Page 12 - The Suffolk Lawyer - March 2021 - Vol. 36, No. 2
P. 12

TIC, TBE, JTWROS, Alphabet Soup or Holding Title

                                                                             By Irwin Izen

                      hen real property is owned by confirmed through recognized business and question whether title is being held as
                      multiple parties, how title is to be records. Conveying real property from a for- TBE.
            W held presents a worthwhile discus- merly wholly owned entity to two or more                       Luckily this issue was clarified by legisla-
            sion to be had well before the closing. With entities as tenants in common as to an undi- tive action. After January 1, 1996, the statu-
            legal implications hinging on the type of vided “%” interest ensures the real property tory presumption is that a transfer to a
            ownership, familiarity with the client and or is titled into separate ownership interests.       husband and wife will create a transfer by
            an organizational structure can prompt sug- For the transactional attorney, making sure the entirety.  Hence, the failure to designate
            gestions or trigger other ownership ques- as to the correct ownership percentages are            a transfer to a husband and wife will not
            tions. Each ownership form is created reflected in this conveyance and then sug- negate the presumption that the transfer
            through the use of specific language. gesting a TIC Agreement to govern how the was intended to create a tenancy by the en-
             Whether it is joint tenants with right of sur- property is to now be managed and eventu- tirety. Such language oversight is commonly
                 vivorship (JTWROS) in which the own- ally distributed provides ample opportunity found on original stock certificates for co-op
                      ership of a deceased passes            for transactional billing work. Language shares when married purchasers were found
                           automatically    by               reciting the ownership as “tenants in com- to be using different last names.
                             operation                            mon” shows the separate and distinct          For succession in transactions not involv-
            of law                                                     ownership, but what happens ing a husband and wife, but resulting in the
            to the sur-                                                     when the language on the same consequences, the language “joint
            vivor or tenant                                                     deed is not as clear?        tenants     with    right   or    survivorship
            in common (TIC)                                                           Language discrep- [“JTWROS”] is customarily used. Using this
            in which separate                                                         ancies are more language implies the interest of a deceased
            and distinct own-                                                            likely to appear in owner passes automatically by operation of
            ership interests                                                              the context of     law to the joint owner. Providing proof of
            are    recognized,                                                              individual death establishes ownership in the surviving
            using clear lan-                                                                ownership. As joint tenant.
            guage in the instru-                                                             relationships Of course, using the proper language on a
            ment of conveyance                                                               evolve, suc- deed will prevent ownership from coming
            should not be over-                                                              cession         into question, but what happens when cor-
            looked.                                                                          rights    and rect language is used “incorrectly” or when
               The “wording” on the deed                                                     other     per-  the verbiage is the actual problem.
            of conveyance can either quickly                                                sonal factors       Two recent examples taken from recorded
            define the intended ownership or                                             are at play in de- deeds are:
            “muddy” the waters through unintended                                  termining real property      1. “ Mr. Smith and Miss Jones as Tenants
            consequences. Lucky for the transactional ownership that are devoid from the “busi- in Common with Right of Survivorship” and
            attorney, when language presents a prob- ness” of real estate. One such predominant                 2.“ Mr. & Mrs. Smith, as husband and wife
            lem, there are other factors to b used in de- theme is succession rights.                        and Mr. Jones as one half share joint ten-
            termining ownership. Plodding through              Unlike a business setting where succes-       ants”
            “muddy” grantee language is Your Action in sion to the real estate is accomplished                  In the first example, the parties are using
            the TransAction.                                 through entity ownership and governed by a two inconsistent terms. The right of survivor-
               For the transactional attorney, those long-   shareholders or operating agreement, indi- ship is common to a joint tenancy and not a
            standing real estate clients are now dealing viduals can hold title and arrange for a suc- tenant in common. Could the language sep-
            with generational succession (transition) and cession of ownership, upon a specific event, arate the ownership between Mr. Smith and
            either divesting real estate holdings or reor- through specific language. The easiest of Miss Jones for estate purposes but then why
            ganizing into new syndications. That original these scenarios is when ownership is be-           would there be a right of survivorship?
            single entity LLC formed to hold the property tween husband and wife, as tenants by the             In the second example, the language is
            amongst an original group of investors entirety (TBE).                                           likewise confusing. Again, the designation of
            (members) is now dissolving and distributing       Ownership of this nature is specific to a “one half” interest as owned by  Mr. & Mrs.
            the real estate to its members who will be husband and wife, with title passing to the Smith together with a “one-half” interest
            forming new and separate LLCs. As is often survivor. However, today many spouses owned by Mr. Jones appears to separate the
            the case in business evolution, partnerships maintain their maiden names and hence ownership interests as half owned by Mr. &
            dissolve and real property once held as a sin- ownership by a married couple, can be con-                             (Continued on page 29)
            gle entity LLC is now undergoing a “drop and fusing if absent the customary “his wife” or
            swap” with fractional ownership interests        “as husband and wife” designation. Thus,                                Irwin Izen
            deeded to the new entities. This is common- two spouses could very well be holding title,                                Solo Practitioner
            place in allowing the original investor group as husband and wife, without a clear desig-
                                                                                                                                     Irwin S. Izen, is a solo prac-
            to now own the property through multiple nation they are tenants by the entirety. Fur-                                   titioner, concentrating on
            entities, as tenants in common.                  thermore, today’s gender neutral preference                             real estate, business and
               The language of conveyance should be could negate the traditional designations                                       transactional law. Reach him
            specific and recite ownership percentages, while recognizing the institution of marriage

            12 THE SUFFOLK LAWYER • The Official Publication of the Suffolk County Bar Association •   MARCH 2021 EDITION
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