Question #1

Question:

I have a client that needs to change her grant deed. She has one daughter on with her as joint tenants and wants to put the other one on also. Can she deed her half over to herself as tenants in common and legally break the J.T.? If she does this, then she absolutely needs to make a will to be able to leave her half to the other daughter, right?

Answer:

Your client certainly can break the joint tenancy by deeding her one half (1/2) interest to herself as tenant in common. The result would be that she and "Daughter No. 1" would each hold undivided 1/2 interests as tenants in common with one another. Normally, she would need a will to leave her 1/2 interest to "Daughter No. 2", but there may be another option. Once she breaks the current joint tenancy, she could then deed her 1/2 interest to herself and Daughter No. 2 as joint tenants. The upshot of this would be that she and Daughter No. 2 would own an undivided 1/2 interest as joint tenants as to each other, but they would be tenants in common with Daughter No. 1 as to the other 1/2 interest. However, in the event of your clients' passing, Daughter No. 2 would succeed to the 1/2 interest she holds with your client, so that both daughters would end up with undivided 1/2 interests as tenants in common.

Of course, everyone's situation is different, and any transfer of a real property interest can entail significant tax and legal consequences. Please note that this is intended only as a general discussion only of the law relating to joint tenancy, and is not intended to be, nor should it be construed as, specific legal advice. Before doing anything, your client should first consult with her own attorney and/or tax advisor, who can evaluate her situation and give her specific advice tailored to her particular circumstances. 

Question #2

Question:

We own property as joint tenants.  Three married couples own this undeveloped lot and one couple is divorcing. The other two couples, ourselves included, are paying the taxes due and engineering fees to ready this lot for future sale.  We are concerned about continuing to pay taxes and fees, and make decisions with the knowledge of the divorcing couple but without their financial assistance.  We certainly want to collect their share of the money we're investing at some point.

Answer:

First of all, the divorce in and of itself will not sever the divorcing couple's joint tenancy. Regardless of their marital status, they will remain co-tenants with all of those rights and obligations. 

As far as taxes are concerned, joint tenants making these payments normally would be entitled to a pro-rata reimbursement from the divorcing couple, absent an agreement to the contrary.  This also would hold true for mortgage payments, insurance premiums and other ordinary expenses of maintaining the property.

On the other hand, this would not be the case for any improvements made in the property.   Absent a prior agreement, a co-tenant who makes any expenditures to improve the property cannot compel contribution from other co-tenants. However, if there is an agreement to share these costs, it normally would remain in effect regardless of any divorce.  In that case, the divorcing couple still would be responsible for their proportionate share of improvements.

Be aware, however, that any transactions involving real property can entail significant legal and tax consequences.  Before deciding whether to move ahead with your plans for the property, you should first consult your own attorney and tax advisor, who can fully evaluate all the circumstances.   

Question #3

Question:

I am refinancing my home.  My sister and I have jointly owned the property through a private agreement, but now we are going to be listed on the loan and title papers as dual owners.  What is the best way to record title?  I understand that being tenants in common means the county will reassess the property for taxes, but joint tenancy does not. Is reassessment based on the market value of the property?  Or the refinanced value?

I also understand that joint tenancy overrides any wills so my share would default to my sister and not go to my children.  Any information you can offer would be great.

Answer:

First of all, my response is based on the assumption that your sister is not presently on the title as an owner, but will be placed on title when the new loan records.  Under Proposition 13, approved by voters in 1978, property ordinarily is reassessed whenever a change in ownership occurs.  However, the law provides exemptions, including the creation or transfer of a joint tenancy interest where the original owner remains a joint tenant after the transfer. This means that if you were to deed the property to yourself and your sister as joint tenants, there would be no reassessment since you still would be on title as an owner.  On the other hand, if you create a tenancy in common there WOULD be a reassessment, regardless of whether or not you remain on title.

Whenever a property is reassessed, it is based on the fair market value as of the date the change in ownership occurs.  However, if a reassessment is triggered because you decide to hold title as tenants in common, only the value of your sister's interest would be reassessed, not the entire property.

You are correct that the principal feature which distinguishes a joint tenancy from a tenancy in common is the right of survivorship, overriding any will. The moment a joint tenant dies, her financial interest vests immediately in the surviving joint tenants, and there is no interest left for her estate.

Be aware that transferring any real estate interest can involve significant legal and tax consequences, and you should consult with your own attorney and tax advisor before moving ahead.

Question #4

Question:

I am considering buying a house with my girlfriend.  I'm a little concerned about the legal ramifications of this major move. What if we break up?  What if one of us dies?  Will I be forced to sell the house if either happens?  Is there legal language that will help us deal with these possibilities?

Answer:

There are two forms of ownership which have serious ramifications in your situation. The distinguishing feature is the right of survivorship.

If you and your girlfriend become joint tenants, you commit to let the house become the property of the surviving owner if one of you dies. To create a joint tenancy, the deed actually must say that you are owners "as joint tenants."  If you do this, neither of you can will away your portion of the house and your heirs may not claim your portion of the house after your death.

