Business Transactions
In my previous entry, California Co-Ownership of Real Estate Part 1: Tenancy In Common or Joint Tenancy?, we analyzed the characteristics of co-ownership of property as tenants-in-common. In this entry we will examine the characteristics of co-ownership as joint tenants.
Joint Tenancy
Joint tenancy is a manner of holding title to real property by two or more parties. In order to create a valid joint tenancy clear language indicating that intent must be used - e.g. "to ABC and XYZ as joint tenants with right of survivorship, and not as tenants in common". Shorter forms such as "to ABC and XYZ as joint tenants" or "to ABC and XYZ jointly" are recognized as valid in most states. Words to that effect may be used by the parties in the transfer of title, in a will, or in a trust deed.
Additionally, the co-owners must share the four unities; the unity of time, title, interest and possession.
Unity of Time
The co-owners must acquire interest in the property at the same time.
Unity of Title
The co-owners must acquire the same title from the same assignor with the same conditions. If one party has a condition on his or her title that does not exist on the others' title, then the same title has not been acquired and no joint tenancy exists.
Unity of Interest
The co-owners each own the same interest in the property irrespective of the amount of money contributed to the real estate purchase. For example, if three persons own property as joint tenants, each owns a 1/3 interest in the property no matter if they each contributed different amounts of money to the purchase.
Unity of Possession
The co-owners all have an equal right of possession to the entire property.
The duration of a joint tenancy is directly tied to the existence of the four unities. This means that in the event that one of the joint tenants transfers his or her interest, this will terminate the joint tenant status of the transferring joint tenant. The outcome of such an action is a severing of the joint tenancy, which means that the new owner would acquire interest in the property as a tenant-in-common with the remaining, "non-severed" joint tenants.
Right of Survivorship
The defining characteristic of joint tenancy is the right of survivorship. The right of survivorship means that upon death a San Francisco joint tenant's property interest passes directly to the surviving joint tenant or tenants by operation of law. The right of survivorship is integral to a joint tenancy and distinguishes it from a tenancy in common. Joint tenancy is an attractive option for many, including spouses, because the right of survivorship trumps outstanding claims by surviving heirs and beneficiaries. Additionally, the transfer of a joint tenancy interest occurs outside of probate, the legal process by which a deceased person's will is approved.
A joint tenancy continues so long as more than one tenant owns interest in the property. Upon the death of one joint tenant, the other joint tenants' interests in the property increase equally. This process occurs until only one tenant remains, and then the remaining tenant becomes the sole owner of the property.
It is worth noting however, that joint tenancy with a right of survivorship may not defeat claims by creditors against the decedent's interest. In fact, such liabilities may pass to the surviving joint tenant(s), attached to the decedent's interest in the property.
In sum, a joint tenancy creates a right of survivorship in the remaining tenant which greatly limits the rights of transfer of a property interest upon an owner's death. This is in great contrast to the unlimited right of transfer in a tenancy in common. Co-owners should carefully consider the implications of each form of ownership before taking title.
San Francisco real estate lawyer Matthew L. Kabak advises and represents property owners throughout the San Francisco Bay Area in transactions and disputes related to the purchase, sale and leasing of real property. He is also a licensed real estate broker.
