Define Joint Tenancy in Real Estate

"A Deep Dive for Real Estate Agents"

Here are a few more things you should know about Joint Tenancy:

Characteristics: Co-owners have equal shares with the right of survivorship. If one dies, their share automatically passes to the remaining owners. However, a joint tenant can transfer their interest during their lifetime, which severs the joint tenancy.

The Four Unities: Time, Title, Interest, and Possession. All joint tenants must acquire equal shares of the property simultaneously, by the same deed, with equal interest and rights to possess the entire property.

Example: You and your sibling buy a home together. If your sibling dies, you inherit their share, making you the sole owner. But if they sell their share before death, the buyer becomes a tenant in common with you.

Key Point: Typically the right of survivorship is automatic unless the joint tenancy is broken by a transfer. (However, it's important to note that in some jurisdictions, the right of survivorship might not always be automatic unless clearly stated in the deed or by law.)

Severance of Joint Tenancy:

• - If a joint tenant sells or gives away their share, the joint tenancy is severed for that share.
• - The new owner becomes a tenant in common with the other co-owners, losing the right of survivorship.
• - The remaining original joint tenants continue to hold their shares in joint tenancy with each other.
• - To create a new joint tenancy including the new owner, all parties must agree and create a new deed satisfying the Four Unities.

Unity of Possession

Definition: Unity of possession is one of the four unities required for joint tenancy. It means that each joint tenant has the right to possess and use the entire property, regardless of the number of joint tenants.

Key Points:

• - Each joint tenant has an equal right to possess and use the entire property, not just a portion of it.
• - No joint tenant can exclude another joint tenant from any part of the property.
• - This differs from tenancy in common, where each tenant has the exclusive right to their own share.
• - Unity of possession does not mean that joint tenants must physically occupy the property simultaneously or equally.

Example: If three siblings own a vacation home as joint tenants, each has the right to use the entire house, not just a third of it. They can't divide the house into thirds and claim exclusive rights to their portions.

Exam Tip: Questions about unity of possession often test your understanding of the difference between "equal right to the whole" (joint tenancy) and "exclusive right to a share" (tenancy in common).

Right of Survivorship:

Definition: The right of survivorship is a key feature in Joint Tenancy and Tenancy by the Entirety, meaning the property automatically passes to the surviving owner(s) when one dies, bypassing the probate process. However, in Joint Tenancy, any owner can disrupt this feature by selling or transferring their share during their lifetime, converting it into a Tenancy in Common.

Probate

Definition: Probate is the legal process that happens after someone passes away, where a court steps in to make sure their assets (like money, property, etc.) are distributed according to their will or, if there's no will, according to state law. It can be time-consuming and expensive, which is why many people try to avoid it with things like joint tenancy or trusts.

Tenancy by the Entirety (similar to Joint Tenancy but different):

Characteristics: A form of ownership exclusive to married couples in some jurisdictions. It combines elements of joint tenancy with additional protections:

• - Includes the right of survivorship
• - Provides protection from individual creditors of either spouse
• - Requires mutual consent for sale or encumbrance of the property
• - Cannot be unilaterally severed by one spouse (in most cases)

Example: You and your spouse buy a house as tenants by the entirety. If one of you dies, the surviving spouse automatically becomes the sole owner of the entire property. If one spouse incurs significant personal debt, creditors generally cannot force the sale of the property to satisfy that debt.

Key Points:

• - Exclusively for married couples (and in some states, registered domestic partners)
• - Offers strong protection against individual creditors
• - Availability varies by state in the U.S. - not universally recognized
• - Often considered the strongest form of joint ownership where available
• - May have implications for estate planning and tax purposes
• - In some jurisdictions, may be automatically converted to a different form of ownership upon divorce

Comparison to Joint Tenancy: While similar in many respects, tenancy by the entirety offers stronger protections against creditors and typically cannot be severed without mutual agreement, unlike joint tenancy which can often be unilaterally severed.

Additional Insights:

• Survivorship vs. No Survivorship: Understanding whether your co-ownership includes survivorship rights is crucial. In Joint Tenancy, it's automatic, but can be severed by transferring your share. In Tenancy in Common, there's no survivorship, and your share can go to anyone you choose.
• Strategic Use: Joint Tenancy with right of survivorship can be a strategic estate planning tool, avoiding probate. However, it can also complicate things if one owner decides to sell their share.

Final Thought

Remember these key points:

• The Four Unities: Time, Title, Interest, and Possession are essential for creating and maintaining a joint tenancy.
• Right of Survivorship: This is the defining feature of joint tenancy, allowing property to pass automatically to surviving tenants outside of probate.
• Severance: Any joint tenant can sever the joint tenancy by conveying their interest, creating a tenancy in common for that share.
• Creation and Presumption: Joint tenancy must be explicitly created; many jurisdictions presume a tenancy in common unless stated otherwise.
• Distinction from Other Forms: Be able to differentiate joint tenancy from tenancy in common and tenancy by the entirety.

When approaching exam questions on joint tenancy, pay close attention to the specific language used and consider how the Four Unities and right of survivorship apply to each scenario. Remember that while joint tenancy offers certain advantages, it also has limitations and can be severed unilaterally. Being able to recognize these nuances will be key to answering exam questions accurately.