Things People Ask: Should I Put My House in a Joint Tenancy?
But love is blind and lovers cannot see
The pretty follies that themselves commit
Shakespeare, The Merchant of Venice, Act 2, Scene 6, Page 2.
Such is the mindset of many who acquire a home in the throes of a relationship that they believe will last forever. Few anticipate or understand how future occurrences may affect them. A recent decision by the Georgia Supreme Court provides an example of what a joint tenancy can mean for a relationship.
Robert Hall purchased real property in Roswell, Georgia, in 1999. In 2005 he conveyed it to himself and his bride Cathleen Mary Cahill as joint tenants with right of survivorship. Their divorce judgment about three years later decreed that the two would “remain on the title.” It granted Cahill exclusive use and possession of the property until she reached the age of 66, and required the parties then to sell the property and split the proceeds.
The IRS filed a federal tax lien against Hall in 2013. Cahill turned 66 in February 2015 and died April 19, 2015. Her estate sued the United States in federal district court, arguing that the divorce decree broke, or “severed,” the joint tenancy, leaving Cahill with a one-half interest in the property not subject to the tax lien. The government countered that the joint tenancy had continued and that upon Cahill’s death Hall owned the entire property, subject to the tax lien. The district court referred the issue to the Georgia Supreme Court. The Court held that the divorce decree evidenced (or at least inferred) the intent of the parties to sever the joint tenancy. Cahill v. United States, 810 S.E.2d 480, 483-484, 2018 Ga. LEXIS 97. The Court noted the inapplicability of O.C.G.A. § 44-6-190 (a)(4), enacted after the events in the case. Id., note 2.
What is a joint tenancy and what is the difference between it and a tenancy-in-common?
Joint tenancy with right of survivorship (or often referred to simply as “joint tenancy”) is an “estate,” or ownership structure, under which two or more individuals own concurrent “undivided interests” in property during their lives, and upon the death of any of them the survivors succeed to the interest of the decedent. An action by a joint tenant inconsistent with the estate (including a unilateral action unknown to the other co-owners, such as a conveyance of the joint tenant’s interest) can break, or “sever,” it so that the co-owners became “tenants in common” with equal but separate interests. The owners may also agree (expressly or by implication, as in Cahill) to sever the joint tenancy. Tenants in common have no right of survivorship but continue to own the property concurrently and can sell, mortgage or otherwise deal with their respective interests as they desire (subject to agreements among them).
Some co-owners may accept the uncertainties of a joint tenancy. Others may at least prefer the requirement of an affirmative action to sever it. For these individuals there is another option: a survivorship deed.
What is a Survivorship Deed?
A survivorship deed grants and describes the concurrent lifetime estates and the right of survivorship separately and expressly, using language like this:
GRANTOR, for and in consideration of good and valuable consideration, has granted, bargained, sold, aliened, conveyed and confirmed, and by these presents does grant, bargain, sell, alien, convey and confirm, to Grantees as tenants in common for and during their joint lives and, upon the death of either of them, then to the survivor of them, in fee simple, together with every contingent remainder and right of reversion, and to the heirs and assigns of said survivor, the Property. . . . .
TO HAVE AND TO HOLD the Property, with all and singular the rights, members and appurtenances thereof, to Grantees as tenants in common for and during their joint lives and, upon the death of either of them, then to the survivor of them in fee simple, together with every contingent remainder and right of reversion, and to the heirs and assigns of said survivor.
A survivorship deed avoids use of the term “joint tenancy” and should therefore not be subject to the attendant severance risks.
Vesting of title in a joint tenancy with right of survivorship can be an effective planning tool but may also result in frustrated expectations. For example, a co-owner may expect to receive full title to the property upon the death of the other, only to discover that the decedent unilaterally transferred his interest to a third party, thereby severing the joint tenancy and leaving the survivor as a tenant in common with a stranger. Use of a survivorship deed could avoid surprises such as this.
Many clients request, and their attorneys prepare, instruments vesting title to real estate in individuals as joint tenants with right of survivorship. That arrangement may be acceptable in many cases, but counsel could explain the risks and recognize when a survivorship deed may better serve the client’s goals.