Does a buyer have to add their spouse to the Seller Financing Addendum?

QUESTION: I represent the buyer in a seller-financed deal we are trying to finalize. My client is married, but her husband is not buying the property. He was therefore not mentioned in my client’s offer or in the Seller Financing Addendum (Form 2A5-T). The seller has made a counteroffer and demanded that my client’s husband sign the contract and the addendum. Does my client’s husband have to sign?

ANSWER: The Seller Financing Addendum is an agreement between the buyer and the seller stating that the seller will provide financing in order to help the buyer purchase the property. The seller can provide all or only some of the purchase price. Under Form 2A5-T, the buyer is required to sign both a promissory note and a deed of trust in favor of the seller in exchange for the financing. However, the seller’s agreement to provide financing is not contingent on a spouse’s participation in the transaction.

We suspect the seller wishes to add your client’s husband to the contract because the seller has discovered that he needs the husband’s signature on the deed of trust. Under North Carolina law, a spouse obtains a passive interest in any real estate the other spouse owns during the course of their marriage. In order for the seller to be able to foreclose this passive interest should your client fail to pay, the seller needs the husband to be subject to the deed of trust.

We therefore believe that sellers who provide financing for the buyer have a good reason for insisting that a spouse sign the contract. Of course, the husband in this case is not obligated to do so, but if your client really wants this property with this kind of financing, we think that the seller’s request is reasonable.

Release Date: 11/30/2017