WHAT EVERY OKLAHOMA ELDER LAWYER SHOULD KNOW ABOUT
JOINT OWNERSHIP OF PROPERTY
By Alyssa D. Campbell
December 1, 2003
Joint ownership is defined as “ownership shared by two or more persons whose interests,
at death, pass to the survivor or survivors by virtue of their right of survivorship.”1 Joint
ownership is also defined as “referring only to those situations in which two or more persons
simultaneously have equal rights in the possession and use of land or chattels.”2 Joint ownership
is a property law concept. Joint ownership, also known as concurrent ownership, has three basic
types, currently. Those types are joint tenancy, tenancy in common, and tenancy by the entirety.
Each type has its own characteristics and requirements, which will be discussed later.
This paper discusses the three basic types of joint ownership. In examining the basic
types of joint ownership, this paper discusses each type’s characteristics. This paper also
provides an examination of relevant Oklahoma law. Following that discussion, this paper
explains how to create and dissolve joint ownerships. Finally, this paper analyzes a variety of
issues that relate to the elderly client, and elder law attorneys.
THE THREE BASIC TYPES OF JOINT OWNERSHIP
There are three basic types of joint ownership: joint tenancy, tenancy in common, and
tenancy by the entirety.
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JOINT TENANCY
Joint tenancy is “a form of concurrent ownership of property in which each owner has an
equal, undivided interest in the whole and holds a right of survivorship with respect to the
interests held by the other co-owners.”3 A right of survivorship means that “upon death of one
of the cotenants, the surviving tenant(s) become the sole owner of the entire estate.”4 For
example, A and B each own a one-half interest in Blackacre as joint tenants with right of
survivorship, and A dies. Upon the death of A, A’s interest automatically conveys to B, and B
becomes the sole owner of Blackacre. Alternatively, A, B, and C each own a one-third interest in
Blackacre as joint tenants with right of survivorship, and A dies. Then, A’s interest will
automatically convey to B and C, and, subsequently, they will both own a one-half interest in
Blackacre.
It is important to note that an interest in joint ownership does not pass under a deceased
owner’s will.5 A joint tenant may convey his or her interest to a third party, depending on
applicable state law.6 This conversion would in effect terminate the joint tenancy and create a
tenancy in common, which will be addressed later. For example, A and B enter into a joint
tenancy with right of survivorship and each owning a one-half interest in Blackacre. A decides to
convey his interest to C. Upon conveyance to C, A and B no longer have a joint tenancy with
right of survivorship, but rather B and C have a tenancy in common. The right of survivorship
does not transfer to C. “A joint tenant might accomplish the same result by transferring his joint
interest to himself as a tenant in common.”7
2
Joint tenancy has four characteristics that must be met. These characteristics are referred
to as the four unities. The four unities are unity of time, unity of title, unity of interest, and unity
of possession. Unity of time means that all tenants must receive their interests in the land at the
same time.8 Unity of title means that all owners must receive their interest/title through the same
event or from the same source.9 Unity of interest means that all the joint tenants must have equal
undivided interests/shares in the land that is jointly held.10 Unity of possession means that each
joint tenant or owner has “the right to possess the whole.”11 In order for a joint tenancy to exist,
all four of these unities and a right of survivorship must be present. Often when a party says that
they have a joint tenancy, they mean they are joint tenants with right of survivorship. However,
if the deed fails to provide for the right of survivorship language, then the presumption today is
that a tenancy in common was created.
TENANCY IN COMMON
Another form of concurrent ownership is tenancy in common. Tenancy in common refers
to situations in which two or more persons own undivided interests in a portion of the property.12
In a tenancy in common, there is no right of survivorship. Upon death, an owner’s interest
passes to his designated beneficiaries or heirs.13 For example, A and B each own a one-half
interest as tenants in common of Blackacre, and A dies. Upon A’s death, A’s one-half interest
will pass to those he named in his will, or if he dies intestate, his interest will pass to those heirs
determined by the state laws scheme of descent and distribution. Tenancy in common also does
not require the four unities. Tenants in common may own different proportions of a property
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interest, meaning A and B do not have to own equal shares. Also, tenants in common do not
have to acquire title at the same time, have access to the use of the whole property, nor obtain
their interest from the same source.
