Property Law: Joint Tenancy and Mortgages

Joint Tenancy

• A joint tenant can sever a joint tenancy by executing a contract to convey their property interest in most states.
• In some states, a contract to convey property held in a joint tenancy executed by all joint tenants does not sever the joint tenancy, severance occurs only upon transfer of the property.

Mortgages

• A joint tenant can grant a mortgage in their joint tenancy interest.
• In lien theory states, the mortgage is only a lien on the property, and severance occurs only upon a foreclosure sale following a default.
• In title theory states, the granting of a mortgage by a joint tenant constitutes a transfer of title, severing the joint tenancy and converting it to a tenancy in common.

Judicial Lien

• A judicial lien imposed on the property interest of a joint tenant does not sever the joint tenancy in most states.
• A levy and sale of the property interest are required to effect a severance.
• If the joint tenant against whom the lien is imposed dies before the sale, the remaining joint tenants are entitled to the property interest by right of survivorship.

Leases

• There is a split among jurisdictions on how to handle joint tenancies when one joint tenant leases their interest.
• Some jurisdictions hold that the lease destroys the unity of interest, severing the joint tenancy, while others believe the lease merely temporarily suspends the joint tenancy, which resumes upon expiration of the lease.

Intentional Killings

• In some states, when one joint tenant intentionally kills another, the felonious joint tenant holds the property in constructive trust for the deceased joint tenant's estate.
• In other jurisdictions, statutes sever the joint tenancy upon a felonious killing of one joint tenant by another.

Tenancy by the Entirety

• Tenancy by the entirety is a joint tenancy between married persons with a right of survivorship.
• The same rules for joint tenancy apply, plus the joint tenants must be married when a deed is executed or conveyance occurs (the fifth unity—unity of person).
• Neither spouse can alienate or encumber the property without the consent of the other.

Rights and Obligations

• The four unities required for a joint tenancy are: unity of possession, unity of interest, unity of time, and unity of title.
• The modern trend focuses on the intent of the parties if the language creating the tenancy is unclear.
• Unlike a joint tenancy, a tenancy in common requires only the unity of possession.

Conveyance by Current Fee Simple Owner

• Traditionally, the fee simple owner of real property cannot directly create a joint tenancy with one or more other persons.
• To overcome this problem, the fee simple owner can transfer the property to a "strawman," who then transfers the property to the owner and the other persons as joint tenants.
• Many jurisdictions now permit the fee simple owner to forego this formality and directly create a joint tenancy with one or more other persons.

Unequal Interests

• Some jurisdictions permit joint tenants to own unequal interests.

Severance

• The severance of joint tenancy may occur in several ways, and converts the joint tenancy into a tenancy in common.
• If there are more than two joint tenants, a severance does not automatically affect the joint tenancy of all joint tenants.