No! You may NOT just use a deed form that you found on line and there are a multitude of reasons of why you should not do so. Let us start with the first reason; YOU DO NOT WANT TO BE CONSIDERED A CRIMINAL! Under North Carolina law, the drafting of a deed by anyone who is not a licensed North Carolina lawyer is considered the Unauthorized Practice of Law (“UPL”). UPL is considered to be a misdemeanor in the state of North Carolina! While you most likely will not end up in jail for drafting of a North Carolina deed, you could very well find yourself faced with misdemeanor charges and a fine for your efforts.
Now for the second, more practical, reason why you would not want to prepare a North Carolina deed. That is that when you eventually go to sell your home, the buyer’s title company will not insure the deed, which means, in layman’s terms, the buyer cannot obtain title insurance and, therefore, will not be able to complete the transaction. Hence, you are out the money you would have made from the sale. You certainly will be allowed to go back and remedy the situation and in a scenario where you are still married to your wife when you go to sell the house you may not need to do anything to undo the deed, you may simply be able to get around the issue by having your wife (along with you) sign the deed into the new buyer. This is because in North Carolina our spouses, even though their names do not appear on the deed, still have to sign any conveyance to a buyer due to the fact that they have a marital interest in the property. In that case, even though the deed you drafted is invalid, it will not preclude you from selling the home. It will most likely push back your closing date as any issue associated with the deed is worked out by the closing attorney.
The third and very important reason – your lender. Unless you paid cash for your home, you may have an issue with your lender if you add your wife’s name to the deed (whether you use a form found on the internet or have a NC licensed attorney draft the deed). The reason is that most promissory notes signed by borrowers at home closings contain the language that states that if the title to the property is changed (i.e. – the ownership of 50% of the property changes hands), the lender can demand the note immediately due and payable. If this happens, you must pay the bank any and all amounts owing under your loan. If you owe $225,000.00 when the bank “calls your note”, you will have a limited amount of time to pay that amount of money to your lender or else they will foreclose on the property. This is in fact a discussion for another blog, suffice it to say though, even if you work out with your lender to allow your wife to stay on the deed you will have spend a considerable amount of time and possibly attorney’s fees to do so. You are much better served speaking to an attorney before you add or delete anyone from a deed.
Spending the $150-$250 it would cost you in attorney’s fees for the preparation of a North Carolina deed is well worth it. You will avoid partaking in the unauthorized practice of law, you will avoid any potential issues with selling your home and you will avoid triggering any clauses in your mortgage documents that would have the bank immediately demanding payment in full the amounts still owned under your promissory note (your mortgage).
I have once last relevant comment to your question about drafting a deed using a form you found online and that is this: I cannot begin to tell you how may times that we, as attorneys, have had to go back and undue problems that were created by people using products found online. When this happens, our clients would have been much better served, and saved a lot of money, had they simply picked up the phone and called us before moving ahead using online forms. This includes using forms from websites like www.legalzoom.com Multiple times I have had to explain to clients that it is going to cost them hundreds, if not thousands, of dollars to clean up a mess brought upon by the use of online forms (with the use of deed forms being the number one problem). Had the client simply “bit the bullet” and paid the $150-$250 up front, they would have been much better of and would have a lot more money in their pocket.
If you have questions about the title to your property or questions about adding someone to title please do not hesitate to give us a call to discuss. While you may save money now by using online forms, you may very well be spending thousands of dollars to rectify the problems brought on by your decision to do so.