December 2002

A PUBLICATION OR THE TITLE COMPANY OF NORTH CAROLINA

     

DECEMBER 2002 

HUSBAND AND WIFE – THE UNIFORM PREMARITAL AGREEMENT ACT 

The statutes in G.S. 52B-1, et seq. set forth the Uniform Premarital Agreement Act, effective July 1, 1987. The Act is applicable to any premarital agreement executed on or after that date. “Premarital agreement” is defined as meaning “an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage.” G.S. 52B-2(1). 

The agreement must be in writing and must be signed by both parties. It is enforceable without consideration. G.S. 52B-3. It becomes effective upon marriage. G.S. 52B-5. Requirements for acknowledgment before a certifying officer mentioned in G.S. 52-10 apply to contracts made during marriage. Thus, premarital agreements are not subject to this requirement. However, in order to be recorded, the agreement would have to be properly acknowledged. There is no requirement that the agreement be recorded.

After marriage, a premarital agreement may be amended or revoked only by a written agreement signed by the parties. The amended agreement or the revocation is enforceable without consideration. G.S. 52B-6. It should be noted that if the spouses are still married when the amendment or revocation is executed, G.S. 52-10, pertaining to contracts and releases between spouses, would apply to the amendment or revocation. 

G.S. 52B-4(a) provides that the parties to a premarital agreement may contract with respect to: “(1) The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located; (2) The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property; (3) The disposition of property upon separation, marital dissolution, death, or the occurrence or non occurrence of any other event…(5) The making of a will, trust, or other arrangement to carry out the provisions of the agreement…” “Property,” as used in the act, is defined broadly to mean “an interest, present or future, legal or equitable, vested or contingent” in real or personal property. G.S. 52B-2(2). 

Therefore, the agreement can govern “property” acquired even after the agreement is executed. It can, for example, waive (1) rights to take under a will or by intestate succession, (2) elective rights under G.S. 29-30, (3) elective share rights under G.S. 30-3.1, et. seq. and (4) rights to equitable distribution under G.S. 50-20. (G.S. 30-3.6(b) states that a waiver is not enforceable if the surviving spouse proves that it was not executed voluntarily or there was not the required disclosure, unless the surviving spouse waived, in writing, such disclosure.) However, G.S. 52B-7 provides that for certain reasons, which do not always appear of record, such as the agreement being unconscionable when executed, the agreement will not be enforceable. While G.S. 52B-8 contains a provision somewhat protective of third parties if the agreement is unenforceable due to a void marriage, the Act contains no other provisions clearly protective of third parties if the agreement is unenforceable for other reasons. (See G.S. 52B-7 and G.S. 52B-9, for example.) Therefore, reliance upon these agreements may be hazardous and should only occur if the title insurer approves. This will be looked at on a case-by-case basis. Nevertheless, the interesting question remains whether reliance upon an agreement before its unenforceability is declared in court is legally permitted. 

G.S. 39-13.4 is entitled, “Conveyances by husband or wife under deed of separation.” It permits the recording of “a deed of separation” (which is a separation agreement), or memorandum thereof, which permits a husband or wife to convey real property, or any interest therein, without the joinder and consent of the other spouse. Such a conveyance will pass title free and clear of all rights in such property or interest therein that the other spouse might acquire solely as a result of marriage, including rights under G.S. 29-30, unless an instrument canceling the deed of separation or memorandum is properly executed and acknowledged by the husband and wife and is properly recorded. G.S. 52-10 or G.S. 52-10.1 applies to G.S. 39-13.4 instruments. It should be noted that G.S. 39-13.4 does not apply to G.S. 52B-1, et seq. premarital agreements and does not apply to an agreement between spouses entered into after marriage if the agreement is not a separation agreement. Clearly, Chapter 52B should be amended to add a definition to G.S. 52B-2 and a new G.S. 52B-9.1 as follows: 

G.S. 52B-2(3):

 

(3) “Appropriate county,” as used in G.S. 52B-9.1, means the county where the real property is located or if the real property is located in more than one county, each county where any portion of the real property is located, in order for a registration or a docketing to be effective as to real property located in that county.

