objectives - res ipsa...-1929 charles & denman convey to chandler w/vl securing 5 one-year notes...

12/6/2019

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R. J. (Ron) Dold

Westcor Land Title Insurance Company

Houston, Texas

SURVIVORSHIPS, JOINT TENANCIES, ALTERNATE BENEFICIAIRES

Objectives

▪ Joint ownerships and passing title outside probate

▪ Lady Bird Deeds v. Transfer on Death Deeds

▪ Creation of valid JTROS, both community and separate property

2019 TEXAS LAND TITLE INSTITUTE

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Types of Joint Ownerships


Types of Joint Ownerships

Generic term used for shared ownership is

“tenants in common”

▪ Tenancy in Common

▪ Community Property

▪ Joint Tenancy With Right of Survivorship


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Tenancy in Common

▪ Not a “tenant” as in a lease

▪ Concurrent ownership where two or more

individuals possess property simultaneously

▪ Undivided interests-need not be equal shares

▪ Can be created at different times in different

documents

▪ Can be sold, transferred or mortgaged


Community Property Rights

▪ All property acquired during marriage

▪ Exceptions:

-gift

- inheritance

- partition

▪ Inception of Title Doctrine-reason for the Marital

Status Affidavit


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Joint Tenancy With Right of Survivorship

▪ Concurrent ownership where two or more

individuals possess property simultaneously

▪ All shares are equal

▪ Created at the same time-same document

▪ Fixed duration-for life of each joint tenant

▪ Upon death of one joint tenant, that share is

divided equally among the remaining joint tenants


Purpose/Objective

▪ Means to automatically transfer an property

interest upon death of the owner

▪ No probate required

▪ No Affidavit of Heirship required

▪ Not subject to Estate taxes

▪ Transfer happens immediately – no waiting period


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Enhanced Life Estate Deeds

▪ Aka “Lady Bird Deed”

▪ Transfers remainder interest subject to life estate

▪ Current owner remains in property

▪ Current owner can sell, lease, mortgage

▪ Current owner can terminate remainder interest in his

lifetime

▪ Removes property from probate & Estate taxes

▪ Can be signed by POA


Transfer On Death Deed

▪ Aka “TODD”

▪ Transfers future title upon death

▪ Current owner remains in property

▪ Current owner can sell, lease, mortgage

▪ Current owner can revoke TODD by sale, new TODD or

recorded memo of revocation

▪ Removes property from probate & Estate taxes


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Transfer On Death Deed (cont.)

▪ Statutory Requirements (Chapter 114 Estates Code):

- Grantor needs same capacity to make a contract

- Same elements & formalities for a recordable deed

- Include statement transfer is upon death of grantor

- Must be recorded prior to death of grantor

- No delivery/acceptance required by beneficiary

- No consideration required


Lady Bird Deed vs TODD

▪ TODD cannot be signed by POA (Lady Bird Deed can)

▪ TODD beneficiary survive grantor for 120 hours/5 days

▪ TODD property subject to claims by estate for 2 years

(Section 114.106(e) Estates Code)

▪ TODD conveys title upon a condition subsequent vs Lady

Bird Deed conveys present title subject to a life estate

▪ Both transfer title outside probate


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Creating Joint Tenancies With Right of Survivorship

▪ “JTROS” for short

▪ Until 1925 common-law presumption all joint ownerships

(including community property) were JTROS

▪ Presumption repealed by Article 2580 (VATS) in 1925 but

JTROS still allowed by written agreement (except

community-partition 1st-then written agreement)

▪ 1987 amendment to Article XVI, Section 15 of the State

Constitution to allow JTROS as to community property

directly by written agreement



▪ General rule is Estates Code Section 101.002

“If two or more persons hold an interest in property jointly and

one joint owner dies before severance, the interest of the

decedent in the joint estate:

(1) does not survive to the remaining joint owner or owners;

and

(2) passes by will or intestacy from the decedent as if the

decedent's interest had been severed.”


