Joint tenancy is a special type of co-ownership recognized in California. It is commonly associated with married couples, ensuring that when one of them dies, their entire interest in the property passes to the other spouse. This is called the right of survivorship, and it is the defining trait of a joint tenancy.
The right of survivorship, however, can be an uncomfortable concept for co-owners, particularly when those owners are not related and are merely business partners. For that reason, co-owners can attempt to sever the joint tenancy to extinguish the right of survivorship.
The Underwood Law Firm, P.C. is familiar with all types of cotenancies, including joint tenancies, and the various means of severing them under the law.
What is a joint tenancy?
As a form of cotenancy, a joint tenancy is one “owned by two or more persons in equal shares.” (CCP § 683.)
Generally, creating and maintaining a joint tenancy is much more difficult than it is for other forms of cotenancy. First, a joint tenancy exists only when the “four unities” are concurrently present in the estate: unity of interest, unity of time, unity of title, and unity of possession. (Tenhet v. Boswell (1978) 18 Cal.3d 150, 155.)
Second, by statute, a joint tenancy exists “when expressly declared in the will or transfer to be a joint tenancy.” (CCP § 683.) This means that joint tenancy cannot exist unless a writing expressly declares the intent of the co-owners to create a joint tenancy.
For example, “Shawn” and “Julie” decided to invest in a residential property as business partners. They intend to develop the property together and eventually sell it for a profit. Because Shawn has more capital to expend on this business venture, they purchase the property with a 75% ownership interest for Shawn and a 25% ownership interest for Julie. Julie and Shawn are not joint tenants. This is because their collective ownership lacks the unity of interest, meaning they own unequal shares.
What is unique to a joint tenancy?
Undoubtedly, the defining characteristic of a joint tenancy is the right of survivorship. As the name implies, this right arises “only upon success in the ultimate gamble – survival.” (Estate of Propst (1990) 50 Cal.3d 448, 458-459.) This means that “when one joint tenant dies, the entire estate belongs automatically to the surviving joint tenant(s).” (Grothe v. Cortland Corp. (1992) 11 Cal.App.4th 1313, 1317.) “Nothing ‘passes’ from the deceased joint tenant to the survivor; rather, the survivor takes from the instrument by which the joint tenancy was created.” (Id.)
Thus, whether real estate is held as a joint tenancy is extremely significant when held with a non-family member or someone who a party does not want to inherit the property after their passing.
How does a conveyance sever a joint tenancy?
Because a joint tenancy is contingent on the existence of the four unities, if at any point, one of the four unities is destroyed, then the joint tenancy is severed, and a tenancy in common results.
“Accordingly, one of two joint tenants may unilaterally terminate the joint tenancy by conveying his interest to a third person.” (Tenhet, 18 Cal.3d 150,155.) Of course, severance of a joint tenancy in this manner also extinguishes the right of survivorship.
Thus, a conveyance by one cotenant to any other third party destroys an estate held in joint tenancy. This conveyance can take any form, so long as it is a transfer of one’s interest. Additionally, the severing cotenant is not obligated to inform their other cotenants of their actions.
“An undisputable right of each joint tenant is the power to convey his or her separate estate by way of gift or otherwise without knowledge or consent of the other joint tenant and to thereby terminate the joint tenancy. (Riddle v. Harmon (1980) 102 Cal.App.3d 524, 531.)
Curiously, conveyances can produce odd results when the property is owned by more than two people. (see generally Shelton v. Vance (1951) 106 Cal.App.2d 194, 196.)
For example, “Arthur,” “Bob,” and “Carol” own a property as joint tenants, meaning they all have an equal 1/3 share. Carol decides to sell her interest to “Dylan.” Because Carol conveyed her interest, it is no longer held in joint tenancy. Therefore, Dylan owns a 1/3 share of the property as a tenant in common. But because Arthur and Bob never conveyed their interests, they still hold interests in the property as joint tenants with the right of survivorship in-tact between the two of them.
What other actions sever a joint tenancy?
While a conveyance may be the most common method of severance, joint tenants have several other ways to terminate a joint tenancy. They are: (1) recording a written declaration, (2) an express or implied agreement of the joint tenants to terminate the joint tenancy, (3) a partition judgment, (4) another form of judgment such as a divorce or probate action, or (5) an execution sale. (Miller & Starr 3 Cal. Real Estate § 11:27.)
Each of these carries unique requirements and is often misunderstood.
For instance, a written declaration is not effective unless it’s recorded in the county where the property in question is located. (Civ. Code § 683.2.) Additionally, a “will” is not effective as a written declaration unless publicly recorded. This is so that “the other joint tenants have constructive notice of the severance and to avoid fraud.” (Estate of England (1991) 223 Cal.App.3d 1, 7.)
Another common misconception is that the filing of a partition action severs a joint tenancy. This is not true. Just because a person files, the action does not mean the joint tenancy is severed. Only the effect of a judgment, which will later order the property sold or divided, can terminate the joint tenancy. (Walters v. Boosinger (2016) 2 Cal.App.5th 421.)
What actions do not sever a joint tenancy?
While a conveyance to a third party terminates a joint tenancy, a joint tenant’s decision to lease the property does not.
Every cotenant has the right to occupy their property, and a lease is merely the lending of this right to another. “By the very nature of joint tenancy, the interest of the non-surviving joint tenant extinguishes upon his death. And as the lease is valid only ‘in so far as the interest of the lessor in the joint property is concerned,’ it follows that the lease of the joint tenancy property also expires when the lessor dies.” (Tenhet, 18 Cal.3d at 157.)
Similarly, liens and encumbrances suffered by a joint tenant do not automatically sever the joint tenancy. “A joint tenant may, during his lifetime, grant certain rights in the joint property without severing the tenancy. But when a such tenant dies, his interest dies with him, and any encumbrances placed by him on the property becomes unenforceable against the surviving joint tenant.” (Grothe, 11 Cal.App.4th at 1318.)
How can the attorneys at Underwood Law Firm, P.C. assist you?
Joint tenancies are just one way co-owners can hold title. But how title is held to property can make a substantial difference in a party’s rights to real estate. These rights can come to the forefront in, for instance, partition actions, where joint tenants are expected to split costs and distributions 50/50.
As each case is unique, property owners would be well-served to seek experienced counsel familiar with joint tenancies and the ways in which they can be severed. At Underwood Law Firm, P.C., our knowledgeable attorneys are here to help. If you are concerned about severing your own joint tenancy, if you’re worried that your co-owner has severed one themselves, or if you just have questions, please do not hesitate to contact our office.