. 1919).
- N.C.G.S. §§ 41-41; 53C-6-7.
- N.C.G.S. § 39-6.3(a).
- See Howell v. Alexander, 165 S.E.2d 256 (N.C. Ct. App. 1969).
- See Schaeffer v. Haseltine, 46 S.E.2d 463 (N.C. 1948).
- See N.C.G.S. § 41-72(a).
- N.C.G.S. § 41-71(a).
- N.C.G.S. § 41-71(b).
- N.C.G.S. § 41-72(a).
- N.C.G.S. § 41-73.
- N.C.G.S. § 41-64.
- N.C.G.S. § 41-56(a).
- N.C.G.S. § 41-58(a).
- N.C.G.S. § 41-58(b).
- N.C.G.S. § 41-60.
- N.C.G.S. § 41-63(5).
- See N.C.G.S. §§ 36C-4-401; 36C-4-402.
- N.C.G.S. § 39-6.7(a).
- N.C.G.S. § 29-4.
- N.C.G.S. § 29-30(a).
- See N.C.G.S. § 29-30(a)(1).
- N.C.G.S. § 39-12.
- N.C.G.S. §§ 32C-1-105; 32C-2-201(a)(1).
- See N.C.G.S. § 29-30(a)(2).
- N.C.G.S. § 29-14(a).
- N.C.G.S. §§ 29-14(a)(1)-(4).
- N.C.G.S. § 30-3.6.
- N.C.G.S. § 30-3.1.
- N.C.G.S. §§ 30-3.2(1), (3f), and (4).
- N.C.G.S. § 30-3.2(3c).
- N.C.G.S. § 47-20.1.
- N.C.G.S. §§ 47-20(a); 47-18.
- See N.C.G.S. §§ 47-16.1, et. seq.
- N.C.G.S. §§ 47-16.2(1)-(3); 47-16.3.
- N.C.G.S. § 47-16.4(b)(4).
- N.C.G.S. § 161-10(a)(1).
- N.C.G.S. § 161-10(a)(1).
- N.C.G.S. § 105-228.28.
- N.C.G.S. § 105-228.30(a).
- N.C.G.S. § 105-228.30(a).
- N.C.G.S. § 105-228.30(a).
- N.C.G.S. § 105-228.32.
- N.C.G.S. §§ 105-228.29(1)-(8).