Our firm often sees errors in property deeds that create problems for owners of real estate after one owner dies. If you own a home, you acquired title through a deed that is recorded with the local county Recorder’s Office. There are two ways of holding title to real estate in Iowa: joint tenancy and tenancy in common.
Joint tenancy is a form of ownership where all of the owners hold title together. Joint tenancy has a survivorship component; when one owner dies, the interest is extinguished and the other owners assume the ownership. Usually, all that is required is an affidavit reciting that one owner died and confirming title is vested in the remaining owners.
Tenancy in common is a form of ownership where each owner holds an undivided interest in the property. Unlike joint tenancy, the interest of a tenant in common doesn’t terminate upon death. When the owner dies, the interest passes to the decedent’s estate. Frequently, it is necessary to probate the decedent’s estate to move an undivided interest to heirs.
The complication arises because, until recently, Iowa law presumed tenancy in common. If a married couple took title as John Doe and Jane Doe, without the phrase “as joint tenants with full rights of survivorship and not as tenants in common,” then they each own 50% of the property. If John dies, his estate must go through court-supervised probate so that the court could approve the transfer of half of the property to his heirs. This is frustrating if that heir is Jane, his surviving spouse.
The revelation often occurs when a home is sold, the surviving spouse is trying to move, and the buyers are anxiously waiting close on the transaction. The failure to create joint tenancy at the time the property was purchased creates an obstacle that can only be overcome through the involvement of the court system.
Iowa Code 557.15 was updated address this issue. For all deeds executed after January 1, 2015, if the grantees are married, it creates a presumption of joint tenancy, not tenancy in common.
The 2015 law is designed to prevent the probate of a deceased spouse’s estate in order to convey half a house. However, the law is prospective – it applies only to deeds executed on or after January 1, 2015. This does not fix older deeds with incorrect vesting language.
Probate is the solution to the problem and allows the family to convey a one-half ownership interest in real estate to the surviving spouse. The court involvement takes time and costs money. This exasperating situation can be prevented with a little investigation.
It is vital that you understand the differences in types of ownership so that you can ensure that you hold title to your property correctly. If you have questions about how your home is owned, consult with an attorney who is experienced in both real estate and estate planning matters.