Chapter: In Georgia, what type of ownership is created when property is owned by two or more people with rights of survivorship? (EN)

Chapter: In Georgia, what type of ownership is created when property is owned by two or more people with rights of survivorship? (EN)

Joint Tenancy with Right of Survivorship in Georgia

In Georgia, when property is owned by two or more people with rights of survivorship, the type of ownership created is a Joint Tenancy with Right of Survivorship. This form of ownership carries specific legal implications and is distinct from other forms of co-ownership, such as tenancy in common.

Defining Joint Tenancy with Right of Survivorship

• Definition: A Joint Tenancy with Right of Survivorship is a type of concurrent ownership where two or more individuals own property equally, and upon the death of one joint tenant, their interest automatically transfers to the surviving joint tenant(s). This is the “right of survivorship” characteristic.
• Key Elements: The creation and maintenance of a joint tenancy with right of survivorship hinges on the presence of what is traditionally known as the “four unities”:
  1. Unity of Possession: All joint tenants must have an equal right to possess the entire property.
  2. Unity of Interest: All joint tenants must hold equal shares of the property’s ownership.
  3. Unity of Time: The interests of all joint tenants must vest at the same time. This generally means all parties obtain their interest at the same moment.
  4. Unity of Title: All joint tenants must derive their title from the same instrument (e.g., the same deed).

Scientific and Legal Principles Underlying Joint Tenancy

The legal principles underpinning joint tenancy are rooted in common law and property law concepts related to the allocation and transfer of rights and obligations. The “unities” serve as constraints to ensure the equal and simultaneous nature of the ownership arrangement.

• Property Rights Theory: The concept of property rights, fundamental to legal and economic systems, posits that individuals or entities can hold exclusive rights to control and benefit from assets. In a joint tenancy, this control is shared equally.
• Contract Law Implications: The document creating the joint tenancy (e.g., a deed) constitutes a legally binding contract among the joint tenants. The terms of this contract define the rights and obligations of each party.
• Inheritance and Succession Laws: The right of survivorship bypasses typical inheritance laws. The deceased joint tenant’s interest does not pass through their will or intestacy laws; instead, it automatically vests in the surviving joint tenant(s).

Creation of Joint Tenancy in Georgia

In Georgia, the creation of a joint tenancy with right of survivorship requires explicit language in the deed or other instrument of conveyance. Merely naming two or more individuals as grantees does not automatically create a joint tenancy.

• Specific Language Requirement: Georgia law requires that the deed clearly state that the grantees are taking title as “joint tenants with right of survivorship and not as tenants in common.” Without this specific language, the default form of co-ownership created will be a tenancy in common.

  Example: A deed stating “to A and B as joint tenants with right of survivorship and not as tenants in common” will create a valid joint tenancy. A deed stating simply “to A and B” will create a tenancy in common.

Severance of Joint Tenancy

A joint tenancy can be severed (broken) during the lifetime of the joint tenants. Severance destroys the right of survivorship. After severance, the co-ownership transforms into a tenancy in common.

• Methods of Severance:
  1. Conveyance by a Joint Tenant: If one joint tenant transfers their interest to a third party, the joint tenancy is severed as to that interest. The remaining joint tenants remain joint tenants with each other, but the new owner is a tenant in common with them.
  2. Agreement Among Joint Tenants: Joint tenants can agree to terminate the joint tenancy and convert it to a tenancy in common. This agreement should be in writing and properly recorded.
  3. Partition: A joint tenant can seek a court order to partition the property. This can be physical partition (dividing the property) or partition by sale (selling the property and dividing the proceeds).
  4. Mortgage (in some jurisdictions, but complex in Georgia): Depending on the specifics and how it’s structured, a mortgage by one joint tenant may sever the joint tenancy, particularly if it results in a foreclosure action. The legal implications are complex and depend on the specific facts.

• Mathematical Representation of Interest After Severance by Conveyance: If A and B are joint tenants each owning 50% interest, and A conveys their share to C, then:

  • C owns 50% as a tenant in common.
  • B owns 50% as a tenant in common.

Practical Applications and Examples

• Real Estate Ownership: A married couple purchases a home, taking title as joint tenants with right of survivorship. If one spouse dies, the surviving spouse automatically becomes the sole owner of the home.
• Bank Accounts: Two individuals open a joint bank account with right of survivorship. Upon the death of one account holder, the surviving account holder becomes the sole owner of the funds in the account.
• Investment Accounts: Two business partners co-own an investment portfolio as joint tenants with right of survivorship. If one partner dies, the surviving partner inherits the deceased partner’s share of the portfolio.

Comparison with Tenancy in Common

It’s crucial to understand the difference between Joint Tenancy with Right of Survivorship and Tenancy in Common.

Mathematical Considerations and Fractional Interests

While the ideal of joint tenancy assumes equal ownership interests, variations exist, particularly after severance. Let’s consider initial ownership as fractions of unity and modifications as severance occurs:

• Initial State: Consider “n” number of joint tenants (JTs). Each JT holds a fractional interest ‘I’.

  • I = 1/n

• Severance by Conveyance: If JT1 conveys their share to an outside party (OP), the ownership transforms. Assume there were initially ‘n’ JTs, and one is now OP.

  • OP holds an interest I_OP = 1/n as a tenant in common.
  • The remaining JTs (n-1) hold a joint tenancy interest in the remaining fraction (n-1)/n. This represents the remaining interest available to them in total.

Legal Considerations and Due Diligence

Establishing and maintaining a joint tenancy requires careful legal considerations and due diligence.

• Proper Legal Advice: Consulting with an attorney is highly recommended to ensure that the deed or other instrument of conveyance is properly drafted to create a valid joint tenancy with right of survivorship under Georgia law.
• Title Insurance: Title insurance protects against defects in title and can provide coverage if a joint tenancy is improperly created or severed.
• Estate Planning Implications: Joint tenancy can have significant estate planning implications, so it’s important to consider the tax consequences and how it aligns with overall estate planning goals.

In conclusion, in Georgia, owning property jointly with rights of survivorship creates a Joint Tenancy with Right of Survivorship. The creation and maintenance of this ownership structure necessitate clear legal documentation and an understanding of the four unities. Severance can occur through various actions, transforming the ownership into a tenancy in common.