Issue 7

Fall 1999





1.       Corporate Conveyances; Seals; Statute of Limitation

Senate Bill 761 became law on June 25, 1999.  It enacted G.S. 39-6.5 and amended G.S. 47-41.01, G.S. 47-18.3 and G.S. 1-47(2). 

G.S. 39-6.5, including the caption, reads as follows:

“G.S. 39-6.5.  Elimination of seal

The seal of the signatory shall not be necessary to effect a valid conveyance of an interest in real property; provided, that this section shall not affect the requirement for affixing a seal of the officer taking an acknowledgment of the instrument.”

The statute is effective June 25, 1999.  It applies to “instruments registered before, on, or after that date, except that [it] shall not apply to litigation pending on that date or to any instrument directly or indirectly involved in litigation pending on that date,” as does the amendment to G.S. 1-457(2) noted below.

G.S. 39-6.5 is good new for, among other situations, those unsealed deeds of trust prepared by out of state attorneys or lenders.  Also, a previously unsealed deed will no longer be a mere enforceable contract to convey. 

However, because of the session law quoted above pertaining to applicability, if a contract vendee is presently suing a contract vendor for specific performance, G.S. 39-6.5 arguably does not apply.  That is unfortunate for there is no reason why G.S. 39-6.5 should not apply to such a situation between vendor and vendee.  Such a statute should be inapplicable only if rights of a third party intervened.

G.S. 47-41.01 has been amended as discussed in the next paragraphs.  G.S. 47-41.01(b) and (d) together make it reasonably clear that G.S. 47-41.01(b) is essentially unchanged except for reference to G.S. 47-18.3(e) and the fact that an authorized agent can execute the deed.  Even though the body of G.S. 47-41.01(b) and the revised form therein refer to a seal, G.S. 47-41.01(d)(6) and G.S. 39-6.5 make it clear that a corporate seal is not necessary.  G.S. 47-18.3(a) does not mention a seal. G.S. 47-18.3(b) is not a requirement for a seal in order to have a valid instrument.  Therefore, corporate execution and attestation with or without the corporate seal should be valid immediately because of G.S. 39-6.5.  Perhaps the use of an agent is deferred until October 1, 9999, although old G.S. 47-18.3(c) and (e) and appropriate documentation should allow use of an agent presently.  G.S. 47-41.01(c) is new.  The form in (c) requires execution by an “official of the corporation” as defined in G.S. 47-41.01(d) or by an agent pursuant to the referenced resolution.  The form does not require attestation or a corporate seal.  This new form can be used on October 1, 1999.  Review of the actual changes is important.

Effective October 1, 1999, G.S. 47-41.01(b) has been amended to provide as follows:

If a deed or other instrument is executed by an official of the corporation, signing the name of the corporation by him in his official capacity, or any other agent authorized by resolution pursuant to G.S. 47-18.3(e), is sealed with its common or corporate seal, and is attested by another person who is an attesting official of the corporation, the following form of acknowledgement is sufficient:

[See Form]

G.S. 47-18.3 deals with authority and proof of corporate instruments.  It has been amended effective October 1, 1999. G.S. 47-18.3(a), pertaining to statutory validity of an instrument, has been amended to delete the requirement for attestation in order for the instrument to receive the benefit of the statute.  G.S. 47-18.3(e) pertains to a corporation being able to convey by instrument executed by either an officer, manager or agent when an attested resolution is attached.  Reference to a deed has been deleted to make the statute clearer.  Nevertheless, the following has been added to G.S. 47-18.3(e):  “Notwithstanding the foregoing, this section shall not require a signed and attested resolution of the board of directors of the corporation to be attached to an instrument or separately recorded in the case of an instrument duly executed by the corporation’s chairman, president, chief executive officer, a vice-president, assistant vice-president, treasurer, or chief financial officer.”

G.S. 1-47(2), a statute of limitations of 10 years, has been amended effective June 25, 1999 with retroactive applicability noted above.  It still applies to sealed instruments.  Now, it also applies to “an instrument of conveyance of an interest in real property…” This could apply to an unsealed contract to convey real property.  While legal title remains in the contract vendor, it is arguable that equitable title is vested in  

the contract vendee. If that is true, new G.S. 1-47(2) could apply to an unsealed contract to convey.  Of course, an unsealed deed is no longer only a contract to convey, due to G.S. 39-6.5.

2.    Trusts 

Since our last newsletter, Article 11A of Chapter 36A, entitled “Modification and Termination of Irrevocable Trusts,” has been passed.  It became law on July 9, 1999 and becomes effective January 1, 2000.  When effective, it will apply to all trusts created “before or after that date,” except for G.S. 36A-125.6(b) applying to certain spendthrift trust provisions. 

A settlor who is “sui juris” and is the sole beneficiary can compel modification or termination of the trust without court approval.  G.S. 36A-125.2.  If there are several beneficiaries and all consent with the settlor, the same can be done.  G.S. 36A-125.3(a). 

If G.S. 36A-125.3(a) does not apply, a court proceeding can be commenced to achieve modification or termination.  G.S. 36A-125.3(b). 

If all beneficiaries consent, a court proceeding can be started to compel termination or modification.  G.S. 36A-125.4(a).  G.S. 36A-125.4(b) contains an exception.  G.S. 36A-125.5 contains provisions that, for example, allow a guardian ad litem to give consent. 

G.S. 36A-125.6 contains special rules for “small” trusts.  And, G.S. 36A-125.7 allows modification or termination due to changed circumstances, if a court proceeding is commenced.  Procedure is pursuant to the declaratory judgement act.  G.S. 36A-125.10.

3.    Anti-lapse statute 

G.S. 31-42 has been completely rewritten and becomes effective January 1, 2000.  Unless the will says different, if the devisee predeceases the testator, and 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 under the intestate succession act.  There are other changes.  For example, if the above rule does not apply, or if the devisee otherwise fails, the property passes to the residuary devisee(s) in proportion to their share of the residue under G.S. 31-42(b).  If the devisee is a residuary devisee, it shall augment the shares of the other residuary devisees, including the shares of any substitute takers.  If there are no residuary devisees, the property passes by intestacy.

4.    Slayer statute 

G.S. 31A-4 has been amended effective October 1, 1999.  We will discuss it in a separate newsletter.



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