Will I owe any transfer taxes or fees when recording the updated deed after a lady bird deed transfer? – North Carolina

Short Answer

Usually, no North Carolina real estate excise tax is due just to update the public record after a lady bird deed takes effect at death, because the transfer is not a typical sale for consideration. However, the Register of Deeds will still charge standard recording fees, and the paperwork must be drafted and recorded correctly to avoid a rejection or a later title problem. Whether any excise tax applies depends on what document is recorded and whether it shows any “consideration” or value being paid.

Understanding the Problem

In North Carolina, a common question after a lady bird deed is: can the new owner record an updated deed (or other document) to remove the deceased owner and reflect the new owner’s current legal name, and will that recording trigger transfer taxes or extra fees. The key decision point is whether the document being recorded is treated as an “instrument conveying an interest in real property” for tax purposes, or whether it is only a corrective or confirmatory filing to match the land records to what already happened at death.

Apply the Law

North Carolina charges a state real estate excise tax when an instrument conveys an interest in real property to another person, and the tax is generally calculated based on the consideration paid or the value of the interest conveyed. In a lady bird deed situation, title typically passes by operation of the deed at the owner’s death rather than by a post-death sale, so the follow-up recording is often about documenting the change in ownership and clearing the record, not about paying for a transfer. Even when no excise tax is due, the Register of Deeds still collects recording fees and may require certain supporting documents or formatting to accept the filing.

Key Requirements

What is being recorded: Excise tax is tied to recording an instrument that conveys an interest in real property, not to every document filed in the land records.
Consideration/value shown on the instrument: The excise tax is generally measured by the consideration paid or the value stated/triggered by the conveyance; documents that do not reflect a sale price or payment often do not fit the usual excise-tax model.
Proper recording package: Even when tax is not due, the Register of Deeds can reject documents that do not meet recording standards or that do not clearly connect the deceased owner, the beneficiary, and the beneficiary’s name change in the chain of title.

What the Statutes Say

N.C. Gen. Stat. § 105-228.30 (Real estate excise tax) – Imposes an excise tax on instruments that convey an interest in real property, generally based on the consideration or value conveyed, and collected by the Register of Deeds before recording.
N.C. Gen. Stat. § 39A-3 (Transfer fee covenants prohibited) – Prohibits private “transfer fee” covenants that try to charge a fee each time property is transferred.

Analysis

Apply the Rule to the Facts: Here, the grandparent used a lady bird deed naming a grandchild (the caller) to receive the property, and the grandparent has died. If the follow-up filing is drafted as a confirmatory/corrective instrument (or other record-clearing document) that does not show a purchase price or other consideration, it often does not function like a taxable sale conveyance under the excise-tax statute. The name change due to marriage usually gets handled by recording supporting documentation and/or a properly drafted instrument that ties the beneficiary’s prior name to the current legal name, which typically affects recording fees and document requirements more than excise tax.

Process & Timing

Who files: The beneficiary named to receive the property (or that person’s attorney). Where: The North Carolina Register of Deeds in the county where the property is located. What: Commonly, an attorney-prepared record-clearing document (often a confirmatory deed or affidavit-type filing, depending on the county’s practices and the title issue being fixed) plus supporting documents such as a certified death certificate and proof of name change (for example, a certified marriage certificate), if needed to connect names in the chain of title. When: As soon as practical after death and after obtaining certified copies of the supporting documents.
Register of Deeds review and fees: The Register of Deeds collects recording fees and reviews for recording standards. If the instrument appears to be a conveyance for consideration, the office may require excise tax payment before recording; if it is clearly confirmatory with no consideration, the office typically treats it as a recording-fee issue rather than an excise-tax issue.
After recording: The recorded document becomes part of the public land records, which helps future transactions (sale, refinance, or estate planning) by showing a clean chain of title from the deceased owner to the current owner under the current legal name.

Exceptions & Pitfalls

Recording a document that looks like a sale: If the document is drafted as a new deed that states consideration (even nominal consideration) or otherwise reads like a purchase, the Register of Deeds may treat it as a taxable conveyance and require excise tax under the excise-tax statute.
Using the wrong “fix” for the name change: A name change does not always require a brand-new deed. The goal is to connect the prior name on the recorded deed to the current legal name in a way that a title searcher can follow.
Chain-of-title gaps: If the recorded lady bird deed is unclear, was never recorded, has legal description issues, or does not match the current parcel, a simple filing may not be enough and additional curative work may be needed.
Assuming a “transfer fee” is required: Some people confuse government excise tax and recording fees with private transfer fees. North Carolina law restricts private transfer fee covenants, but that does not eliminate normal government recording fees.

Conclusion

In North Carolina, recording an update after a lady bird deed transfer usually does not trigger the state real estate excise tax when the filing is only meant to document a transfer that already occurred at death and does not reflect a sale for consideration. Recording fees still apply, and the Register of Deeds may reject paperwork that is not drafted and formatted correctly. The practical next step is to have an attorney prepare the correct record-clearing instrument and record it with the county Register of Deeds promptly after obtaining certified supporting documents.

Talk to a Real Estate Attorney

If you’re dealing with a lady bird deed transfer and need to update the land records after a death and a name change, our firm has experienced attorneys who can help you understand your 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.