TENANCY BY THE ENTIRETY
Unlike tenancy in common, the third form of joint ownership, tenancy by the entirety,
must meet several requirements. Tenancy by the entirety is a form of joint ownership that is
limited to spouses.14 For example, as tenants by the entirety, husband and wife would each own
a one-half interest in Blackacre. Tenancy in the entirety also requires that the four unities be
present.15 It requires unity of time, unity of title, unity of interest, and unity of possession. Joint
tenancy and tenancy by the entirety each must have the four unities. However, tenancy by the
entirety must have a fifth unity and that unity is called unity of person.16 This derives from the
fact that historically when a husband and wife were married, the wife lost her legal identity and
the husband and wife became one person with the husband having the power to manage the
property.17 Tenancy by the entirety is also subject to the right of survivorship feature.18 If one
spouse dies, then the surviving spouse becomes the sole owner of the property held in joint
ownership in a tenancy by the entirety. Tenancy by the entirety differs from joint tenancy in at
least two ways. First, tenancy by the entirety requires unity of person (i.e. only a husband and
wife may be tenants by the entirety) and a tenancy by the entirety may not be severed unilaterally
by one party.19 It requires both owners consent to transfer property ownership.
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“In some states, property of the husband and wife that is acquired during the marriage is
treated as communal property.”20 These states are known as community property states;
however, Oklahoma is not a community property state.21 There are a number of issues that arise
in relation to tenancies by the entirety, and these will be addressed later.
OTHER TYPES OF JOINT OWNERSHIP
While joint tenancy, tenancy in common, and tenancy by the entirety are the basic forms
of joint ownership today, there have been other forms that existed. At common law, there
existed a fourth type of joint ownership known as tenancy by coparcenary.22 Tenancy by
coparcenary occurred with the descent of land to two or more persons.23 Coparceners did not
have the right of survivorship, but they had the “ability to force the division of the jointly-held
land by a procedure known as partition.”24 Partition was finally permitted in other joint
ownership types in 1539.25 Today, tenancy by coparcenary is treated the same as a tenancy in
common.26 A fifth type of joint ownership that has been recognized is tenancy in partnership.27
Today, the Uniform Partnership Act governs property that would be considered owned jointly as
a tenancy in partnership.28
JOINT OWNERSHIP IN OKLAHOMA
Property law in the state of Oklahoma is governed by Oklahoma statute title 60.29 Title 60
Okla. St. Ann. §1 provides for the definition of property as, “the ownership of a thing is the right
of one or more persons to possess and use it to the exclusion of others. In this chapter the thing
of which there may be ownership is called property.”30 In the very first definition of property
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under Oklahoma statute, the state of Oklahoma recognizes the idea of joint ownership of
property. In Oklahoma, joint tenancies have been “recognized as being part of the common law
of the state.”31 Joint tenancy and tenancy by the entirety are also provided for in the Oklahoma
statutes at 60 Okla. St. Ann. §74 (hereinafter referred to as §74).32 While §74 is titled joint
tenancy and tenancy by the entirety, the statute also mentions tenancy in common. The first
paragraph of §74 provides definitions of joint interest, joint tenancy, and tenancy by the
entirety.33 The second paragraph discusses how a joint tenancy or tenancy by the entirety may be
created.34 The last paragraph of §74 does address the issue of severance and states what
constitutes a severance.35 The rest of §74 addresses formalities and procedural aspects of joint
tenancies and tenancies by the entirety. For the creation of joint tenancy to be valid, §74 “requires
an express declaration”.36 The Oklahoma statute does not have any express provisions regarding
the right of survivorship. However, if the document creating the joint tenancy is silent as to right
of survivorship, it is possible that a court will interpret the document by presumption to be a
tenancy in common.
