Joint Tenancy Does Not Always Mean Equal Ownership

NOVEMBER 8, 2010 VOLUME 17 NUMBER 35
Elder law attorneys often see some version of the same story. Parents put child’s name on the deed to their home “just in case.” Dispute between parents and child breaks out when child asserts ownership interest. Sometimes litigation ensues. Child claims that joint ownership of the home means just that — the child owns an interest. The parents claim that putting the child’s name on the deed was just a convenience, or an estate planning device, or a mistake.

The resolution of the recurring story will depend very heavily on individual facts. It should be easy to see that evidence of conversations between the parents and child will tip the result one way or the other, and that written agreements will be even more persuasive than remembered conversations. Again and again, though, we see cases where family members just couldn’t imagine having disagreements in the future. Sometimes the analysis is complicated by the family’s failure to be clear about complicated legal relationships from the outset.

A good illustration of this repeating story is reported in a Missouri appellate case from a few weeks ago. Evan and Evelyn Hoit, who had lived on a Kansas farm for nearly four decades, decided to move closer to their two daughters in Kearney, Missouri. They told Mrs. Hoit’s son (from a prior marriage), Brent Rankin; he and his wife thought it might be a good idea to move closer to family, too. The Rankins suggested that the Hoits could look for a home in Kearney for them, too.

The Rankins had been pre-qualified for a loan, and had hired a real estate agent to find them some likely candidates. They asked the Hoits to check out a couple of the best candidates. The Hoits did, but also went looking for their own place; they found a house that they thought would be perfect for them, and told the Rankins they were going to buy it. The Hoits offered to let the Rankins live in the lower level, but Mrs. Hoit told her son that they intended to buy the house in any event.

The Rankins thought the house would work for them, too; they suggested that the Hoits buy it and let them live there. The Hoits put down 25% of the purchase price. The Rankins agreed to borrow the remainder, since they had pre-qualified for a loan and the Hoit’s farm had not yet sold. No one discussed exactly how the title would be taken, though everyone understood that when the Hoits died the Rankins would inherit the house. Mrs. Hoit later explained that she had intended to leave her other assets — all the couple’s cash and investments — to their two daughters.

Although the couples did not explicitly discuss the title arrangements, the lender apparently made a decision that it would be important to get all four names on the property (and the loan). The result: the four individuals ended up owning the property as joint tenants with right of survivorship.

When the Hoit farm in Kansas sold two months later, they paid off the mortgage with the proceeds. But when they tried to move into the house, they found that the Rankins had taken over one upstairs room that Mrs. Hoit had expressly reserved for her piano, and that there was little space for them to put the rest of their furniture. The family relationships began to fray almost immediately.

Within a few months the Hoits were demanding that the Rankins move out of the house. The Rankins refused, claiming that they owned the property. The Hoits ended up buying another house in Kearney and moving into it. Then they filed a lawsuit asking the courts to decide how much of the first home belonged to them, and how much (if any) to the Rankins.

The trial judge ruled that the Hoits had paid almost the entire cost of purchasing and maintaining the home — their contribution had been $192,734.26, as compared to the $2,757.48 paid by the Rankins. He awarded the home to the Hoits and imposed a lien against it in favor of the Rankins for their small contribution. The Rankins appealed, arguing that they owned half of the home.

The Missouri Court of Appeals affirmed the trial court holding. It noted that, though there is a presumption of equal ownership in joint tenancy titling, that presumption can be overcome by showing the unequal contributions of the joint owners. The appellate court expressly noted that one of the choices available to the Hoits would have been a “beneficiary deed” (recognized in Missouri, as in Arizona and about a dozen other states), but that the evidence showed that the choice of deed was made not by the Hoits but by the lender. Hoit v. Rankin, September 28, 2010.

Though both the trial judge and the appellate court agreed that the evidence was clear that the Hoits did not intend to make a present gift of the property, that successful (for them) outcome may be beside the point. This family, which once got along well enough to experiment with a shared living arrangement, has now spent thousands of dollars in legal fees and two years in the courts battling over what they intended when they started their experiment. Would they have gotten a happier result if one or both couples had talked with a lawyer in advance, and considered what might happen if things didn’t work out as well as they hoped?