Case Study: Breaking Joint Tenancy: A Costly Oversight in Real Estate
Buying a home is one of the most significant investments a family makes. However, errors during property transactions—especially involving joint tenancy—can have long-term legal implications.
One of the most common mistakes occurs during refinancing. Many homeowners assume that all details from the original title remain intact when they refinance; however, this isn’t always the case.
Here’s a real-life scenario.
A couple bought a home as joint tenants to protect their property from probate. However, during a refinance, only the husband signed the updated documents to correct an error in his middle initial. The wife did not sign as a Grantor. As a result, their joint tenancy was inadvertently broken, which removed the automatic survivorship protection they had relied on.
Why This Matters:
When joint tenancy is broken, property ownership defaults to tenants in common, which means that probate would be required if one owner passes away. This can lead to costly legal proceedings and potential disputes among heirs.
Additionally, during refinancing, lenders often do not require the closing to go through escrow, which means a new title policy is typically not issued. Had the borrowers gone through title and escrow with a new title policy, the deed that was recorded incorrectly would have been insured, providing protection to the homeowners upon the death of one of the spouses.
How to Avoid This Mistake:
- Verify every signature: Ensure that both spouses or co-owners sign as Grantors during refinancing or title corrections.
- Work with a Title Expert: A knowledgeable Title professional can help spot potential issues and guide you through proper documentation.
- Review property ownership after refinancing: Confirm that your desired ownership structure (joint tenancy or community property with right of survivorship) remains intact.
By paying attention to these details, homeowners can avoid unnecessary legal complications and ensure their estate plans remain protected.
Have questions about joint tenancy or property Title issues? Reach out. We can assist you.
Disclaimer: We are not attorneys, CPAs, or tax advisors in the state of Nevada or any other state. We are not licensed to give legal, tax, or financial advice, nor may we accept fees for doing so. Nothing in this information, digital content, social media channels, profiles, or website is intended to be or should be considered legal, financial, or tax advice. Laws, statutes, tax codes, lending policies, guidelines, programs, and more are subject to change. Social media and website content may not be fully up-to-date. Information is provided “as is” without any guarantees, warranties, or representations, implied or otherwise. Each legal matter is unique and specific. Therefore, QC Deed, LLC, DBA: Quick Claim USA, encourages every individual and business to seek professional guidance from legal counsel and qualified or certified professionals regarding their specific legal, tax, or financial matters.