CREATION AND DISSOLUTION OF JOINT OWNERSHIP
CREATION OF JOINT OWNERSHIP
Joint ownership of property can be created in a number of ways. The first thing to be
considered when creating a joint ownership is what type of joint ownership is the client wishing
to create. Second, an attorney should consider whether the prospective joint owners meet the
requirements, if any, of that type of joint ownership. Third, an attorney must address the issue of
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what kind of property will be put into joint ownership. If a person wanted to create a joint
tenancy over a bank account or other type of account, often only a new signature card needs to be
provided with valid signatures. If parties wish to become joint owners of real property, then the
creation of joint ownership is a little more complex. To create joint ownership in realty usually
requires changing the deed to the real property to reflect both parties as owners. This in essence
will give title to the property, and the Land Title will reflect the joint ownership.
Deeds are used to convey land and create joint ownerships. There are two major types of
deeds, quitclaim deeds and warranty deeds. One of the most common deeds used to create joint
ownerships is the quitclaim deed. A quitclaim deed is “a deed that conveys a grantor’s complete
interest or claim in certain real property but that neither warrants nor professes that the title is
valid.”37 On the other hand a warranty deed is “a deed containing one or more covenants of
title.”38 More specifically, it is “a deed that expressly guarantees the grantor’s good, clear title
and that contains covenants concerning the quality of title, including warranties of seisin, quiet
enjoyment, right to convey, freedom from encumbrances, and defense of title against all
claims.”39 These cover the most common ways to convey property to joint owners.
DISSOLUTION OF JOINT OWNERSHIP
Although joint ownership creation is relatively simple, the dissolution of joint ownerships
is more complex. The dissolution methods are limited to only a few. The first is death of one of
the joint owners. If one party dies, then the joint ownership ceases. The property will convey
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accordingly if there is a right of survivorship present. If no right of survivorship exists, then the
property will pass according to the decedent’s will.
Severance
The second form of dissolution is called severance. Severance is “the termination of a
joint tenancy by converting it into a tenancy in common.”40 In practice, severance will occur if
“one of the joint tenants conveys his or her interest to a third party.”41 This act dissolves the right
of survivorship and also converts the joint tenants into tenants in common. In order to determine
what acts are considered severance action, an individual needs to look at state law. However,
there is a major issue that arises with severance actions. A tenancy by the entirety cannot be
severed by a unilateral conveyance of one of the parties.42 The right of survivorship still exists,
and, therefore, the property cannot be conveyed unless both husband and wife convey their
interest. On the other hand, in the event that divorce occurs, courts have dissolved the right of
survivorship interest and converted the tenancy by the entirety into either joint tenancy or tenancy
in common depending on the state.43
Partition
Severance is not the only way to terminate a joint ownership of property. The most
common type of dissolution is called partitioning. Partitioning is “the act of dividing; esp. the
division of real property held jointly or in common by two or more persons into individually
owned interests.”44 There are a few types of partition. First, there is a partition in kind. A
partition in kind occurs when there is a physical division of the jointly owned property. “Each
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cotenant receives a separate geographic portion of the property.”45 A physical partition or a
partition in kind can be achieved by court action or by joint owner agreements.46 The second
type of partition occurs when the property cannot be partitioned in kind. In this instance, the
joint owners petition a court for a partition.47 The court by judicial process sells the property and
divides the proceeds between the parties according to their ownership interests.48 A partition will
often occur in situations where the joint owners enjoy the property and wish to keep part of it but
do not wish to be joint owners with the other parties. Partitions are often used in divorce cases
when the parties cannot agree as to who is entitled to the property or when the parties agree that
neither party should keep the property.
EFFECTS AND ISSUES IN ELDER LAW
As millions of Americans grow older and begin entering their elder years, a number of
issues that are associated with joint ownership arise. Often elderly people are unaware of the
consequences of putting property into a joint ownership arrangement. Elder lawyers have a duty
to inform their clients of the risks and benefits associated with joint ownership. Today a number
of issues that arise in relation to elderly clients and joint ownership exist.
One issue is the belief that joint ownership is a suitable replacement for a guardianship.
Joint ownership may be appropriate in certain situations, especially when the elder client has had
the opportunity to plan before the need for a guardianship.49 Joint ownership can, under the
proper circumstances, “manage a person’s financial affairs when that person is no longer willing
or able to do so.”50 For the elder client, a common concern is how they will pay for medical care
9
or how they will continue to maintain their lives outside of an institution.
