Parties often hold title to California real estate as joint tenants. On the death of one, the other succeeds to 100% of the title to the property. Thus joint tenancy is often used as a will substitute. When married couples holding property as joint tenants split up, they usually seek to sever the joint tenancy, so that if a party dies ex-spouse does not get their interest. In a recent Partition action the court addressed a conflict in the statutes: the Civil Code requires that a document severing a joint tenancy be recorded before the death of the severing tenant; while the Family Code requires, on dissolution, notice of the severance must be filed and served on the other owner before it is effective. The Partition court concluded that a party in dissolution must obey each statute, but they may be satisfied in any order, and the severance occurs when the last step is taken.
In Raney v Cerkueira, a married couple held the title as joint tenants. They split up, and the wife filed for dissolution. The summons in the action had the standard language prohibiting parties from transferring property provided by the Family Code. She then executed a transfer Deed severing the joint tenancy, transferring her interest to her trust with her son as trustee. Her son then, as trustee, filed a Partition action. The trial court found that the wife violated the Family Code provision in transferring 50% of the property to her trust. This appeal followed.
The two involved statutes (set out below in further detail) are:
Civil Code section 683.2, subdivision (c), providing that a written instrument severing a joint tenancy is not effective to eliminate the other tenant’s right of survivorship unless it is recorded before the death of the severing tenant (with one exception not relevant here); and
Family Code section 2040, subdivision (b)(3) (hereafter, providing that the standard automatic temporary restraining order binding parties in a pending dissolution proceeding (see § 2040, subd. (a)) does not restrain one party’s “[e]limination of a right of survivorship to property, provided that notice of the change is filed and served on the other party before the change takes effect.”
The court noted the purpose of the Civil Code provision is to avoid fraudulent behavior by the party who executes a document severing the joint tenancy,” because absent the recordation requirement, the joint tenant could “ ‘execute an undisclosed severance, deposit the severing instrument with a third person, and instruct the third person to produce the instrument if the severing joint tenant dies first so the severed half may pass to his or her heirs or devisees,’ ” but could also, if the other joint tenant dies first, “ ‘suppress[ ] the severing instrument’ ” and “ ‘take the other half of the property by survivorship.
Looking at the Family Code, the court noted that the right of survivorship in a joint tenancy by itself is not ‘property, but instead is a mere expectancy — in other words, the unenforceable interest of a person who merely foresees that he might receive a future beneficence. Thus severing the tenancy does not dispose of community property and would not automatically be restrained by the Family Code.
The Court concluded that if a spouse first files and serves notice of a joint tenancy severance on the other spouse and then records the severance in compliance with the Civil Code, the elimination of the right of survivorship takes effect upon recordation. Alternatively, if the spouse first records the severance and then files and serves notice on the other spouse, the elimination of the right of survivorship takes effect when the notice is filed and served.
In this case, the court found that the filing and serving the Partition action, with the attached deed severing the tenancy, was sufficient under Family Code 2040(b)(3) – there is no requirement that the filing must be in a dissolution action.
Civil Code 683.2.
(a) Subject to the limitations and requirements of this section, in addition to any other means by which a joint tenancy may be severed, a joint tenant may sever a joint tenancy in real property as to the joint tenant’s interest without the joinder or consent of the other joint tenants by any of the following means:
(1) Execution and delivery of a deed that conveys legal title to the joint tenant’s interest to a third person, whether or not pursuant to an agreement that requires the third person to reconvey legal title to the joint tenant.
(2) Execution of a written instrument that evidences the intent to sever the joint tenancy, including a deed that names the joint tenant as transferee, or of a written declaration that, as to the interest of the joint tenant, the joint tenancy is severed.
(c) Severance of a joint tenancy of record by deed, written declaration, or other written instrument pursuant to subdivision (a) is not effective to terminate the right of survivorship of the other joint tenants as to the severing joint tenant’s interest unless one of the following requirements is satisfied:
(1) Before the death of the severing joint tenant, the deed, written declaration, or other written instrument effecting the severance is recorded in the county where the real property is located.
(2) The deed, written declaration, or other written instrument effecting the severance is executed and acknowledged before a notary public by the severing joint tenant not earlier than three days before the death of that joint tenant and is recorded in the county where the real property is located not later than seven days after the death of the severing joint tenant.
Family Code 2040
(a) In addition to the contents required by Section 412.20 of the Code of Civil Procedure, the summons shall contain a temporary restraining order:
(2) Restraining both parties from transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community, or separate, without the written consent of the other party or an order of the court, except in the usual course of business or for the necessities of life, and requiring each party to notify the other party of any proposed extraordinary expenditures at least five business days before incurring those expenditures and to account to the court for all extraordinary expenditures made after service of the summons on that party.
(b) Nothing in this section restrains any of the following:
(1) Creation, modification, or revocation of a will.
(2) Revocation of a nonprobate transfer, including a revocable trust, pursuant to the instrument, provided that notice of the change is filed and served on the other party before the change takes effect.
(3) Elimination of a right of survivorship to property, provided that notice of the change is filed and served on the other party before the change takes effect.