What is a Free Trader Agreement and Do I Need One

As a general rule, any married person conveying or mortgaging property must be joined in the conveyance by their spouse.  There are exceptions to this rule, one of those being a free trader agreement.  

A free trader agreement is, in basic terms, a document prepared for the purposes of waiving each party’s rights as to real estate and creating a right to obtain real estate independent of the other.  This can be done in a premarital agreement, antenuptial agreement, or a separation agreement.  In the agreement, the spouses also typically agree that neither will create any obligation in the name of or against the other, nor secure or attempt to secure any credit upon or in connection with the other, or in his or her name. Each party agrees to promptly pay all debts and discharge all financial obligations which he or she may incur for himself or herself, and shall indemnify the other against any and all debts and other obligations which he or she may incur.

Most banks will not lend money without a signed and recorded free trader agreement, separation agreement, or a divorce judgment because it ensures the bank’s lien has priority over any outstanding marital interest in the event of a foreclosure due to nonpayment.   Title insurance requirements also typically require a satisfactory waiver which is contained in a recorded free trader agreement or memorandum of separation, such as:

Recording of agreement between * and * wherein each party releases all of his/her marital rights in the real property of the other.

Free Trader Agreements should be drafted in accordance with N.C.G.S. 52-10 and 39-13.4, they must be signed by both parties and notarized, and are filed with the Register of Deeds.