Elder clients are more likely to enter into joint ownership agreements and often elder
clients are victims of financial abuse involving joint ownership. How are elder clients victims of
joint ownership? In a joint tenancy, “immediate unfettered control vests” in the new joint
owner.51 Many elder clients will create joint bank accounts or put their property in joint tenancy.
The new joint tenant may act according to the elderly client’s wishes, and there may be a mutual
understanding that the assets and/or accounts have been set up this way to simplify the task of
managing the elder client’s affairs. However, the new joint tenant may take advantage of the
elderly joint tenant’s trust.
The elder client needs to be aware that by placing property in joint ownership with
another person, they, in essence, are effectuating a gift. The new joint owner or tenant has the
legal right to possess and to use the property according to their own wishes.
In certain situations, these joint accounts or joint ownership arrangements are detrimental
to the elderly client. “The new joint tenant has the ability to legally deplete bank accounts.”52 If
the new joint owner is a tenant in common, the new joint owner may even dispose of real
property. A problem occurs when the property has been depleted, disposed of, or accounts
emptied. There may be no effective legal recourse for the elder client. With joint accounts,
banking institutions have created options that are more favorable for elderly clients.
Another problem with joint ownership is that once the elderly client effectuates the joint
ownership, the property is subject to the debts of the new joint owner.53 It is possible that the
joint property may be used to satisfy the new joint owner’s obligations.54
10
Even though there are some potential risks, there are also some facts that elder clients
should also be informed of before making the decision to create a joint ownership. Raymond
Bornhoft states that:
three distinct disadvantages must be understood by the client…First, counsel
inform the elderly client that his asset will be subject to litigation when a child is
sued. Second, if the child should become incapacitated the asset cannot be sold
unless a valid Durable Power of Attorney has been made through a guardianship
proceeding. Finally, even if the first two never happen, for your client to sell the
asset the child must consent to the sale.55
However, there are other facts that the client should know. First, joint tenancies and tenancies by
the entirety are accompanied by a right of survivorship. The effect of this is that a deceased
owner cannot defeat a survivor’s interest by a devise in the decedent’s will. In short, once a joint
ownership is entered into, the elderly client should be aware that if the right of survivorship is
present that upon their death, the joint owner will receive the property.
Second, there may be tax consequences associated with joint ownership.56 There may be
some tax liabilities incurred by joint owners of real property.57 If the individual is wealthy, there
may be Federal gift tax consequences that attach, but more often there will not be such tax
liabilities.58 Another tax consequence that is of concern is a Federal income tax consequence.
While the elder client is alive, both tenants must report income from the property and pay taxes
associated with that income.59 However, there is no tax consequence when one person dies and
the surviving joint tenant becomes the sole owner.60 This is a major benefit to having joint
ownership. It is often considered a way to avoid probate. This also means that family members
may avoid costs associated with probate.
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CONCLUSION
Joint ownership can be an effective estate planning and probate avoidance tool. Every
day there are a number of elder law issues that arise in conjunction with joint ownership. Elder
lawyers need to be aware of the needs of the elderly client, as well as the situation the elderly
client is facing. The elder lawyer should be prepared to inform the elderly client about all the
options and all the risks and consequences associated with joint ownership. Elderly clients
should not become victims because they put their property into joint ownership without all the
facts.
BLACK’S LAW DICTIONARY 1131 (7th edition, 1999).
JOHN E. CRIBBET ET AL., PROPERTY: CASES AND MATERIALS, 316 (David L. Shapiro, ed., 7th ed. 1996).
3
Robert B. Danforth, Jointly Owned Property, in ESTATE PLANNING STRATEGIES: A LAWYER’S GUIDE TO
RETIREMENT AND LIFETIME PLANNING, 271-272 (Jay A. Soled, ed., American Bar Association, 2002). See also,
Edwin G. Fee, Jr., New Disclaimer Regs, and Other Rules Affecting Jointly Owned Property, 25 EST. PLAN. 117
(March/April 1998) reprinted in A. KIMBERLEY DAYTON ET AL., ELDER LAW: READINGS, CASES, AND MATERIALS,
287 (2nd ed. 2003).