This decision can be reversed after you buy the house. You can record a declaration that you are severing the joint tenancy or you can record a deed giving your house interest to yourself and end the joint tenancy.

Your other option is to buy the house as tenants in common. This is the presumed situation if the deed does not contain any references to joint tenancy. If one of you dies during your tenancy in common, that person's portion of the house becomes part of his or her estate.

Unfortunately, you can't protect yourself from the fallout of a bitter breakup. Under either form of ownership, an owner may sell the portion of the house they own, gift it to someone or bring legal action to partition the property.

Partitioning the property can occur in one of three ways: the court can order the property physically divided; can order it sold and the proceeds divided; or can allow one owner to buy out the other after a fair appraisal. As you can see, you could be forced to sell the house.

I have two other warnings for you. There are tax ramifications to your choice of ownership options and you should consult your financial advisor before making a decision. And you may want to consider the legal ramifications of owning property together under the Marvin vs. Marvin palimony decision.

Question #5

Question:

I am interested in changing title to my condominium from just my name to that of my husband and myself. Is there a way that I can perform this transaction myself, or do I need the aid of a real estate broker or lawyer? In other words, what is the least expensive way for a literate, high-functioning person to get this done?

Answer:

In order to change the title, you would need to execute either a Quitclaim Deed or a Grant Deed from yourself as grantor to yourself and your husband as the grantees. The Deed would need to be notarized, and recorded in the office of the County Recorder in the county where the property is located. Either type of Deed would work; the main difference being that a Quitclaim Deed conveys whatever title (if any) the grantor has in the property, while the Grant Deed contains certain implied warranties of title.

This is something you could probably handle yourself by obtaining a Deed form from a title company, completing it and recording it with the appropriate county recorder. Bear in mind, however, that how you hold title (i.e. as joint tenants, tenants in common, or community property) can have important legal and tax ramifications, so you may want to consult with your legal and/or tax advisor before recording the instrument. However, once you have determined how to hold title, the actual process for completing and recording the Deed is relatively straightforward.

Question #6

Question: 

My father passed away and he left his property in trust for us kids. He had remarried, but kept this as his sole and separate property. He gave his new wife the right to live there as long as she did not cohabitate, vacate for 6 months, etc. She does not like us and is trustee. I found out she had a sale pending (I suspect to a friend) and is using our equity to make things nicer for the buyer than required for the sale. She will receive no money just satisfaction from wasting ours. Here is the question: the house went into escrow and there is a cloud on title. My dad never removed my mom from the property. She is a joint tenant. The divorce papers instructed her to deed it to him and I guess he never got around to recording it. No one can find it. Could she just deed us the house and circumvent this whole lousy sale or does the new wife's trust have more clout than the joint tenancy? Is it poetic justice if the trust does not have legal status for failure to record a quitclaim? I will see an attorney and I need to know which one wins: the living trust or the deed. Can a judge rule against a deed? This house is now in escrow and I feel we are being cheated.

Answer:

This is a tricky one. Ordinarily, the short answer to your question would be that your Mom is now sole owner of the property. When property is held in joint tenancy, it passes to the survivor immediately upon the death of one joint tenant. As such, there is nothing to pass with the decedent's estate, whether by will, trust, or otherwise.

The complicating factor here is that your parents divorced, and the court awarded the property to your Dad as his sole and separate property. Arguably, the deed from your Mom would have been a mere formality, and your stepmother, as trustee under the trust, could now bring an action against her to quiet title.

The silver lining to all of this, I suppose, is that your stepmother is going to have a difficult time selling the property until the title is cleared. If the chain of title reflects that your Dad and Mom held the property as joint tenants, than a title company is not going to be able to insure the sale until your stepmother establishes her title to the property as trustee.

The best advice I could give you is to see your attorney right away, so he or she can thoroughly evaluate the situation, and advise you how best to proceed.

Question #7

Question:

In 1979 my husband purchased a condo as his sole and separate property. Shortly after, he was involved in a live in relationship. She subsequently had him include her on the deed as joint tenants, then later changing (possibly forging) the deed to tenants in common. The relationship ended in 1980 and my husband married in 1983 at which time He tried to get the deed straightened out as he was paying all the taxes and payments on the property. She is not on the loan or the taxes.

Unfortunately, based on what you've told me, about the only thing your husband can do at this point is to file a quiet title action. Apparently, your husband put her on title voluntarily, and this gave rise to an ownership interest in the property. Whether the property is now held as joint tenancy or tenants in common is really immaterial since she would hold an ownership interest in either case. Legally, a joint tenant can execute a deed of her interest back to herself as a tenant in common, and this is sufficient to break the joint tenancy. The consent of the other joint tenant is not required. The only ramification of this would be that if the lady died, your husband wouldn't automatically become the owner of her share through right of survivorship; it would pass with her estate instead. As I'm sure your husband's attorney has explained, in order to successfully quiet title to the property, your husband will have to establish that the transfer of the interest to the lady was somehow conditional, and that the condition(s) was/were not satisfied. If it appears to the court that the transfer was intended as an absolute gift, however, he will have a very difficult time convincing the court to divest the lady of her ownership interest.