Home > Uncategorized > The Words You Use In Real Estate Documents: They Matter.

The Words You Use In Real Estate Documents: They Matter.

I recently met with a client at my office – her mother recently passed away.

 

My client had no siblings, she alone was scrambling to figure out what she needed to do to wrap up her mother’s estate. Mother had died without any estate plan, the largest asset that mother owned was her home.

 

Prior to passing away, mother added daughter on the deed to her house. Mother assumed that adding daughter to the deed would allow the property to pass to daughter, period.

 

After a review of the deed, it was clear to me that although mom did add her daughter to the deed, unfortunately, the property would not pass to her when mother died.

 

Why?

 

Because mother failed to include a few key words in the deed.

 

 

Two ways to hold joint ownership of  Property in Michigan

 

Under Michigan law, there are generally two ways to jointly own real property – Tenants in Common and Joint Tenants with Full Rights of Survivorship.

Tenants in Common

A tenancy in common is a legal estate, with each tenant having a separate and distinct title to an undivided share of the whole.  Kay Inv. Co., L.L.C. v. Brody Realty No. 1, L.L.C. (2006) 731 N.W.2d 777, 273 Mich.App. 432

Holding property as Tenants in Common means that each owner holds the entire title along with the owners.  Each owner shares in possession of the entire property, and each is entitled to an undivided share of the whole. If an owner dies, his interest in the property is passed on two his heirs.

 

This is what happened. Since my client’s deed did not contain the “magic words” with full rights of survivorship, my client held the property was a tenant in common with her mother. So, when mother passed away, the property passed to mother’s estate.

 

The practical effect:

In order to own 100% interest in the property, my client now needs to open up a probate estate and then transfer it to herself. Although this isn’t a really overly burdensome outcome, you can imagine scenarios where the effect would be very much unintended:

what if client’s mom had a will directing where her estate assets should go?

then mom’s 50% interest in the property would go to the will’s beneficiaries

 

What if mom had other children?  

Then all would take an equal share in the estate’s

 

You could imagine many scenarios that could result in disputes, or possibly litigation.

Lesson: the words you use matter. Using the wrong words could have unintended and unfortunate consequences.

 

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

 

 

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