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An estate or unit of interest in real estate that is owned by two or more natural persons all owning equal shares with rights of survivorship. The basic idea of a joint tenancy is unity of ownership; title is held as though all owners collectively constituted one person, a fictitious entity. The death of one joint tenant does not destroy the owning unit—it only reduces by one the number of persons who jointly own the unit. The remaining joint tenants receive the deceased tenant’s interest by the right of survivorship. Thus, the decedent’s interest cannot be transferred by will or descent. As each successive joint tenant dies, the remaining tenants acquire the interest of the deceased. The last survivor takes title in severalty, fully inheritable at his or her death by heirs and devisees.

Some form of joint tenancy is recognized in most states, although several states have opted to eliminate the right of survivorship as a distinguishing characteristic. Sometimes called the “poor man’s will,” the fact that one holds title to property as a joint tenant is no reason for a person not to make a will. Joint tenancy does avoid a formal probate proceeding, however.

Traditionally, four unities are required to create a joint tenancy: unity of title, unity of time, unity of interest, and unity of possession. All unities must be present when title is acquired by one deed, executed and delivered at one time that conveys equal interests to all the grantees, who hold undivided possession of the property as joint tenants.

A joint tenancy can be created only by grant or purchase (by a deed of conveyance) or by devise (will)—it cannot be created by operation of law. The grantees or devisees must be specifically named as joint tenants. In most states, a deed or will that is unspecific about the grantees’ or devisees’ tenancy will pass title to the parties as tenants in common. Typical wording used to create a joint tenancy may be “To Morton Charles and Seymour Berkowitz, and to the survivor of them, and his or her heirs and assigns as joint tenants, with rights of survivorship, and not as tenants in common.”
A combination of interests can exist in one parcel of real estate. For example, if A and B hold title to an undivided one-half as joint tenants, and C and D hold title to the other undivided half as tenants by the entirety, the relation between the two sets of joint tenants is that of a tenancy in common.

A joint tenancy is terminated when any of the essential unities has been terminated by mutual agreement of the parties or by one of the parties selling his or her interest in the joint tenancy. For example, if A, B, and C hold title to certain farmland as joint tenants, and A conveys his interest to D, then D owns an undivided one-third interest, and B and C continue to own an undivided two-thirds interest as joint tenants. D owns the farm as a tenant in common with the joint tenants B and C.
Likewise, if one or more of the joint tenants’ interests are defeated by an action of law, such as the appointment of a receiver in bankruptcy or the sale of property to satisfy a judgment, then joint tenancy is broken. In title-theory states, a mortgage is a conveyance of land to the lender. The land is then subject to being reconveyed upon payment of the debt, and a joint tenant in such states who mortgages his or her interest without the other joint tenants joining the mortgage therefore destroys the existing joint tenancy by removing his or her interest from the joint tenancy.

Many state laws hold that there is no dower in joint tenancy. Thus, business associates can hold title to a parcel of real estate as joint tenants, and any spouses are not required to join in a conveyance to waive dower and/or homestead rights. A corporation cannot be a joint tenant because it has perpetual existence and—at least in legal theory—never dies.
Debtors cannot protect themselves from creditors’ claims by taking title to property in joint tenancy. The creditor has every right to attach the debtor’s interest in jointly held property and force a partition. However, if the joint tenant dies before the creditor seizes that tenant’s interest then the creditor loses his or her interest because the surviving tenant takes the property free from the claims of the decedent’s creditors. On the other hand, a creditor of the surviving joint tenant has substantially increased his or her security.

One principal advantage of joint tenancy is avoiding the delay and expense of probate proceedings, because the surviving joint tenant immediately becomes the sole owner of the property. The current value of the property is not included in the total value of the estate on which probate fees are assessed. In addition, the survivor holds the property free from the debts of the deceased joint tenant and from heirs against his or her interest.
Each joint tenant gives up the right to dispose of his or her interest by will, thus precluding the use of estate planning to minimize the estate taxes. Although not subject to probate proceedings, joint tenancies are subject to gift taxes, income taxes, and inheritance taxes in addition to federal estate taxes. A purchaser should discuss these tax consequences with experienced tax counsel before deciding whether to hold title to the property in joint tenancy. In addition, joint tenancy or tenancy by the entirety may not be appropriate for people with children from a prior marriage.

In many states, a property owner can create a joint tenancy (also a tenancy by the entirety with a spouse) by conveying to himself or herself and another as joint tenants without the necessity of conveying through a third person (called a straw man). This is a statutory exception to the common-law “four unities” rule that requires the creation of a joint tenancy by one and the same instrument when title to the property is acquired.

If all joint tenants die in a common disaster, the Uniform Simultaneous Death Act in effect treats them as equal tenants in common. Rather than avoid probate, however, the unfortunate effect would be to multiply the number of probate proceedings.
Upon the death of a joint tenant, the survivor(s) should, as a matter of good title practice, record an affidavit of death and a death certificate with the county recorder. This is often required under state inheritance tax laws to obtain a tax clearance. If the property is registered in Torrens, the certificate of title must be amended to reflect such death.
Dearborn Real Estate Education
This "Word of the day" is excerpted from The Language of Real Estate, 6th Edition by John Reilly (published by Dearborn Real Estate Education, 2006 copyright). To purchase the complete book, with over 2800 key terms and definitions, or to browse through Dearborn's hundreds of other professional real estate titles, including Real Estate Technology Guide by Klein, Barnett, Reilly, click here.