Joint Tenancies

[wired]

https://theboard.byu.edu/questions/65822
I started writing a comment, but I decided I will post it here so I won't have to worry about a character limit. (If an editor or writer wants to append it to the question, I am fine with that.) I am not a lawyer, but as a law student who loved property, I thought I would give my academic view. (Do NOT use this as legal advice.)

No Dice's overall conclusion is basically right. With any property law question, you will have to consult the jurisdiction's law to figure out whether something will work. It is possible to construct a deed and mortgage to work a certain way in California that will never be possible to do under Utah law; each state has its own legal nuances. Let me expound a little on the question and answer to make the picture a little clearer.

The basic definition and advantage of a joint tenancy is right. Survivorship rights are the key goal. No Nym wrote that the homeowners "owned equal shares of the house." That's not exactly the best way to think about it; "equal shares" connotes that the tenancy is divided into parts. Instead, a joint tenancy is each individual in the tenancy having full rights to the whole. (But this is more an academic critique than a real world critique: courts often talk about joint tenants' halves of the whole.) To have a joint tenancy, you also have to have certain conditions that are stringently met. Those requirements aren't important for this answer, but I mention it to emphasize that joint tenancies are very fragile: there are specific things that have to be done to make it and the joint tenancy can be easily "broken." If it is "broken," then the survivorship rights disappear and it turns into a "tenancy in common," a type of tenancy governed by different principles and rules. (A tenancy in common could accurately be described as having "shares.")

When No Nym says, "in a joint tenancy you cannot "encumber" (sale, lease, etc.) the share of the other tenants in common," he is partly right. Some modifications. First, he refers to "the other tenants in common." That's not a (technically) proper use of the term "tenants in common." As mentioned before, a tenancy in common is a completely different estate of ownership. Second, he is kind of right that you cannot encumber others' rights in a joint tenancy, but you can encumber your own rights. In some states, doing so breaks the joint tenancy. (No Dice gets at this pretty well.) (Since this is the 100 Hour Board, I'll say that this is the case in Utah. If an individual encumbers their mortgage, it breaks the joint tenancy and it becomes a tenancy in common. See Franklin Credit Mgmt. Corp. v. Hanney, 2011 UT App 213, 262 P.3d 406, 411.) In the mortgage case, it would mean that when the husband dies, his half of the home transfers to whomever he wills it. The bank's mortgage against the husband's half of the home, but not against the wife's half of the home. (This causes all sorts of weird questions: If the bank executes the mortgage, what can they do? The wife still has half of the rights of ownership! The bank is really only able to sell its half of the home. It's up to a judge to decide the best way to resolve it, but almost certainly would be that the bank could force a sell of the home and the wife would receive half of the proceeds.)

Even in states where encumbering a joint tenancy does not break the joint tenancy, courts are split on how to handle mortgages post-mortem. Some states hold that the wife takes ownership of the home subject to the mortgage. (This means you will usually end up with the same result as states that hold that encumbrances break a joint tenancy; in most cases, a husband will leave his half of the home to the wife which means she takes it subject to the mortgage; just so here.) Others do what No Nym initially asked about:
the wife takes the home and the mortgage disappears. Commentators have pointed out that this can be a quite unfair result. No Nym is right that banks catch this. I would be surprised if the individuals live in a state that reaches this result and the bank issued the mortgage to just the husband. Banks make it their business to not get screwed on this. More likely, I think, is the individual thinks they've hit the jackpot, but they're really in a state that doesn't follow this method. (By the way, Iowa is the only state I know of that follows it, but that's not because others don't, it's just the only one I've seen. I might check into this later to see if George is really in that situation.)

*Convey, here, is used to mean transfer the right of access, ownership, etc. That also means that the individual can use the ownership rights to serve as collateral for a loan - that's precisely what a mortgage is. So "convey" can also mean "mortgage" here.