Let’s Get Real About Real Estate: Why Joint Tenancy Is Both Great and Terrible Part 2
- February 25, 2019
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As discussed in Part 1, Joint Tenancy can be both great and terrible, particularly if Rights of Survivorship is omitted or overlooked. If you have not read Part 1 of this article you can find the article here: [Let’s Get Real About Real Estate: Why Joint Tenancy Is Both Great and Terrible Part 1].
On its own as a legal principle, a right of survivorship is pretty straightforward. It means if the other owner dies, the survivor(s) acquire their interest automatically. It is like a three-word contract between the owners that is easy to verify and enforce.
But why are those three words, on their own, legally significant apart from the Joint Tenancy? There is an argument that there is a difference between Joint Tenancy and Joint Tenancy with Rights of Survivorship. This analysis is more recent, and has practical development than actual settled law.
In its basic form, Joint Tenancy is a group ownership of the whole property. It is logical that if I own the whole of a something together with another person that the death of that joint owner, legally, should not cause me to lose any of my rights to the whole property. The supporting logic for this point of view would be that if the parties actually intended a different result from owning property as Joint Tenants after the death of either of them, they can take ownership as tenants in common, which is the form of ownership that produces that exact result. In that sense, adding the distinction in the stated form of title ownership, “Joint Tenants with Rights of Survivorship” is really just an added clarification.
However, some modern courts and title professionals have gone the opposite direction and are erring on the side of caution. Without settled law to fall back on, a title insurer may be unwilling to make the legal conclusion, on their own, that joint tenant’s survivorship rights are inherent (i.e. valid) unless they are specifically stated. Real estate transactions are constantly increasing in frequency with urban development all while real estate lawyer participation in real property transactions is less frequent, particularly in Arizona.
Defects in title ownership are often not discovered until years later or after the joint owners have died; in such circumstances fixing problems can be very challenging or sometimes impossible. However, by creating or updating an estate plan we can help to identify such potential challenges and fix them beforehand. It is for reasons like these, and many other important considerations, that we believe that when Joint Tenancy works as intended it is great, but when it does not work it is terrible.
*The information provided in this article is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, does not create an attorney-client relationship, and you should not act upon it without seeking independent legal counsel.