July 2000

A PUBLICATION OR THE TITLE COMPANY OF NORTH CAROLINA

     

ANTI-LAPSE STATUTE

In an earlier newsletter, we pointed out, without much discussion, the fact that G.S. 31-42, entitled "Failure of devises by lapse or otherwise; renunciation," had been substantially revised effective January 1, 2000 and was made applicable to estates of decedents dying on or after that date. We would like to take this opportunity to discuss this statute in more detail. 

G.S. 31-42(a) now provides that unless the will indicates a contrary intent, if a devisee predeceases the testator, whether before or after the execution of the will, and if the devisee is a grandparent of or a descendant of a grandparent of the testator, then the issue of the predeceased devisee shall take in place of the deceased devisee. The devisee's issue shall take the deceased devisee's share in the same manner that the issue would take as heirs of the deceased devisee under the intestacy provisions in effect at the time of the testator's death. The provisions of this section apply whether the devise is to an individual, to a class, or is a residuary devise. In the case of the class devise, the issue shall take whatever share the deceased devisee would have taken had the devisee survived the testator.

G.S. 31-42(b) was amended to provide that unless the will indicates a contrary intent, if the provisions or G.S. 31-42(a) do not apply to a devise to a devisee who predeceases the testator, or if a devise otherwise rails, the property shall pass to the residuary devisee or devisees in proportion to their share or the residue. If the devise is a residuary devise, it shall augment the shares or the other residuary devisees, including the shares or any substitute takers under G.S. 31-42(a). If there are no residuary devisees, then the property shall pass by intestacy.

G.S. 31-42(d) states that "devisee" means any person entitled to take real or personal property under the testator's will. G.S. 31-42(c) provides that renunciation of a devise is governed by Chapter 31B.

Consider the following example: T devises land to N, his niece. N is the daughter of B, the brother of T's wife. N dies before T and leaves children X and Y. T, a widower, dies survived by his children C and D. Since N is not a descendant of a grandparent of T, X and Y do not take N's share under G.S. 31-42(a). N's share would pass to the residuary devisee or devisees, if any, under G.S. 31-42(b). If there are no residuary devisees, N's share would pass by intestacy to C and D under G.S. 31-42(b).

In the above example, would it make a difference if T died before January 1, 2000? Former G.S. 31-42, applicable since 1987, would apply. Former G.S. 31-42(8) provides that unless a contrary intent is indicated by the wi1l, where a devise or legacy of any interest in property is given to a person as an individual or as a member of a class and the person dies survived by qualified issue before the testator dies, then the qualified issue of such deceased person that survive the testator shall represent the deceased person, and the entire interest that the deceased person would have taken had he survived the testator shall pass by substitution to his qualified issue. G.S. 31-42(b) states that "the term 'qualified issue' as used in subsection (a) means issue of the deceased person who would have been an heir of the testator under the provisions of the Intestate Succession Act had there been no will." More than one practicing attorney has taken the position that "qualified issue" means someone who actually takes under the Intestate Succession Act in the circumstances at hand. In other words, X and Y would not be "qualified issue" because of the existence of C and D.

These attorneys believe that "qualified issue" does not mean someone who is listed as a possible taker, under certain hypothetical circumstances, under the Intestate Succession Act. We agree.

Consider another example: T wills property to GD, the child of T's daughter, D. GD predeceases T. T is survived by D and he is also survived by GD's daughter, GGD. T dies in 1995. It has been argued that it is unfair for GGD not to be able to take GD's share merely because D survived T. However, this is the result under former G.S. 31-42. However in this example, if T died on or after January 1, 2000, we believe that new G.S. 31-42(a) would allow GGD to take. This leads to the conclusion that there were probably several good reasons, if not cases, that resulted in the current version of G.S. 31-42. 

The Title Company of North Carolina can help you with your "anti-lapse" problems - or your "lapse problems"!

MORE ON THE SCRIVENER'S ERROR STATUTE AND RELATED ISSUES 

In a prior issue of our newsletter, we discussed G.S. 47-36.1, entitled "Correction of errors in recorded instruments," affectionately referred to as the "scrivener's error statute." The statute allows correction of "obvious typographical or other minor" errors. (Emphasis added.) The parties who signed the instrument or the attorney who drafted it can initial the correction and sign the statement of explanation. While we discussed all of that, and more, we did not discuss two cases involving the statute. 

Green v. Crane, 96 N.C. App. 654, 386 S.E. 2d 757 (1990), should be noted. It deals with G.S. 47-36.1 and other interesting issues. We will use "P" for the plaintiff and "D" for the defendant. P bought land from D. P sued D to enforce D's contractual agreement to restrict the balance of D's land for the benefit of P. This resulted in a consent judgment whereby D agreed to restrict the property. P filed a motion in the cause against D to enforce the consent judgment. 

P argued that the recorded documents were executed by the trustee under the deed of trust and did not effectively restrict the use of the property. P asserted that there was no written authority for the trustee to impose restrictions on the property encumbered by the deed of trust. Additionally; P argued that the "Joinder Agreement" as originally recorded did not include a six-acre tract in the legal description of the property; the six-acre tract was the subject of the original complaint. Although the joinder agreement was re-recorded and the property description amended to contain the six-acre tract, P argued that the re-recording was ineffective because the mortgagee bank (holder of the note) did not join in its execution. P also asserted that D cannot declare restrictive covenants, which will run with the land unless there is a delineation of dominant and servient tenements. Finally, P argued that the legal description of the property contained in the recorded restrictive covenants is ambiguous and therefore ineffective to restrict the property.

