In Michigan, there are three ways that multiple persons can be owners of real estate:
- Tenancy in Common: Each person owns a specific interest in the property (e.g. four owners own 25% each) and that person is free to sell or convey that interest to any other third party without the consent of the other owners. Absent any specific language in the deed to the contrary, multiple ownership situations are presumed to be tenants in common.
- Joint Tenancy: Each person shares in possession of the entire estate and each is entitled to an undivided share as a whole. The joint tenants must come into ownership of the property at the same time. Upon the death of one joint tenant, the surviving tenant or tenants take the entire estate.
- Tenancy By The Entirety: This is a special form of joint tenancy reserved only for a married couple in ownership of property. The spouses are considered under Michigan law to own the property as a separate entity. It acts like a standard joint tenancy in most respects and, if one spouse dies, the surviving spouse becomes the sole owner of the property. However, there are some additional benefits with this legal status such as limits on creditors to attach liens against the property with respect to one spouse.
Unlike a tenant in common, a joint tenant does not have the right to unilaterally alienate his or her interest in the property. To convey an interest in a joint tenancy, all of the joint owners must join together to execute a deed that conveys the interest to a new joint tenant or create a tenancy in common with a third party. The joint tenancy may also be severed by a levy and sale on an execution against one of the joint tenants by a creditor. In the event that one joint tenant wants to separate his interest but the other joint tenants do not agree, he or she may file an action for partition in the circuit court to obtain a judgment that divides the property. MCL 600.3304 provides that “[a]ll persons holding lands as joint tenants or as tenants in common may have those lands partitioned.”
However, there is a major exception to this right to partition that is rooted in Michigan’s common law. There are actually two types of joint tenancies:
- “Standard” Joint Tenancy – All owners have an undivided interest in the entire estate and the surviving joint tenants take the entire estate upon the death of one tenant. However, the joint tenancy is severed when one tenant conveys his interest to a third party either by consent or court order.
- Joint Tenancy with Right Of Survivorship – This joint tenancy acts as a joint life estate with dual contingent remainders. This is created when the deed or instrument contains express language to the right of survivorship, such as “to the survivor of them”, “to them and the survivor of them”, “or survivor of them”, or “with right of survivorship.”
In the landmark case Albro v Allen, 434 Mich 271; 454 NW2d 85 (1990), the Michigan Supreme Court determined that a joint tenancy with rights of survivorship was “indestructible”, meaning that the joint tenant may not deprive the other owners of the right to survivorship to his interest by a unilateral act. Since the right to survivorship is overtly expressed, the contingent remainder of either joint owner may not be destroyed by an act of the other. Id at 275-276. Ironically, the life estate interest possessed by the joint tenant may be conveyed and alienated, but this will have no effect whatsoever on the contingent remainder. For example, a third-party who purchases a life estate from a joint tenant with right of survivorship enjoys all right to the property while he or she is alive, but cannot convey this interest to another person in a last will and testament upon death because the contingent remainder grants the entire estate to the surviving joint tenants.
The “indestructibility” of the joint tenancy with right to survivorship precludes a joint tenant from filing a partition action to separate the property. In Hirt v McKeon, unpublished per curiam of the Court of Appeals issued February 3rd, 2015 (Docket No. 317988), the Michigan Court of Appeals ruled that a plaintiff had failed to state a claim where relief could be granted when she filed an action for partition on residential real property held in a joint tenancy with full rights of survivorship. Although MCL 600.3304 permits a partition, the Michigan Legislature did not draft this cause of action to expressly abrogate the common law rules regarding joint tenancies. The common law prevails unless abrogated by statute. Myers v Genesee Co Auditor, 375 Mich 1; 133 NW2d 190 (1965). The plaintiff, however, could ask the court to partition her life estate only without disturbing the contingent remainders. In reality, the practical effect of that request would be useless.
The addition or deletion of a few words to a deed or instrument conveying property can radically determine or abrogate the rights of the persons receiving the property. Becoming attached to a joint tenancy with full rights of survivorship can become problematic if the personal relationship with the other owners goes sour and you want to convey your interest in the property. Before walking into a future nightmare, it is always advisable to make a small investment into a skilled lawyer that can review the conveyance documents and inform you of the benefits and drawbacks of becoming co-owner of the premises.
If you or a loved one have questions about joint tenancies, do not hesitate to contact the property law attorneys at Kershaw, Vititoe & Jedinak PLC today.