Concurrent Estate - Breaking A Joint Tenancy

Breaking A Joint Tenancy

If any joint co-owner deals in any way with a property inconsistent with a joint tenancy, that co-owner will be treated as having terminated (sometimes called "breaking") the joint tenancy. The remaining co-owners maintain joint ownership of the remaining interest. The dealing may be a conveyance or sale of the co-owner's share in the property. The position in relation to a mortgage is more doubtful (see below). For example, if one of three joint co-owners conveys his or her share in the property to a third party, the third party owns a 1/3 share on a tenancy in common basis, while the other two original joint co-owners continue to hold the remaining 2/3s on a joint tenancy basis. This result arises because the "unity of time" is broken: that is, because on the transfer the timing of the new interest is different from the original one. If it is desired to continue to maintain a joint tenancy, then the three original joint co-owners would need to transfer, in the one instrument, the joint interest to the two remaining joint co-owners and the new joint co-owner.

A joint co-owner may break a joint tenancy and maintain an interest in the property. Most jurisdictions permit a joint owner to break a joint tenancy by the execution of a document to that effect. In those jurisdiction which retain the old common law requirements, an actual exchange with a straw man is required. This requires another person to "buy" the property from the joint co-owner for some nominal consideration, followed immediately by a sale-back to the co-owner at the same price. In either case, the joint tenancy will revert to a tenancy in common as to that owner's interest in the property.

A significant issue can arise with the simple document execution method. In the straw man approach, there are witnesses to the transfer. With the document, there may not be witnesses. With either method, as soon as the break occurs, it works both ways. Because there may not be witnesses, the party with the document could take advantage of that fact and hide the document when the other party dies.