Severance of a Joint Tenancy

One of the main reasons why real property held in joint tenancy is not preferable is due to its inflexible nature. If one joint tenant dies, the surviving joint tenant(s) automatically receive the interest of the deceased joint tenant. This is true even if the joint tenant wrote a will and devised their interest in the property to somebody other than the surviving joint tenant. 

In order to avoid the automatic transfer upon a joint tenant's death, severance has to occur. Civil Code § 683.2 provides various methods in which a joint tenancy can be severed:

"(1) Execution and delivery of a deed that conveys legal title to the joint tenant’s interest to a third person, whether or not pursuant to an agreement that requires the third person to reconvey legal title to the joint tenant.

(2) Execution of a written instrument that evidences the intent to sever the joint tenancy, including a deed that names the joint tenant as transferee, or of a written declaration that, as to the interest of the joint tenant, the joint tenancy is severed."

A recent appellate decision addressed the issue of whether a contested lawsuit, i.e. the filing of a complaint and the answer to the complaint, constituted severance.

Walter v. Boosinger (2016) ___ Cal.App.4th _____

The parties involved a father and a former girlfriend. Originally  father sued to resolve ownership of the property. He claimed a 2/3 interest and her share was allegedly 1/3. However, a 2003 deed named the two as joint tenants. Thereby, if the deed was valid, the ownership interests would be the same, i.e. 50/50. Further, upon the death of one joint tenant, the surviving joint tenant would inherit the decedent's share of the property, 50%, automatically. See Civil Code § 683.2. 

Right after the lawsuit was started, father died intestate and son took over the case as his administrator. Son argued that former girlfriend's answer to the complaint severed the joint tenancy. However, the Court of Appeal disagreed. It held that "Scott cites no common law authority, and we are aware of none, that holds that a court may interpret a party's complaint and another party's superseded answer to constitute an instrument that severs a joint tenancy."

The crux was that it was unclear "even from Boosinger's superseded answer, that Boosinger agreed that she and Randy owned different percentage interests in the property (and therefore were not joint tenants)."

Author's Note: in order for a joint tenancy to be valid, the interests must be the same. For example, if a deed says Randy - 66.67% and Boosinger - 33.33%, there is no joint tenancy because the interests are not equal. The son's goal was to nullify the joint tenancy and thereby avoid having Boosinger automatically receive the other 50% of the property. 

Severance of a Joint Tenancy

A common method to hold title to real property in California is joint tenancy. For example, if John and Jane Doe purchase a home together, they can hold title as joint tenants simply by adding "as joint tenants" to their names.

One of the key features of joint tenancy is, as mentioned, right of survivorship. This legal term dictates that when one joint tenant dies, the surviving joint tenant automatically inherits the deceased joint tenant's interest in the property. CC §683; Prob C §223. For instance, if John Doe and Jane Smith owned their home in joint tenancy and John passed away after being hit by a bus, Jane would automatically inherit John's 50% interest in the home. To transfer John's interest in the home to Jane, she would simply have to file an affidavit of death of a joint tenant along with some other forms depending on the county in which the realty sits. Hence, there is no probate or trust administration needed to transfer an interest held in joint tenancy. This is particularly important because a few words can amount to thousands or hundred of thousands of dollars. The following example illustrates this point.

John Van Persie and Norm Vermaelen were best friends and decided to purchase a rental home together in Campbell, CA for $600,000 in 2012. They decided to take title as joint tenants because the real estate agent told them it would be easier that way. John wrote a will that devised his entire estate to his brother Arjen. Thereafter John passed away in April 2012 in a tragic skiing accident in Bear Valley, ID. Since title was held in joint tenancy, John's interest automatically passed to Norm, despite John's valid will. Conversely, if John and Norm had taken title as "tenants in common", John's interest would pass to his brother Arjen albeit a probate would be needed. Still, the use of the phrase "as joint tenants" instead of "tenants in common" amounts to a roughly $300,00 difference for Arjen.

In light of this, a few clients have asked to transfer property out of joint tenancy to tenancy in common because of the inflexibility of joint tenancy. The following are the methods in which joint tenancy is severed and a tenancy in common results. CC §683.2(a).

1. Transferring the joint tenant's interest to a third person via a deed; 
2. Executing a written instrument with intent to sever that transfers the joint tenant's interest out of joint tenancy and into tenancy in common via a deed; or
3. Declaring the severance in writing.

For all these methods, the instrument must be recorded in the county where the real property is located. CC §683.2(c).

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.