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What Is A Joint Tenancy In New Jersey and How to Cancel One

In New Jersey, there are three ways you can hold title to real property with another party. You can be tenants in common, Tenants in the Entirety or Joint Tenants. Tenants in common is the easiest. If two parties hold title as tenants in common, they each own 50% of the property. Each can freely sell their own interest to any other party. And their interest can, in most cases, be freely levied upon by a creditor or spouse as part of a divorce. Since February 4, 1812 if two unmarried parties purchase a property together and the deed is silent as to how title is to be held, they are automatically considered tenants in common pursuant to NJSA 46:3-17. Tenants in the entirety is a bit more complicated. It only applies to parties who are married at the time of the purchase, and where the deed states that they are married (see NJSA 46:3-17.2). In this case the spouses each have an ownership interest in the entirety of the property. When one dies, the other obtains a sole title interest in the property by operation of law in accordance with NJSA 46:3-17.5.

A joint tenancy is similar to a tenancy in the entirety, except it applies to non-married parties who wish to have a similar arrangement. Each owner has an ownership interest in the entire property, which generally passes directly to the survivor at the death of the co-joint-tenant. The deed must expressly state that title is to be held jointly. There are a number of advantages to this arrangement. For example, parents might jointly title real estate with their children, and in that case avoid probate at their death since the real estate would pass directly to their children by operation of law. (Remember though that if the NJ inheritance tax would apply, for example to an estate inherited by a boyfriend from a girlfriend, it still applies even to a property interest acquired in joint tenancy by operation of law due to NJAC 18:26-5.11).

However there are some limitations to the creation of a joint tenancy, and there are some limitations to if and to how long it applies even when the deed correctly recites the joint nature of ownership. One of the primary cases on this is Steinmetz v. Steinmetz, 130 N.J. Eq. 176, 179 (N.J. 1941). It states that in “the case of joint tenancy in personal property four unities must continue to exist, viz.: unity of interest, title, time and possession. Either joint owner may destroy one or more of the constituent unities in such manner as to sever his interest from the joint fund and so destroy its existence, thereby ending his right of survivorship.” So a joint tenancy interest can be turned into a tenants in common interest if there ceases to be common interest, title, time or possession of the property. A simple way to destroy a joint tenancy interest is if one of the joint tenants transfers title to another party, then back to itself. This is sometimes referred to as a “straw man” transfer since it is done solely for the purpose of destroying the joint tenancy – by destroying “unity of title” and “unity of time”.  Arguably, if one joint tenant denies “possession” of the property to the other (by for example refusing to give them the keys or refusing to allow access), that could destroy the joint tenancy as well. But this is much more difficult to prove later in a court of law, if necessary, than a recorded deed would be.

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