Although same-sex marriage is legal in North Carolina and throughout the United States, there is still a lack of clarity surrounding North Carolina’s laws as they relate to same-sex couples. Real property laws are no exception. Now that same-sex marriage is legal, these couples have the option of holding property through tenancy by the entirety. Holding a property as tenants by the entirety is a form of legal title available exclusively to married couples. Tenancy by the entirety offers a married couple the most protections by providing right of survivorship (avoiding probate), equal ownership and asset protection. North Carolina General Statute § 39-13.6 states:
§ 39-13.6 Control of real property held in tenancy by the entirety.
(a) A husband and wife shall have an equal right to the control, use, possession, rents, income, and profits of real property held by them in tenancy by the entirety. Neither spouse may bargain, sell, lease, mortgage, transfer, convey or in any manner encumber any property so held without the written joinder of the other spouse. This section shall not be construed to require the spouse's joinder where a different provision is made under G.S. 39-13, G.S. 39-13.3, G.S. 39-13.4, or G.S. 52-10.
(b) A conveyance of real property, or any interest therein, to a husband and wife vests title in them as tenants by the entirety when the conveyance is to:
(1) A named man "and wife," or
(2) A named woman "and husband," or
(3) Two named persons, whether or not identified in the conveyance as husband and wife, if at the time of conveyance they are legally married; unless a contrary intention is expressed in the conveyance.
(c) For income tax purposes, each spouse is considered to have received one-half (1/2) the income or loss from property owned by the couple as tenants by the entirety. (1981 (Reg. Sess., 1982), c. 1245, s. 1; 1983, c. 449, ss. 1, 2.).
The issue with the above statute lies with the language “husband and wife” which is a term historically understood to mean a man and a woman married to each other. The big question is: Do two individuals that are lawfully married to each other own property as tenants by the entirety if they are the same sex? For a clear answer, the question will have to be addressed through litigation (case law) or legislation.
In the meantime, closing attorneys in North Carolina are using creative language in Deeds to ensure that if tenancy by the entirety for some reason does not hold up, the same-sex couple will take property as joint tenants with right of survivorship (the next best option). Typically, attorneys will draft the Deed to state: “John Doe and spouse, John Doe as tenants by the entirety. In the event that tenants by the entirety is not recognized under North Carolina law, then as joint tenants with right of survivorship.”
Until this volatile social issue is addressed, there will continue to be ambiguity surrounding the above law in North Carolina. If you are a married same sex couple taking title, make sure your attorney knows you are legally married so they can explain your options. At Hutchens Law Firm, we go out of our way to ensure married same-sex couples understand the current law in place.
Published by Bess Harris Reynolds on August 23, 2016