Court Clarifies Test for Creation of Joint Tenancy

October 15, 2008 | Erin Herbold

 

A joint tenancy is signified by the right of survivorship- when a joint tenant dies, the surviving tenant (or tenants) own the property.  Without the survivorship component, co-ownership is by tenancy-in-common.  That means that at the death of a co-tenant the deceased co-tenant’s interest in the land passes to co-tenant’s heirs (either by will or by intestacy).  Historically, the common law required that in order for a joint tenancy to be created, the co-owners must share the “four unities” of (1) time – the property interest must be acquired by both tenants at the same time; (2) title - both tenants must have the same title to the property in the deed; (3) interest - both tenants must have the same interest in the property; and (4) possession – both tenants must have the right to possess the whole property.  If any one of the four unities is missing, co-ownership is by tenancy in common.  Over time, however, the “four unities” test became viewed as archaic and some courts abandoned it.  Now, Iowa can be added to the list.

In this case, the Iowa Supreme Court ruled that a now-deceased husband's efforts to transfer his incompetent wife's interest in the family homestead to himself by severing a joint tenancy were ineffective. Under the facts of the case, a married couple purchased a homestead as joint tenants and lived there together for 35 years.  The wife suffered a severe stroke in 1998, causing her family to assume that she would die first.  The family agreed that all assets should be transferred to the husband. So, as part of this plan, her family (on her behalf) quit-claim deeded her interest as joint tenant in the homestead to her husband.  The husband signed the quit-claim deed.  But, the wife hadn't executed a valid power of attorney at the time of the execution of the quit-claim deed.  She later executed a power of attorney, and her daughter, as agent, signed the deed for her.  The husband also executed a deed transferring the homestead property to himself. The husband, however, died first with a will that left all of his property to his three children in equal shares.  Five years later, the final report for his estate was filed.  The wife objected to the claim that she transferred her interest in the homestead through the quit-claim deed.  The trial court determined, however, that the husband could have unilaterally terminated the joint tenancy during his life, with the result that the wife was only a tenant in common owning half of the homestead. 

The trial court found that one spouse may unilaterally sever the joint tenancy in a homestead leaving the title holders as tenants in common without violating either the language of homestead statute or its purpose. The Iowa Supreme Court didn't address that issue, but instead ruled that the deed executed by the husband was not executed with the intent to sever the joint tenancy. Instead, it was executed with the intent to vest all of the property in the husband. Since there was no intent to sever and create a tenancy in common, the court reasoned, the deed failed to sever the joint tenancy. Thus, the property remained in joint tenancy until the husband died and the wife was the surviving joint tenant and owned the entire property outright upon her husband’s death. As such, the property was to be distributed under her will as the surviving joint tenant. The husband's estate argued that the conveyance to him was sufficient to sever the joint tenancy and create a tenancy in common, but instead of focusing on the “four unities” to determine if a joint tenancy existed, the Court, as mentioned above, adopted an intent-based approach that focused on the intent of the parties as evidenced by some action or instrument that corroborated that intent. In addition to its intent-based approach, the court ruled-out the possibility of an inadvertent severance by treating the husband’s deed to himself as void under Iowa Code §561.13 because the wife didn’t sign the deed (and couldn’t because of her incompetency).  Unfortunately, on this point, the only authority the court cited for its opinion were cases involving personal property joint tenancies, and not homestead property. 

The court’s opinion is not as clear as it could be,, and could raise some questions in the future concerning common estate and medical planning techniques.  In re Estate of Johnson, 739 N.W.3d 493 (Iowa 2007).