This story comes from a recent trial. Very interesting case that
involved some interesting facets of real estate law and provides a good
example of why you should get legal advice prior to entering into any
contract, real estate, or otherwise.
Briefly, the facts of my case are as follows:
Mom and Dad owned a large Farm. They had 3 children. One of the 3
children (“Bill”) operated the farm along with his wife (“Brenda”) for
many years.
Mom and Dad added Bill as an owner to the farm with a deed as
follows: “Mom and Dad and Bill, as Joint Tenants with Full Rights of
Survivorship”
This “full right of survivorship” language means that when a joint
tenant passes away, his or her interest passes to the remaining owner
(as opposed to passing to the deceased’s heirs).
In my case, Bill died unexpectantly, predeceasing Mom and Dad. Under
the language of the deed, Bill’s interest did not pass to wife, Brenda,
but simply reverted to Mom and Dad.
Thereafter, Mom and Dad executed another deed, this one adding Brenda as a joint tenant with full rights of survivorship.
Dad passed away. At that point Mom and Brenda were the legal owners of the farm.
years later, Mom, without Brendan’s knowledge or permission, in her
old age, signed a quitclaim deed, deeding the entire property to her
Trust.
Thereafter, mom passed away. One of the children brought suit against
my client, Brenda. They claimed that the Property belonged to Bill’s
siblings, not Brenda, since mom’s last deed put the property in her
trust.
The legal question I was presented with was a simple one:
what is the effect of Mom’s later deed?
The Answer is: nothing.
It had zero legal effect.
Law: Distinction Between Tenants in Common and Joint Tenants with Full Rights of Survivorship
Under Michigan law, there are generally two ways to own real property
– Tenants in Common and Joint Tenants with Full Rights of Survivorship.
(A third way, not part of my discussion, but very interesting topic,
being as husband and wife, or tenants by the entirety).
Tenants in Common
Holding property as Tenants in Common means that each owner holds the
entire title along with the owners. . Each owner shares in possession
of the entire property, and each is entitled to an undivided share of
the whole. If an owner dies, his interest in the property is passed on
two his heirs.
Joint Tenants with Full Rights of Survivorship
Conversely, in Joint Tenants with Full Rights of Survivorship, when
an owner passes away, their “remainder interest in the property passes
to the remaining owners. Simply put, the last joint owner to die takes
the entire property.
Another way to characterize this tenancy is: “joint tenancy with full rights of survivorship” is comprised of a joint life estate with dual contingent remainders. While the survivorship feature of the ordinary joint tenancy may be defeated by the act of a cotenant, the dual contingent remainders of the “joint tenancy with full rights of survivorship” are indestructible.”
This issue was made clear in the Michigan Supreme
Court Decision of Albro v. Allen, 434 Mich. 271, 287, 454 N.W.2d 85, 93
(1990).
Put another way: “A cotenant’s contingent remainder cannot be destroyed by an act of the other cotenant.”
Mom’s actions to separate her interest were ineffective. The only
interest she could separate was her “life estate” or her ability to
jointly own and possess the property during her lifetime. When she
passed away, by law, the Property reverted to Brenda. Brenda owns the
farm.
Lesson:
This is a case in point of why you get legal advice before entering
real estate transactions. Know the legal consequences of the deeds you
decide to execute. Michigan law is very clear – mistake as to the legal
effects of of executing document will not undo the transaction. See Schmalzriedt v Titsworth, 305 Mich 109, 114 (1943) “[i]t is elementary, of course, that
a mistake as to law will not invalidate the act of a person who, at the
time, was laboring under no mistake of fact, or who was not the victim
of fraud, undue influence or other form of wrong-doing.” (Emphasis added).
This blog was shared as an educational tool from http://jeshualaukalegalnews.wordpress.com/2013/05/02/lessons-from-trial-the-indestructible-deed-joint-tenants-with-full-rights-of-survivorship/