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▪ For community property - Estates Code Section 112.051

“At any time, spouses may agree between themselves that all

or part of their community property, then existing or to be

acquired, becomes the property of the surviving spouse on

the death of a spouse.”



▪ Acceptable agreement? - Estates Code Section 112.052

an acceptable form of agreement must:

(a) be in writing and signed by both spouses.

(b) is sufficient to create a right of survivorship in the

community property described in the agreement if the

agreement includes any of the following phrases:

(1) "with right of survivorship";

(2) "will become the property of the survivor";


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▪ Acceptable agreement? - Estates Code Section 112.052

(3) "will vest in and belong to the surviving spouse"; or

(4) "shall pass to the surviving spouse."

(c) (omitted)

(d) A survivorship agreement may not be inferred from the

mere fact that an account is a joint account or that an account

is designated as JT TEN, Joint Tenancy, or joint, or with other

similar language.



▪ For non-community property - Estates Code Section 111.001(a)

“Notwithstanding Section 101.002, two or more persons who

hold an interest in property jointly may agree in writing that

the interest of a joint owner who dies survives to the surviving

joint owner or owners.”


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▪ For non-community property - Estates Code Section 111.001(b)

“an agreement described by Subsection (a) may not be

inferred from the mere fact that property is held in joint

ownership.


Some Cases


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Cases-Creating JTROS (Community Property)

▪ Haas v Voight, 940 SW2d 198, Tex Civ App-San Antonio

(1996)

▪ Beatty v Holmes, 233 SW3d 475, Tex Civ App-Houston

(14th) (2007)



▪ Haas: - Bert & Emma Haas married with 3 children

- Bert & Emma establish 3 accounts at BOA as JTROS

- Emma declared NCM-son (Herman) appointed guardian

- Bert & Herman create account at Nations Bank as JTROS

- All accounts created with community funds

- Bert died in early 1994 and leaves everything to Emma

- Before Bert dies, Bert & Herman complete new signature cards at BOA to

remove Emma, add Herman

- Emma dies in late 1994


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▪ Haas (cont.): - Herman’s siblings sued to have these accounts declared part of Emma’s

estates and did not pass to Herman as JTROS

- Trial Court ruled in favor of the siblings on all 4 accounts (3 BOA + 1 Nations)

- San Antonio Appeals Court affirmed

- Attempt to create a JTROS on community property was ineffective between

Bert & Herman because

1) there was not a partition first as to the Nations account

2) Bert & Emma’s original agreements with BOA were effective and there

was no revocation before the change of signature

- Attempt to create JTROS with Herman as beneficiary under 112.051 on

community property was ineffective since Herman was not a spouse



▪ Beatty:

- Thomas & Kathryn Holmes married in 1972; 2nd marriage for both

- Kathryn dies in July 1999, her son by a prior marriage (Beatty) appointed IE

- Thomas dies in May 2000, his son by a prior marriage (Holmes) appointed IE

- H & W had multiple broker accounts (community property) valued > $1MM

- Thomas & Kathryn signed forms purporting to establish JTROS

- Beatty sued to get Kathryn’s ½ community interest made part of her estate

- Probate Court (on summary judgement) upheld the JTROS-all to Thomas’

estate


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▪ Beatty (cont.):

- Houston (14th) Appeals Court reversed and declared the accounts created TIC

- Focus was on the written agreement purporting to create the JTROS

- Code requires certain formalities, including a written agreement signed by both

- Form Thomas & Kathryn signed provided three options/opportunities to

express there intent by checking boxes or by strikeouts-none taken

- Thomas & Kathryn signed/dated a blank form without completion

- As a result the Court ruled the agreement did not meet the minimum reqts

- Code prevented the Court from presuming the spouses intent so no JTROS


Cases-Creating JTROS (Non-Community Property)

▪ Chandler v Kountze, 130 SW2d 327, Tex Civ App-

Galveston (1939)

▪ Wagenschein v Ehlinger, 581 SW3d 581, Tex Civ App-

Corpus Christi (2019)


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▪ Chandler: - 1908 deed Charles & Luther Kountze acquire land in Wharton County

- At the time common-law presumption of JTROS

- Luther dies in 1925 leaving a W + 2 children

- November 1925 Charles deeds to himself & Denman Kountze (his son?)

