How to Split up a Joint Tenancy

Before exploring your question, we need to define our terms.

Joint tenants

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.

Joint tenants are two or more people who 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.

Another way a joint tenancy can be destroyed is if all of the joint tenants die, or if one survives. The remaining tenant owns the property in fee simple. In other words, completely.

Mortgage

A mortgage is a loan secured by real property and paid in installments over a set period of time. The mortgage secures a promise that the money borrowed will be repaid.

In some states, a "mortgage" is actually a deed of trust. I like American Banker's definition: "A three-party document conveying interest in property, almost always real estate, to a trustee. In many states, deeds of trust are used instead of mortgages. In those states, the trustee holds the deed in favor of the lender and then reconveys the title to the borrower when the loan is paid in full. Sometimes called a trust deed."

California and Massachusetts are two states where home loans are handled with deeds of trust instead of mortgages. However, the term "mortgage" is so ingrained in our vocabulary that almost everyone says "mortgage" when the legal instrument may be a deed of trust.

Your question

My favorite cliché is, "Hindsight is 20/20," and this old saying came to mind when I read your question. I have no idea why the four of you agreed to deed the property as joint tenants and agreed to put all four names on the mortgage. I think it was foreseeable that one or more of you would change their goals, and the property and mortgage would become a impediment. I realize you cannot unwind the clock, and I write this for the benefit of other people who are considering a four-person joint tenancy.

Your son can walk away, which will leave the other mortgagors responsible for paying the monthly mortgage payment because all mortgagors are equally responsible for 100% of the mortgage payment. This is called joint and several liability. However, if the joint tenants have a contract whereby each agreed to pay 25% of the monthly mortgage payment, then you and the other joint tenants have a cause of action against the defector for breach of contract.

Assuming for the sake of argument that the parting is amicable, the four joint tenants can agree to buy-out the share of the person leaving. The three remaining can then refinance the mortgage with only their names on the mortgage.

Alternatively, the three could consult with an attorney who will propose alternatives to a three-way joint tenancy that avoids the flaws that are very apparent to you now.

For a no-cost quote from pre-screened mortgage lenders, see the Bills.com mortgage saving center.

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

Best,

Bill

Bills.com