Legal Question in Real Estate Law in California

Re: Adding a 3rd joint tenant

Mr. Whipple has, as he always does, given you detailed, accurate, and helpful advice. I could only add that you should go to your grandmother and honestly tell her what the results would be on adding the sister-in-law, both as to taxes and other matters. For example, now she has equal control with you over the huse in which she lives and you seem not to have any problems between you. If the sister-in-law is added, she can force a partition sale which results in the house being sold. She can interfere with your grandmother's use of her own home. When your grandmother dies, instead of you getting her half with the basis adjusted upward to the fair market value at the date of her death, you will inherit only her remaining 1/4 of the property [or whatever percentage she has kept for herself] and the other 1/4 will not get a stepped up basis and your sister-in-law will want the place sold or you pay her rent.

If she is putting a large amount of pressure on your grandmother who can barely resist it, the three of you should go to an estate and trust attorney to discuss what the effects are of each option [you should take detailed notes] so your grandmother can hear from an independent expert what it will cost her to fall prey to the sister-in-law.

Good luck.

Re: Adding a 3rd joint tenant

First, traditionally, joint tenancies could only be created by all the joint tenants coming onto title at the same time. It was legally impossible to ADD someone as a joint tenant, and the attempt to do so would have destroyed the existing joint tenancy, if there were one, between the two existing joint tenants. Further, the interest of joint tenants must be equal - 1/2-1/2 or 1/3-1/3-1/3. There cannot be a joint tenancy in which one of the joint tenants has a smaller interest than any other.

When people co-own property in unequal shares, or where they otherwise do not qualify as joint tenants, they are tenants in common. Joint tenancy and tenancy in common are the two most usual methods for two or more parties, not married to each other, to share ownership of property.

Civil Code section 683 defines joint tenancies and describes how they may be created. If I understand 683 correctly, it would be possible for your grandmother and you to create a three-owner joint tenancy with the sister-in-law by the two of you deeding the property to the three of you using a deed expressing the intent to create a three-party joint tenancy. Your resulting ownership interests would be 1/3-1/3-1/3. Neither of you can do it alone, however. One of the reasons is that the law doesn't allow it; the other is that neither of you currently owns a sufficient interest (2/3 or more).

Your grandmother can, however, add her sister-in-law to title without your knowledge or signature by giving or selling her part or all of whatever interest she does have, i.e., 50%. The result would be something like this: (1) there would no longer be any joint tenancy. (2) you would own 50% as a tenant in common with the other two; and (3) between them, granny and sis-in-law would own 50%, also as tenants in common. Probably it would be 50%-25%-25%, altough 50% (you) -49%-1% or anything in between is possible, depending on what the deed from grandmother to S-I-L says.

I repeat, the three of you would be tenants in common, not joint tenants. There would be no "automatic inheritance" feature when somebody dies; the deceased person's share would go to their heirs under their will, trust, or in the absence of either, according to the laws of intestate succession.

Most of these joint tenancy between relatives deals are ill-advised attempts to avoid probate. They are usually a big planning boo-boo. The unnecessary taxes (gift, property and capital gains) usually are ten to rwenty times more than what it would cost to pay a lawyer to draw up a living trust.