 

G.S. 52B-9.1 Protection of purchasers for value, lenders for value, lessees and lien creditors. Notwithstanding any other provision of this Chapter or any other law of this state, with respect to any party entitled to protection by registration of another interest for priority purposes pursuant to the provisions of Chapter 47, such a party may rely upon a premarital agreement, or a memorandum thereof, that is properly executed by the parties, is properly acknowledged and is properly registered in the appropriate county with respect to any real property in which such party obtains an interest if (1) the registered premarital agreement, or registered memorandum thereof, sets forth the provision or provisions of the premarital agreement upon which such party is relying and (2) at the time such party’s interest becomes effective for priority purposes, (a) there has not been registered in the appropriate county a properly executed and properly acknowledged amendment or revocation of the premarital agreement eliminating the provision or provisions upon which such party is relying; (b) there has not been docketed in the Clerk of Superior Court’s office of the appropriate county a judgment in an action that eliminates or invalidates the provision or provisions of the premarital agreement upon which the party is relying and (c) there has not been docketed in the Clerk of Superior Court’s office of the appropriate county a notice of lis pendens describing an action that eventually results in a judgment referred to in (b) above.

 

Registering or docketing includes proper indexing and cross-indexing required by other provisions of the law in order to constitute constructive notice of record to such a party. 

The Real Property Law Section and the North Carolina Land Title Association should work together to have provisions similar to those set forth above enacted. No one quarrels with the fact that premarital agreements should be revocable, but innocent parties should be entitled to rely upon the public records.   

RESTRICTIVE COVENANTS – USING A LOT FOR A STREET OR ACCESS WAY – A NEW CASE 

In our August, 2001 newsletter, we issued an article entitled, “RESTRICTIVE COVENANTS—USING A SUBDIVISION LOT FOR A STREET OR ACCESS WAY.”  In Belverd v. Mileses, __N.C.App.__, 568 S.E.2d 874 (2002), the Court of Appeals revisited the issue. 

In the case, a developer wanted to use a lot in the restricted subdivision for a through street to an adjacent subdivision. The restrictive covenants provided, in relevant part, as follows: 

1. No lot shall be used for other than residential purposes. No residential dwelling shall be erected, placed or permitted to remain on any lot other than one single family dwelling[.]

 

13. No lot shall be used for the purpose of constructing a public street or to provide access to and from the properties located in the subdivision of Partridge Bluff, Section One, except with the written consent and permission of Allan D. Mileses and wife, Wanda M. Mileses, their heirs and assigns.

 

The plaintiffs contended that paragraph 1 controlled, that paragraph 13 merely added an extra level of protection and that as a result, using the restricted lot as noted above was prohibited and should be enjoined. 

The North Carolina Court of Appeals disagreed and said that the plaintiffs’ interpretation would be “contrary to the applicable rules of interpretation.” The North Carolina Court of Appeals held that provision 13 was meant to modify the “general prohibition” of provision 1 “by providing that lots could be used for specific non-residential purpose of constructing a public street upon obtaining consent from the Mileses [defendants] in writing.” The Court also stated that when a situation such as this arises and the restriction of the free use of the property is “in doubt, such covenants are to be construed in favor of the unrestricted use of property.” Long v. Branham, 271 N.C. 264, 268, 156 S.E.2d 235, 239 (1967). 

Further, the plaintiffs had moved to join all of the lot owners, relying on Karner v. Flowers, 351 N.C. 433, 527 S.E.2d 40 (2000), discussed in our June, 2000 newsletter. However, since the case at issue did not involve a determination that the restrictions were void due to changed circumstances, the plaintiffs’ reliance on Karner was misplaced. 

Reviewing these matters for insurability is one of the things that The Title Company of North Carolina does. Give us a call when you have these problems.   

