thOn July 11, 2016 and August 22, 2016, we blogged about how to successfully prepare and record a deed in the State of New York.  Just a few days ago, a question arose as to whether joint tenants with rights of survivorship can hold title to real property in unequal interests.  Although I emphatically stated in our July 11, 2016 post that joint tenants can only hold title in equal shares, I wavered in my answer when I was met with opposition by others who emphatically stated that joint tenants can, in fact, hold title in unequal interests.  So this blog post is intended to set the record straight.  Under New York State law, persons holding title to real property as joint tenants with rights of survivorship must hold title in equal interests.

The three types of real property ownership interests consist of (1) tenants by the entirety, reserved to married couples only, which by its terms creates a survivorship interest in each party; (2) joint tenants, which creates a survivorship interest between the parties, and must be clearly stated on the deed in order for the joint tenancy to exist; and (3) tenants in common, which creates no survivorship interest between the parties and is typically used when friends or persons other than married or familial parties purchase, most often, investment properties.  When a deed is silent as to the ownership interest, such as John Doe and Mary Smith, unless John Doe and Mary Smith are married, the law presumes that the parties intended to create a tenancy in common, with no survivorship interest between the parties.

And, to further set the record straight – the term “joint tenants with rights of survivorship” is a misnomer.  The legal term “joint tenants” provides each titled owner with the right of survivorship.  Consequently, when drafting a deed, indicating the ownership interest between the parties as “joint tenants” is sufficient to create a right of survivorship between the parties.  (See EPTL 6-2.2).  Having said that, when creating a joint tenancy between parties, attorneys routinely indicate ownership interests as “joint tenants with rights of survivorship.”

Understanding the three types of ownership interests becomes of utmost importance when multiple parties take title to real property.  For example, in the State of New York, if John Smith and Mary Smith, his wife, take title to real property together with their children Jack Smith and Meg Smith, the interest created here is an undivided 50% ownership interest in the property by John and Mary Smith and a 25% tenant in common interest to each child, Jack and Meg.  The tenant in common ownership interest arises because the deed is silent as to the ownership interests among all four parties.  Upon the death of husband John, Mary remains a 50% owner; and her two children, Jack and Meg, each own the remaining 25%, all as tenants in common.

This scenario would change in the event that Jack, the son, was to die first.  In this instance, John and Mary Smith, husband and wife, remain 50% owners, Meg remains a 25% owner, and the heirs of Jack inherit his 25% interest.  If the deed had read:  “John Smith and Mary Smith, husband and wife, and Jack Smith and Meg Smith, as joint tenants with rights of survivorship”, then each of the parties, regardless of the spousal relationship, would own 25%.  Upon the death of any owner, the surviving parties would equally inherit the decedent’s share.  If Meg were to pass on first, then John’s, Mary’s and Jack’s interests would increase to 1/3 each.

There are numerous examples of cases where the ownership interests of the parties are disputed.  In most cases, the language set forth in the deed by the attorney draftsman is the cause of the litigation.   In reconfirming that joint tenants must hold equal ownership interests, I came across a 1996 Westchester County, Supreme Court case, Prario v. Novo 168 Misc.2d 610, whereby the trial court not only sets out the law, but also provides great examples of who owns what in specific ownership scenarios.  Most drafting mistakes arise when individuals hold title along with married couples.  To avoid creating an ownership interest that the parties did not anticipate, the drafter must carefully read the language set forth in the deed to ensure that the interests created are, in fact, the interests that the parties desire.  Perhaps printing out a copy of Prario, supra, will assist in avoiding critical ownership interest mistakes.

One footnote:  The joint tenant equal ownership interest theory does not necessarily mean that in a partition action, or action for divorce, each party will walk away with equal monetary amounts.  We will leave that discussion for another day!