Citing Riddick v. Davis, 220 N.C. 120, 16 S.E. 2d 662 (1941), the court held that since a deed or trust passed legal title to the trustee, the trustee had authority to execute the joinder agreement.  Jordan v. Crew, 125 N.C. App. 712, 482 S.E. 2d 735 ( 1997), cert. den., 346 N.C. 279, 487 S.E. 2d 548 (1997), should be noted. It is an attorney malpractice case. The attorney drafted the deeds on September 16, 1980. The legal descriptions were in error in a way that created a claim by a third party. On February 8, 1995, the plaintiffs sued the attorney for malpractice. The trial court dismissed the case due to the statute of limitations in G.S. 1-15. The issue was, was the drafting of the deeds in 1980 or the alleged failure and refusal to correct the error in 1992 the "last act" for purposes of G.S. 1-15. The court held that the last act was the attorney's delivery of the negligently drafted deed, citing McGahren v. Saenger, 118 N.C. App. 649, 456 S.E. 2d 852, disc. rev. den. and app. dismissed, 340 N.C. 568, 460 S.E. 2d 318 (1995). Absent a continuing duty imposed by the contractual relationship or the nature of the services, the attorney has no continuing duty or relationship to the client. Hargett v. Holland, 337 N.C. 651, 447 S.E. 2d 784 (1994). In Jordan, the court found no continuing duty under any theory, including a duty to correct the error because of G.S. 47-36.1. 

RECORDED PLATS -"OPEN SPACES"

Harry v. Crescent Resources, Inc., 523 N.C. App. 118 (1999), deals with "open spaces" shown on a recorded plat. The plat in question showed five numbered lots and four small, unnumbered, irregularly shaped and undesignated "remnants" of .25 of an acre to .43 of an acre in size. The remnants were not designated for any specific purpose such as streets, parks, playgrounds or beaches. The court stated that the fact that the remnants were depicted on the plat is not sufficient to demonstrate that plaintiffs were entitled to a negative easement appurtenant or equitable servitude to keep the open spaces remnants that could not be built upon. The court stated that there must be something more, citing and distinguishing other cases.

ACTS BARRING RIGHTS OF SPOUSE 

G.S. 31A-l sets forth acts barring certain rights of a spouse. G.S. 31A-l(a)(1) through (5) state that the following persons lose rights specified in G.S. 31A-l(b): a spouse (1) from whom or by whom an absolute divorce or marriage annulment has been obtained or from whom a divorce from bed and board bas been obtained; or (2) who voluntarily separates from the other spouse and lives in adultery and such has not been condoned; or (3) who willfully and without just cause abandons and refuses to live with the other spouse and is not living with the other spouse at the time of such spouse's death; or (4) who obtains a divorce the validity of which is not recognized under the laws of this State; or (5) who knowingly contracts a bigamous marriage.

G.S. 31A-1(b) lists the rights lost, the most interesting including:  (1)     all rights or intestate succession in the estate of the other spouse; (2)     all right to claim or succeed to a homestead in the real property of the other spouse; (3)     all right to dissent from the will of the other spouse and take either the intestate share provided or the life interest in lieu thereof; and ( 4) any rights or interests in the property of the other spouse which by a settlement before or after marriage were settled upon the offending spouse solely in consideration of the marriage.

The third item listed in the preceding paragraph refers to rights under G.S. 29-30. G.S. 29- 30 sets forth marital rights that the surviving spouse can elect if the owner spouse conveys real property without joinder of the non-owner spouse. 

G.S. 31A-1(d) provides that the spouse not at fault may sell or convey his or her real property without the joinder of the other spouse, and bar the other spouse of all right, title and interest therein in the following instances: (1) during the continuance of a separation arising from a divorce from bed and board as specified in G.S. 31A-1(a)(1), or (2) during the continuance of a separation arising from adultery as specified in G.S. 31A-1(a)(2), or during the continuance of a separation arising from an abandonment as specified in G.S. 31A-1(a)(3) or (3) when a divorce is granted as specified in G.S. 31A-1(a)(4), or a bigamous marriage is contracted as specified in G.S. 31A-1(a)(5).

It is noted that, when G.S. 31A-l(a) and G.S. 31A-l(d) are construed together, conveyances during the continuation of a separation arising from acts set out in G.S. 31A-l(a)(1), (2) or (3) are valid. Of course, the termination of any such separation is not a matter of record. The Title Company of North Carolina will work with you to review and, when appropriate, accept affidavits of continued separation (in the above circumstances) when that is vital; for instance, when the spouse wants to make a conveyance (deed or deed of trust) without joinder of the spouse considered to be barred under G.S. 31A-l and the conveying spouse wants to submit an affidavit. It is a good idea to record the affidavit as an incorporated exhibit to the conveyance instrument. Of course, the veracity of the affiant will be considered on a case by case basis.

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