Home > litigation, Real Estate, Uncategorized > Real Estate Case Law: Tenants in Common v Tenants with Full Rights of Survivorship – A Potentially Costly Distinction.

Real Estate Case Law: Tenants in Common v Tenants with Full Rights of Survivorship – A Potentially Costly Distinction.

This morning I read a court of appeals decision that came out on October 18 – it provides a classic example of why you need to take care in drafting real estate documents.

 

The case: In Re Estate of Lyle Steiner

Facts are relatively straight forward:

  • In 2007, Tuscan Plaza Condominiums, LLC, conveyed a personal residence to Lyle F. Steiner and Steven Steiner.
  • Specifically, the deed provides that the property was conveyed: to LYLE F. STEINER, A SINGLE MAN AND STEVEN M. STEINER, A SINGLE MAN
  • Lyle passed away. Steven was appointed personal representative of Lyle’s estate.
  • DHHS filed a claim against the estate for unpaid Medicaid bills in the amount of $48,084.95.
  • Steven subsequently filed a petition to reform the deed to Lyle’s personal residence to indicate a joint tenancy with a right of survivorship.

What’s the significance?

Law: Distinction Between Tenants in Common and Joint Tenants with Full Rights of Survivorship

 

Under Michigan law, there are generally two ways to own real property – Tenants in Common and Joint Tenants with Full Rights of Survivorship. (A third way, not part of my discussion, but very interesting topic, being as husband and wife, or tenants by the entirety).

Tenants in Common

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 to his heirs.

Joint Tenants with Full Rights of Survivorship

Conversely, in Joint Tenants with Full Rights of Survivorship, when an owner passes away, their remainder interest in the property passes to the remaining owners. Simply put, the last joint owner to die takes the entire property.

In the Steiner Estate Case:

The Deed indicated that Lyle and Steven owned the Property – there was no “survivorship language” – so the property was held as “tenants in common”.

 

When Lyle Steiner passed away – an undivided half interest in the Property was owned by the Estate – and therefore DHS had a, presumably, valid claim for its $48,084.95!

If the Property was held as Tenants with Full Rights of Survivorship – Lyle Steiner would have no Estate – his half of the Property would transfer automatically to Steven.

No Estate = No money to pay DHS.

Steve attempted to argue that the Deed should be “reformed” because Steve’s complete ownership upon Lyle’s death was intended.

The Court of Appeals was not convinced.

To paraphrase – the Deed is not ambiguous. It is plain in its meaning.

because it is plain in its meaning – you cannot look outside of the deed to other evidence that shows Lyle’s intent.

 

Conclusion:

Real Estate can be precise and complex. It is worth engaging legal counsel in any real estate matters.

 

http://www.dwlawpc.com

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

 

 

 

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