MORTGAGES

UpdatedAug 14, 2024

Key Takeaways:

The exact words used on property title are very important.

Joint tenancy controls how the property is owned in the future if one owner dies.

Joint tenants are equal owners of the property.

What does it mean if a title to property is listed as "joint tenancy with rights of survivorship"?

Multiple buyer vesting buyers has instructed the title company that they wish to hold title of property as "joint tenancy with rights of survivorship." What does that mean?

The exact language used in conjunction with the names on a title to real property is extremely important.

Joint tenancy with right of survivorship is manner of titling real estate that contains specific rights and liabilities for each concurrent owner. It is used often by married homeowners for their family home. However, joint tenancy with right of survivorship can be used by unrelated people on the title for any real estate. This form of concurrent ownership is hundreds of years old and has its roots in English common law. Despite its age and common origin, each US jurisdiction is free to alter the rights and liabilities of co-owners of property titled as joint tenants with right of survivorship. As a result, you should consult with an attorney in your state who has experience in property law.

In a joint tenancy, two or more people own a single, unified interest in real or personal property. Here are the most important attributes of a joint tenancy:

Survivorship: Each joint tenant has a right of survivorship. That is, if there are two joint tenants, and one dies, the other becomes sole owner of the interest that the two of them had previously held jointly.

Possession: Each joint tenant is entitled to occupy the entire premises, subject only to the same right of occupancy by the other tenant(s).

Equal shares: Since the joint tenants have identical interests, they must have "equal shares." Thus one joint tenant cannot have a one-fourth interest, say, with the other having a three-fourths interest.

A joint tenancy must be created by a deed or will, and must be created in both or all joint tenants at the same time. Usually, a joint tenancy is created by specific language: "To A and B as joint tenants with right of survivorship." At common law, A (owner of a fee simple) cannot create a joint tenancy between himself and another by conveying "to A and B as joint tenants." But many states, by statute or case law, now permit this result.

There are a number of ways in which a joint tenancy may be destroyed. Severance normally results in the creation of a tenancy in common. A joint tenant may convey his interest to a third party. Such a conveyance has the effect of destroying the joint tenancy.

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For example, let us say A and B hold Mom’s House as joint tenants. A conveys his interest to C. This conveyance destroys the joint tenancy, so that B and C now become tenants in common, not joint tenants.

If there are three or more original joint tenants, a conveyance by one of them to a stranger will produce a tenancy in common as between the stranger and the remaining original joint tenants, but the joint tenancy will continue as between the original members.

For example, let us say A, B and C hold Mom’s House as joint tenants. A conveys his interest to X. Now, X will hold an undivided one-third interest in the property as a tenant-in-common with B and C. B and C hold a two-thirds interest, but they hold this interest as joint tenants with each other, not as tenants-in-common. Thus if X dies, his interest goes to his heirs or devisees. But if B dies, his interest goes to C.

Courts are split as to whether the granting of a mortgage by one joint tenant severs the joint tenancy. In so-called "title theory" states, the mortgage is treated as a conveyance, and thus severs the joint tenancy (so that the mortgagee can foreclose on the undivided one-half interest of the mortgagor, but the interest of the other party is not affected). In "lien theory" states, the mortgage does not sever the joint tenancy; in some but not all lien theory states, if the mortgagee dies first, the other joint tenant takes the whole property free and clear of the mortgage.

Most courts hold that a lease issued by one joint tenant does not act as a severance of the joint tenancy.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

10 Comments

RRon Sargent, Jul, 2014

I am a joint tenant (JTWROS) with my mother on an investment account. I have been on this account for over 20 years but her SS # was listed as the primary and all earnings until now have been reported on her SS#. She passed away a couple of months ago and now I am the sole surviving owner. What are my tax liabilities, if any? The value of the account is 125K.

BBill, Jul, 2014

It is not possible for a correspondent like us to answer specific tax question like this one. Consult with a tax preparation professional to learn what impact the 1099 you will receive this year will have, if any, on your tax situation.

LLouis, Apr, 2014

Can I add my partner on with "Joint Tenancy with Rights to Survivorship" to a property I already own? How do I set that up/add her to have these rights to this property?

BBill, Apr, 2014

The answer to your question depends on your state laws. In some states, a sole owner of a property can create a JT. However, in other states, the sole owner must "sell" the property to a strawman buyer, who then "sells" the property to the joint tenants.

