July 27, 2011

Joint Tenancy in California

Joint tenancy is a common arrangement for owning real estate in California, and much of the United States. The following are various questions that address some key aspects of joint tenancy. 

1. What is a joint tenancy in terms of real property? 

A joint tenancy is a method of holding title to real property by two or more persons in equal shares. CC §683. 

2. How can I create a joint tenancy? 

A joint tenancy is created by inserting certain language on the deed, the document that transfers ownership of real estate. For example, assume best friends Aaron Rivers and Chad Stafford wish to purchase real estate together and own it as joint tenants. Aaron and Chad would instruct the title company to insert the phrase “as joint tenants” or “in joint tenancy” after their names as grantees on the deed. So if Joe Clyde and Bonnie Clyde sold the property to Aaron and Chad, the deed would read, as to the Grantor-Grantee section:

For a valuable consideration, receipt of which is hereby acknowledged,
Joe Clyde and Bonnie Clyde, husband and wife
hereby grant to
Aaron Rivers and Chad Stafford, as joint tenants 

3. How is ownership allocated amongst the joint tenants? 

Each joint tenant owns an equal undivided share of the property. Rupp v. Kahn (1966) 246 CA2d 188. Thus, if there are 4 joint tenants, then each joint tenant would have a 25% interest in the property. 

4. How can a joint tenant change the joint tenancy arrangement? 

A joint tenant can sever the joint tenancy by transferring their interest to a third party or themselves, recordation of a written declaration, agreement of the joint tenants, a partition decree or judgment.

For example, recall from Question #3 that Aaron and Phillip purchased a property as joint tenants. Aaron became disgusted with Phillip’s decisions about maintaining the property and decided to terminate the joint tenancy. Aaron executed a deed which conveyed his interest to himself as a tenant in common with Phillip. This deed would sever the joint tenancy relationship between Aaron and Phillip. 

5. What happens after a severance? 

When the joint tenancy is severed, it becomes a tenancy in common. Estate of Propst (1990) 50 C3d 448. One key feature of a tenancy in common is that there is no right of survivorship on the death of a tenant in common unlike a joint tenancy. 

6. What is right of survivorship for real property? 

Right of survivorship is the automatic transfer of an interest in the real property, by operation of law, from the deceased joint tenant to the surviving joint tenant. Grothe v Cortlandt Corp. (1992) 11 CA4th 1313. Thus, regardless of what a will or trust dictates, the deceased joint tenant’s interest in a piece of real property transfers to the surviving joint tenant. 

7. How do you transfer ownership interest from a deceased joint tenant to another? 

There are two methods in which a deceased joint tenant’s interest can be transferred, (1) by an affidavit procedure and (2) by a court order. Prob C §210. The vast majority of joint tenancy transfers are done via the affidavit procedure. The affidavit needs to be signed by a person having knowledge of the facts which includes the legal description of the real property at stake and an attested or certified copy of the decedent's death certificate needs to be attached to the affidavit. Prob C §210. This affidavit is filed with the County Recorder in the county in which the real property is located. 

8. What other ways can multiple people own real property? 

Multiple people can own real property in tenancy in common, community property or partnership interests. CC §§682-687. 

9. Can a joint tenant force a sale of real property? 

Yes, a joint tenant can force the sale of real property. CCP § 872.210. The term for this is a partition action and is quite expensive. The right to seek a partition by a joint tenant is automatic unless the joint tenants have agreed to waive the right to seek a partition. Harrison v Domergue (1969) 274 CA2d 19. 

10. Can a person hold other assets in joint tenancy? 

Yes, bank accounts, automobiles, stocks, bonds and brokerage accounts are other types of assets that may be held in joint tenancy. 

11. Is there a disadvantage for a married couple to hold property as joint tenants? 

Yes, there is a significant tax disadvantage for a married couple to hold title as joint tenancy as opposed to community property.