Do I need to change the deed and title for my home and rental properties to fund a revocable trust, and will that affect my mortgage or ability to access equity? – North Carolina

Short Answer

Usually, yes—if the goal is for North Carolina real estate to avoid probate through a revocable trust, the trust generally needs to own the properties, which is typically done by signing and recording a new deed to the trustee of the revocable trust. Many mortgages allow a transfer to a borrower’s revocable trust without triggering a “due-on-sale” problem, but the loan documents and the lender’s policies still matter. A properly handled trust transfer typically does not prevent refinancing, a home equity loan, or a HELOC, but lenders often require extra paperwork or may ask that title be temporarily moved out of the trust for closing.

Understanding the Problem

In North Carolina estate planning, a common question is whether a homeowner or rental property owner must retitle real estate into a revocable trust in order for the trust plan to work, and whether changing the deed will create mortgage issues or limit later access to equity. The decision point is whether to record a deed that moves ownership from individuals to the trustee of the revocable trust (and how that interacts with existing mortgages and future borrowing). This question often comes up when spouses with minor children own multiple properties and want probate avoidance and smoother management if incapacity occurs.

Apply the Law

Under North Carolina law, a revocable trust can hold title to real estate, but the trust does not automatically “own” a property just because the trust document lists it. For North Carolina real property, ownership is typically shown by the recorded deed in the county land records, so “funding” the trust usually means signing a deed that conveys the property to the trustee(s) of the revocable trust and recording that deed with the Register of Deeds in the county where the property is located. North Carolina law also recognizes conveyances “to a trust” as conveyances to the trustee, which helps avoid technical title problems when documents use trust wording.

Key Requirements

Correct new owner on the deed: The deed should name the trustee(s) of the revocable trust (not just the trust name) as the grantee so the land records clearly show who holds title in a fiduciary capacity.
Proper execution and recording: The deed must be properly signed and notarized and then recorded in the county Register of Deeds where the property sits; otherwise, the trust transfer may not accomplish probate-avoidance goals.
Mortgage and lender follow-through: If there is a mortgage or deed of trust, the loan paperwork should be reviewed for any transfer restrictions, and the lender’s documentation requirements should be addressed before recording, refinancing, or seeking a HELOC.

What the Statutes Say

N.C. Gen. Stat. § 39-6.7 (Conveyances to or by trusts) – Treats a conveyance “to a trust” as a transfer to the trustee(s), helping confirm how deeds involving trusts are construed.
N.C. Gen. Stat. § 105-317.2 (Deed transfer report information) – Requires certain information to appear in deeds (including whether the property is a grantor’s primary residence) but states that noncompliance does not invalidate an otherwise recorded deed.
N.C. Gen. Stat. § 47-38 (Acknowledgment form) – Provides a sufficient North Carolina notarial acknowledgment form, including when signing in representative capacities such as trustee.

Analysis

Apply the Rule to the Facts: Because the plan involves multiple properties and a goal of avoiding probate, transferring North Carolina real estate into the revocable trust by recorded deed is often a core step in “funding” the trust. If the home and rentals remain titled in the individuals’ names, those properties may still require a probate court process at death, even if a revocable trust exists. Moving title to the trustee of the revocable trust aligns ownership with the estate plan’s probate-avoidance goal while still allowing the same people (as trustees) to manage, sell, or refinance during life.

Process & Timing

Who files: The current owner(s) sign. Where: The Register of Deeds in the North Carolina county where each property is located. What: A new deed conveying the property from the current owner(s) to the trustee(s) of the revocable trust; the deed is signed and notarized. When: Typically after the trust is signed and before any incapacity planning gap develops; if probate avoidance is the goal, the transfer should be completed while the owner has capacity to sign.
After recording: Keep a conformed copy of the recorded deed with the trust binder and confirm insurance and property management records (landlord policies, leases, and vendor accounts) reflect the trust ownership where appropriate.
Future borrowing (equity access): For a refinance, HELOC, or home equity loan, the lender may request a certificate/summary of trust, trustee authority, and confirmation the trust is revocable. Some lenders will underwrite and close with the trust as owner; others may require a temporary deed out of the trust and then back in after closing.

Exceptions & Pitfalls

“Due-on-sale” and lender policy issues: Even when a revocable trust transfer is commonly permitted, a specific mortgage contract may still require notice or paperwork. Recording first and asking later can create avoidable friction when refinancing or seeking a HELOC.
Deeding to the wrong party: A frequent mistake is titling the property to the trust name alone without clearly identifying the trustee(s). North Carolina has a statute that helps construe trust conveyances, but clean deed wording reduces later title and closing problems.
Not coordinating insurance and liability: Rental properties in a trust still need proper landlord insurance and consistent named insureds/additional insureds. Separately, a revocable trust does not replace the need to review liability protection and entity structure for rentals.
Out-of-state or outside-the-U.S. property: Real estate located outside North Carolina follows the law of where it is located, so the correct “funding” step may be different and may require local counsel.
Agent authority gaps: If an agent signs deeds under a power of attorney, North Carolina has specific recording rules for powers of attorney used to transfer real property; failing to follow those rules can create recording and title problems even if the deed is ultimately enforceable.

Conclusion

In North Carolina, funding a revocable trust with a home or rental property usually requires recording a new deed that transfers title from the individual owner(s) to the trustee(s) of the revocable trust. This step is often essential if the goal is to keep those properties out of probate. A trust transfer commonly does not block refinancing or tapping equity, but the mortgage documents and lender requirements should be reviewed before recording. Next step: prepare and record the correct trust-funding deed(s) with the Register of Deeds.

Talk to a Estate Planning Attorney

If a revocable trust is part of an estate plan for multiple properties and minor children, deed transfers, mortgage terms, and future refinancing needs should be coordinated as one plan. Our firm has experienced attorneys who can help explain options and timelines. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.