4
ROGER BERNHARDT, REAL PROPERTY IN A NUTSHELL, 89 (Jo Walker, ed., 3rd ed. 1993).
5
Edwin G. Fee, Jr., New Disclaimer Regs, and Other Rules Affecting Jointly Owned Property, 25 EST. PLAN. 117
(March/April 1998) reprinted in DAYTON, supra note 3, at 287.
6
Danforth, supra note 3.
7
Edwin G. Fee, Jr., New Disclaimer Regs. and Other Rules Affecting Jointly Owned Property, 25 EST. PLAN. 117
(1998). See also, In re Knickerbocker, 912 P.2d 969 (Utah, 1996).
8
BERNHARDT, supra note 4, at 86. See also CRIBBET, supra note 2, at 319.
9
Id.
10
BERNHARDT, supra note 4, at 87. See also CRIBBET, supra note 2, at 319.
11
BERNHARDT, supra note 4, at 88.
12
Edwin G. Fee, Jr., New Disclaimer Regs, and Other Rules Affecting Jointly Owned Property, 25 EST. PLAN. 117
(March/April 1998) reprinted in DAYTON, supra note 3, at 287. See also CRIBBET, supra note 2, at 316.
13
Fee, supra note 5.
14
Fee, supra note 5. See also CRIBBET, supra note 2, at 321 and JON W. BRUCE, ET AL., CASES AND MATERIALS ON
MODERN PROPERTY LAW, 323 (1984).
15
CHARLES DONAHUE, JR., ET AL., CASES AND MATERIALS ON PROPERTY, 566 (1974).
16
BERNHARDT, supra note 4 at 88
17
BRUCE, supra note 14, at 324.
18
BERNHARDT, supra note 4, at 88
19
Danforth, supra note 3, at 272.
1
2
12
20
PETER J. STRAUSS & NANCY M. LEDERMAN, THE ELDER LAW HANDBOOK: A LEGAL AND FINANCIAL SURVIVAL
GUIDE FOR CAREGIVERS AND SENIORS, 182 (1996).
21
Id.
22
DONAHUE, supra note 15 at 567.
23
Id.
24
Id.
25
Id.
26
Id.
27
Id. at 568.
28
Id.
29
OKLA. STAT. tit. 60 (2002).
30
OKLA. STAT. tit. 60 § 74 (2002).
31
Van Foreman McClellan, Inter Vivos Transfers: Will They Stand Up Against the Surviving Spouse’s Elective
Share?, 14 OKLA. CITY U.L. REV. 605, 610 (1989). See also, Peyton v. McCaslin, 417 P.2d 316 (Okla. 1966).
32
OKLA. STAT. tit. 60 § 74 (2002).
33
Id.
34
Id.
35
Id.
36
McClellan, supra note 31, at 605.
37
BLACK’S LAW DICTIONARY, supra note 1, at 424.
38
Id.
39
Id.
40
Id. at 1378.
41
BERNHARDT, supra note 4, at 91.
42
Id. at 92.
43
Id.
44
BLACK’S LAW DICTIONARY, supra note 1, at 141.
45
BERNHARDT, supra note 4, at 92.
46
Id.
47
Id. See also CRIBBET, supra note 2, at 318.
48
BERNHARDT, supra note 4, at 92.
49
LAWRENCE A. FROLICK & RICHARD L. KAPLAN, ELDER LAW IN A NUTSHELL 251 (3rd ed. 2003).
50
Id.
51
Id. at 254.
52
Id.
53
Id.
54
Id.
55
Raymond Bornhoft, Estate Planning, An Opportunity to Map the Future for an Elderly Client, 35-SPG ARK. LAW.
12, 16 (2000).
56
See generally John F. MacArthur & George S. Cabot, Tax Aspects of Creating Non-spousal Joint Tenancies, 65
MICH. B.J. 706 (1986).
57
Id.
58
Id.
59
Id. at 256.
60
Id.
13