Jointly Owned Assets

This post provides an overview of the ways in which real and personal property may be jointly-owned by two or more persons and the consequences of owning the property in such manner. There are three basic ways that property may be jointly owned: (1) tenants in common; (2) joint tenants with right of survivorship; and (3) tenants by the entirety.

Tenants in Common :  When property is held as “tenants in common” each tenant owns an equal share of the property in his or her own right. For example, if John and Mary (who are not husband and wife and not related) own a condominium as tenants in common, they each own one-half of the condominium and can sell, mortgage or leave their one-half interest of the condominium to someone in their will. Furthermore, their respective interests in the condo are subject to claims by judgment creditors. Thus, if John took out a mortgage to purchase his half of the condominium but then defaults on the mortgage resulting in a bank foreclosure, the bank is now a tenant in common with Mary. The bank cannot, however, foreclose on Mary’s interest assuming she’s not on the mortgage. Similarly, if John sells his half of the condo to Sam then Mary is now a tenant in common with Sam. When John or Mary dies, their half ownership in the condo passes to their respective estates or under the terms of their will, not to the surviving tenant in common.

Joint tenants with right of survivorship:  When property is held as “joint tenants with right of survivorship” then, like tenants in common, each owner has an undivided interest in the property. The difference however is that in a “joint tenancy with right of survivorship” when one owner of the property dies, his or her interest passes, as a matter of law, to the surviving joint tenant(s), not to the deceased’s tenant’s estate. Importantly, simply titling jointly-owned property as “joint tenants” is not enough to create a joint tenancy. Florida Statute §689.15 provides that “The doctrine of the right of survivorship in cases of real estate and personal property held by joint tenants shall not prevail in this state…” and that unless the words “right of survivorship” are expressly contained in the instrument creating the ownership interest in the property, the property is held as “tenants in common.” Using the same facts above as to John and Mary, if they bought 500 shares of Apple stock and they or their stockbroker titles the shares in both their names as “joint tenants” but omit the “right of survivorship” language, upon the death of John or Mary his or her share of the stock passes to their respective estate, not to the surviving joint tenant. This result is so even though it was John’s and Mary’s intention when they bought the stock that it would pass to the surviving “joint tenant.” Note that even with the “right of survivorship” language, there is no protection from a creditor who may have a judgment against one of the joint tenants. If, for instance, Mary breached a contract and was sued resulting in a judgment against her, her interest in the Apple stock (i.e., 250 shares) is subject to levy to satisfy the judgment. John’s shares, however, are not subject to the levy.
Although not specifically stated in the either statute, an important exception to Florida Statute §689.15 is contained in Florida Statute §655.79 regarding deposit accounts and accounts in two or more names such as savings and checking accounts.  This latter statute provides that unless otherwise expressly provided in a contract, agreement, or signature care, a deposit account in the names of two or more persons shall be presumed to have been intended by such persons to provide that, upon the death of any one of them, all rights, title, interest, and claim in, to, and in respect of such deposit account, vest in the surviving person or persons. So, notwithstanding the requirement in F.S. §689.15 that “right of survivorship” language be included to create a joint tenancy, under F.S. §655.79 when two or more persons are named on a deposit account there is a presumption that a joint tenancy with right of survivorship was intended.

Tenants by the entirety:   Only married persons may hold property as “tenants by the entirety.” Married persons may also own property as either tenants in common or joint tenants but the preferred manner of owning property between spouses is as tenants by the entirety as this form of ownership provides more protection from judgment creditors. In the seminal case of Beal Bank, SSB v. Almand and Associates, 780 So. 2d 145 (Fla. 2001) the Florida Supreme Court held that when a husband and wife own property – whether real property or personal property – there is a presumption that they own the property as “tenants by the entirety” and the burden is on a judgment creditor to prove that a tenancy by the entireties was not created.  Before Beal Bank was decided there was no presumption under Florida law of a tenancy by the entireties as to personal property such as with checking accounts, bonds and stock certificates.
Unlike those persons who own property as joint tenants or tenants in common, and who’s share of the property is subject to judgment creditors, when a husband and wife own property as tenants by the entirety each spouse own the “whole or the entirety, and not [just] a share” of the property. Beal Bank at 53. “Thus, property held by husband and wife as tenants by the entirety belongs to neither spouse individually, but each spouse is seized of the whole.” Id. Since each spouse owns the whole of the property, a judgment lien against one spouse cannot be enforced against any property held as tenants by the entirety. The only way a judgment creditor can reach real or personal property owned as tenants by the entirety is if the creditor has a judgment against both spouses. Similarly, unlike joint tenants or tenants in common who may sell, mortgage or devise by will their property, neither spouse may do so without the consent of the other when property is held as tenants by the entirety.
There are a couple of important exceptions to the Beal Bank holding. First, under Florida Statute §319.22 when a husband and wife own a motor vehicle or motor home and use the word “or” between their names on the title to the vehicle or motor home they are held, as a matter of law, to own the property as “joint tenants” and either spouse has the absolute right to dispose of the title and interest in the vehicle or mobile home. Therefore, in order to create a tenancy by the entireties as to a motor vehicle or motor home a married couple need to show their intent in creating such ownership by using the word “and” between the two names on the title. Thus, the title should read “John Doe and Mary Doe.” This statute is specific to motor vehicles and motor homes. The holding in Beal Bank does not require the word “and” on the title to any other type of property held by husband and wife since a tenancy by the entireties is presumed when married persons own the property.
The second exception to Beal Bank is that a federal tax lien against one spouse alone will attach to his or her interest in property even if held as tenants by the entirety because the individual rights of each spouse alone in such property are sufficient to constitute “property” or “rights to property” under the federal tax lien statute contained § 6321 of the Internal Revenue Code. See United States v. Craft, 535 U.S. 274 (2002).