- Recall in 1925 Article 2580 (V.A.T.S.) abolished common-law presumption

- 1929 Charles & Denman convey to Chandler w/VL securing 5 one-year notes

- Chandler paid 1st note, extends remaining 4, but eventually defaults

- 1936 Charles does a “blanket deed” to correct errors in the Chandler deed

- Kountze files suit to foreclose vendors lien-Chandler counterclaims



▪ Chandler (cont.): - Chandler claimed Art. 2580 invalidated JTROS and Luther’s interest would

have gone to his heirs so Kountze only had lien on ½ interest

- Trial Court ruled in favor of Kountze

- Galveston Appeals Court affirmed and allowed foreclosure to proceed

- Art. 2580 abolished common-law presumption of JTROS, but did not preclude

establishment by a written agreement

- No Texas cases at the time-looked to 9 other jurisdictions for precedence

- What we take from this decision is that a deed satisfies the requirement of a

“written agreement” to establish a valid JTROS


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▪ Wagenschein:- In July, the Corpus Christi Appeals Court brought some clarity

- Oswalt & Marie Wagenschein owned 240+ acres in DeWitt County-7 children:

Viola, Erna, Victor, Clara, Paul, Frieda and Norman (“Original Siblings”)

- When Oswalt & Marie die the Original Siblings inherit the property

- 1989 the Original Siblings convey to Harvey & Jane Mueller and reserve ½ of

the mineral estate-”for the Grantors and the survivor of the Grantors”

- Reservation stated “continue until the death of the last survivor of the Grantors”

- 2006 Mueller grants oil & gas lease (no argument)

- 2009 Clara dies leaving 2 children as heirs

- 2010 well comes in and operator starts paying royalties to 6 survivors



▪ Wagenschein (cont.):

- 2011 Norman dies leaving two children as heirs-operator pays 5 survivors

- 2012 Paul dies; before death conveys to his 2 children who put in Family Trust

- 2014 Frieda dies leaving one child as an heir

- Operator is now paying 3 survivors 1/3 each pursuant to division order

- 2015 Co-Trustees of the Family Trust, joined by the other heirs sue the

survivors claiming reservation created a TIC and not a JTROS


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▪ Wagenschein (cont.):

- Trial Court (on summary judgement) held for the 3 surviving siblings – JTROS

and the mineral interest would revert to Mueller upon death of last sibling

- Corpus Christi Appeals Court affirmed stating the reservation language was

not ambiguous and applied the “4-corners rule” to interpret as a matter of law

- Court noted the appellants were all heirs of siblings who had enjoyed

increased benefits under JTROS, and heirs were estopped from claiming TIC


Conclusion

▪ Common-law presumption of JTROS is abolished (Estates

Code Chapter 101)

▪ Valid JTROS can be created by a written agreement

(Estates Code Chapter 112 for community property;

Chapter 111 for non-community)

▪ JTROS cannot be inferred; language must be specific

▪ A deed can satisfy the requirement of a written agreement

(Chandler & Wagenschein)


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Underwriting Guidelines

▪ Two out of 14 Appellate districts in Texas recognize a valid

JTROS can be created in a deed.

▪ At least Appellate District seems to require the signature of

all tenants on the deed creating the JTROS.

▪ Conservative approach is to record a separate written

agreement signed by all tenants.

▪ If that written agreement is a deed, get all joint tenants to

sign.


Thank You(Best wishes to you and your family

for a safe & happy holiday season)


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objectives - res ipsa...-1929 charles & denman convey to chandler w/vl securing 5 one-year notes...

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