NJSBA Family Law Section

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  • 1.  Real estate ownership

    Posted 10-08-2021 05:20 PM
    I'm trying to figure out how to accommodate my client's (somewhat unconventional) settlement proposal but could use some help. 
    Client and husband own a home together.  No mortgage.  She is 65 and he is 73.  She is willing to allow Husband to occupy the property as long as he wishes.  These are her conditions and she thinks Husband will agree:  (1) He pays all carrying costs.  (2) If he vacates the property for any reason, the house will be sold and the proceeds split equally between them.  (3) If he dies while still living in the house, she will become the sole owner. Both of them have children from a previous marriage. 
    Can a Deed be prepared that re-titles the property so that Wife holds the property as a tenant-in-common to Husband but Husband holds the property as a joint tenant with Wife?  That would allow my client to retain her 50% interest while Hubby is alive but will also insure that she gets the house outright (without having to share it with his kids) if he dies before the house sells. If she dies first, she wants her kids to inherit her 50% share of the house. 
    Here's a second question:  The house was purchased before their marriage but the Deed doesn't delineate how they hold title.  It lists the buyers as "Susan Smith and John Jones as _______" [left blank when it should say either tenants-in-common or joint tenants]  I know that the default is T.I.C. but does that type of ownership "convert" to a joint tenancy if they later marry?  I don't think so but I can't find the answer to that question.
    Thanks for your help, Folks. 
    Lisa.

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    Lisa M. Radell, Esq.
    207 South Main Street
    Cape May Court House, NJ 08210
    Phone (609) 465-9910
    Fax (609) 465-9920
    E-Mail [email protected]
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  • 2.  RE: Real estate ownership

    Posted 10-08-2021 05:53 PM
    Lisa,

    A deed can reflect a life estate to a grantor. So the husband could deed his interest back to the wife reserving a life estate for himself. There should be a writing to govern the terms of the "sale" of the interest and the writing should say that the agree survives the transfer.

    Another option would be enter into the agreement, have the husband tender a deed to the wife quit claiming his interest and the agreement would require an escrow agent to hold the deed and not allow it to be recorded until the death of the husband or his vacating the property for good. Technically under NJ law, the tender of the deed is sufficient to effect the transfer of title, but holding the deed would not allow the wife to sell the property out from under the husband, as the transfer would not be of record.

    Deb Guston
    =============================.
    (she/her/hers)
    Debra E. Guston, Esq., C.A.E.
    Guston & Guston, L.L.P.
    55 Harristown Road, Suite 106
    Glen Rock NJ 07452
    (201) 447-6660
    Fax (201) 447-3831


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  • 3.  RE: Real estate ownership

    Posted 10-09-2021 09:04 AM
    They took title as tenants in common, and that's how they continue to have title. It doesn't convert by virtue of the marriage. 

    You can grant a life estate by having both husband and wife convey a deed granting a life estate to husband with wife being the remainderman. But, husband will have that life estate even if he vacates the property, so the settlement agreement should set forth that the property will be sold if the husband vacates. And if the wife passes first, then her estate becomes the remainderman; husband's heirs get nothing. 

    A life estate holder is already obligated to pay the real estate taxes and mortgage interest, but the responsibility to pay other holding costs (particularly insurance) should be expressly set forth in the agreement.  

    (Before the wife makes this proposal, she should speak with an accountant as there may be a capital gains impact to her or her heirs.)

    I'm not sure the deed escrow arrangement would work as title to property is conveyed only when a deed is delivered to and accepted by the grantee, irrespective of recording. And even without such recording, the grantee can conceptually transfer title to a property, as you just need to be the owner of a property to convey title to it; you do not have to be an owner of record to transfer title.

    The escrow agreement may make it appear that the parties do not intend to transfer title, and intent matters for both the grantee and grantor in order for title to transfer. If the agreement does not express that intent, then the grantee does not have title, which would be bad for the wife; that means the husband can transfer title to a subsequent buyer, and the subsequent buyer will have title once its deed from the husband is recorded.

    If the escrow agreement does make it appear that the parties intended to transfer title, then the grantee has title, and there can be a recording (such as the original escrow agreement, or a memorandum of the escrow agreement) to go along with the new deed from the grantee to the subsequent buyer to show the previous conveyance, even without recording or releasing the escrowed deed. This is good for your client, but if the husband understands the implications, he will not accept it.

    (Whether a title company will insure title transfered per an escrowed, unrecorded deed with the agreement confirming the requisite intent is a separate issue, but there are ways to maneuver around this foreseeable issue with the right title company, which is in furtherance of why escrowing is not a viable option for the husband in this scenario.)

    (Also keep in mind that the realty transfer fee exemption for a deed granted incident to a divorce only applies if the deed is recorded within 90 days of the divorce. And a delayed sale of the property by the non-occupant owner (wife) or her estate will most likely be subject to capital gains.)

    Rajeh A. Saadeh
    The Law Office of Rajeh A. Saadeh, L.L.C.
    1200 Route 22 East, Suite 2000
    Bridgewater, New Jersey 08807-2943
    p: 908.864.7884 | f: 908.301.6202
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    http://www.rajehsaadeh.com

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    Original Message