Consult with a lawyer in your state who has mortgage or property law experience. Do not try to change your property's title yourself without receiving legal advice from a lawyer in your state.

NNancy Prager, Jan, 2014

My mom wants to help me buy a home and give me 100k. Rather than get taxed on the 100k she wants to be a JTWROS. What are the inheritance tax implications and general tax implications for her. This would be my primary residence, not hers.

BBill, Jan, 2014

You need more help than I can provide in a one or two paragraph reply. Tax and inheritance questions like yours need a holistic review of the consumer's assets and wishes for how their estate is divided upon death. Take your mom to a lawyer in her state who has estate planning experience. The lawyer will look at her entire situation, and recommend a plan of action that helps your mom's heirs avoid taxes and helps you buy a home.

TTracey, Mar, 2013

I currently own a home (deed-only, the loan is in ex-boyfriend's name) as rights of survivorship. Over a year ago, he was evicted from the home with Protection From Abuse (PFA) after a second assault on me. The PFA is in affect for two years. He is willing to sign-off on the deed for a price of course, which I am willing to pay to get him out of my life. But now the mortgage company is saying I can't refinance the home that I have to assume it instead. I am not sure why I can't just refi the loan. Isn't there a way that I can get the refi if he's willing to sign-off on the deed?

BBill, Mar, 2013

My first and last thought here will be a recommendation that you consult with a lawyer who has either family law or real property law experience to advise you through this process.

In law, the title is separate from the home loan, although it is common for us to mix and combine the two in conversation because they both deal with home ownership. But here, we need to separate the two because using legal and financial terms matters for you to understand your rights and liabilities.

The name or names on the title determine who has ownership rights to property. The legal device we use to change ownership is a deed. People mix up deed and title often, but they are different things. Here, your ex-boyfriend would use a quitclaim or warranty deed to convey the ownership rights of the property to you. The deed would be recorded at your county recorder's office, where the deed would be added to the property's title. See the Bills.com article Mortgage, Note, Deed & Title to learn more.

Let's turn to the loan. The bank mentioned a loan assumption. An assumption is where you sign a document stating you promise to take responsibility for the loan, and the original borrower agrees to relinquish any rights granted by the loan. The loan term, interest rate, and amount do not change in a loan assumption. The only thing changing in an assumption is the name of the borrower. You mentioned a mortgage refinance. In a refi, the borrower obtains a new loan, which is almost always at a lower interest rate, and pays-off his or her existing loan.

Here, you are asking the lender to refinance a loan that is not in your name. It has no experience with you, and it appears you were not a co-signer on this mortgage. From the bank's perspective, it would view a refinance with you no differently than it would a loan with a new customer because you are, after all, probably a stranger to it. Consult with a lawyer about assuming the existing loan, and then waiting 6 months or so to apply for a refinance. By doing so, you have a history on the home loan, and this history will tend to boost your credit score. Although no one knows the future for certain, it seems unlikely mortgage rates will skyrocket anytime soon, so your waiting to refinance may not harm you too much.

LLisa, Aug, 2012

My father in law put his home in his name, my husband's name, and my brother-in-law's name, JTWROS. If either one of the sons dies before the parent, what happens to their share of the home? His intention is to have it transfer down to the spouse/heirs of that son, but does JTWROS accomplish that? Is there a better way to title it, such as JTTEN?

BBill, Aug, 2012

What I am about to write is based on common law, which your father-in-law's state may have modified. In other words, what I write here may be 100% wrong. Therefore, your father-in-law should consult with a lawyer in his state who has property law experience.

Under common law, a properly formed joint tenancy (JT or JT TEN), which is also called joint tenants with right of survivorship (JTWROS) results in all owners having the right to 100% access and use of the property. Each owns an equal share, and unequal shares are not allowed. When one joint tenant dies, at the moment of death, the other joint tenants receive an equal share of the decedent's share. Under common law, offspring or heirs to the decedent do not inherit the joint tenancy, unless, of course, the decedent owned the land as a joint tenancy with his or her offspring.

Your father-in-law should ask a property lawyer about setting up a revokable living trust, which can spell out his wishes for disposing of the property upon his passing, or a tenancy in common where the decedent's fraction of ownership interest is transferred to his or her heirs.