EASEMENTS – ACCESS 

In Bee Tree Missionary Baptist Church v. McNeil, __N.C.App.__, 570 S.E2d 781 (2002), it was held that a judgment in a prior action upholding the validity of an access easement (to a public road) over the plaintiff—landowner’s property collaterally estopped the plaintiff-landowner from challenging the easement and the easement was not void for vagueness. Also, the Court of Appeals cited the case of  Shingleton v. State, 260 N.C. 451, 454, 133 S.E.2d 183, 185 (1963), where the Court quoted Shingleton: “However, ‘an easement appurtenant is incident to an estate’ and passes with transfer of that estate.” The Court continued, “In the absence of evidence to the contrary, an easement that is a ‘useful adjunct of land owned by the grantee of the easement, will be declared an ‘easement appurtenant,’ and not ‘in gross,’…’”  

PUBLIC HOLIDAYS – AFFECT ON TIME LIMITATIONS 

In re County Lake Enterprises, Inc. ______ B.R. _____ (E.D.N.C. 2002), is a reminder about the affect of the last day of a statutory time period falling on a public holiday.  The case dealt with a power of sale foreclosure.  The tenth day of the upset bid period was March 25, Greek Independence Day, a public holiday specified in G.S. 103-4(a).  G.S. 45-21.27(a) provides that if the tenth day shall fall upon a Sunday or legal holiday or upon a day on which the clerk’s office is not open for business, the deposit may be made and notice of upset bid filed on the following day.  Whether the clerk’s office is open or closed on public holidays is irrelevant, the court held.  That is because the statute makes it clear that the upset bid period may not end on a legal public holiday.  Because March 25 was such a holiday, the upset bid period expired at the normal close of business on March 26, by which time the debtor filed its bankruptcy petition on—you guessed it—March 25, 2002, Greek Independence Day!  Therefore, the property was subject to the automatic stay, the debtor still had rights in the property and the property was still part of the bankrupt’s estate. 

The holidays are set out in G.S. 103-4(a) as follows:  (1)  New Year’s Day, January 1.  (1a)  Martin Luther King, Jr.’s Birthday, the third Monday in January.  (2) Robert E. Lee’s Birthday, January 19.  (3) Washington’s Birthday, the third Monday in February.  (3a)  Greek Independence Day, March 25.  (4) Anniversary of signing of Halifax Resolves, April 12. (5) Confederate Memorial Day, May 10.  (6) Anniversary of Mecklenburg Declaration of Independence, May 20.  (7) Memorial Day, the last Monday in May.  (8) Good Friday.  (9) Independence Day, July 4. (10) Labor Day, the first Monday in September. (11) Columbus Day, the second Monday in October. (11a) Yom Kippur. (12) Veterans Day, November 11. (13) Tuesday after the first Monday in November in years in which a general election is to be held. (14) Thanksgiving Day, the fourth Thursday in November. (15) Christmas Day, December 25. 

G.S. 103-4(b) provides as follows:  “Whenever any public holiday shall fall upon Sunday, the Monday following shall be a public holiday.” 

Additionally, the following statutes should be kept in mind: 

§1-593.  How computed.

 

The time within which an act is to be done, as provided by law, shall be computed in the manner prescribed by Rule 6(a) of the Rules of Civil Procedure.

 

§1-594.  Computation in publication.

 

Except as otherwise expressly provided, the time for publication of legal notices shall be computed in the manner prescribed by Rule 6 of the North Carolina Rules of Civil Procedure.  (Emphasis added.) 

Note that G.S. 1-593 and G.S. 1-594 do not appear to limit Rule 6 computations to civil actions.  Under Rule 6(a), you do not count the day of the act, event, default or publication.  The last day of the period is included, unless it is a Saturday, Sunday, or a legal holiday, in which event the period runs until the end of the next day which is not a Saturday, Sunday or legal holiday.  When the period of time prescribed or allowed is less than seven days, intermediate Saturdays, Sundays and holidays are excluded in the computation.  A half holiday shall not be counted as a holiday.  G.S. 1-593 should be kept in mind when computing the 180 day mechanics’ lien enforcement period in G.S. 44A-13 which is computed from the date of last furnishing by the claimant. 

BILL PITTMAN 

Bill Pittman, formerly of Fidelity National, has joined our Raleigh Office as Vice President and Claims Counsel. Bill is a veteran with many years of experience in the title industry. We are delighted to have the benefit of this experience here at The Title Company of North Carolina.

Back to Top