How Do I Make Sure My Contribution to the Property is Recovered if the Property is Transferred?

Full question:

Mother in law and husband purchased property and became joint tenant (in NY). They didn't put much $ down, say 60k total. For 7 years they did no capital improvements to the 2 houses on the property. Son marries me and I 'demand' that my name be placed on the deed. She was VERY reluctant but at the signing, her lawyer looked at me and said, 'you know now that she can leave her share of the house (50%) to ANYONE she wants'. I'm concerned because we tore down the old house that we were living in and took out home equity line of credit for a modular, which cost around 450,000. I put in 197,000 of that personally from the sale of my co-op in Brooklyn. Once she passes on, how do I found out who she has left the house to? What are the repercussions? Will we have to move? If she leaves it to my husband's other brothers what happens? I'd like for them to sign a letter that states that the 'equity' that I placed in the 'new' house (modular) gets paid back to me (well, to my children set up in a trust fund or something); my hard-earned $$ shouldn't be charity for someone else...please help me! Does her will or should her will indicate who she has left her share of the house to? Should I change it back to Joint Tenants in Common? I was nervous about that because I thought what if my husband passes away first? (he was a detective at the time) I need serious help! Nervous that whomever she leaves house to will say, 'let's sell' while we are still living there with young children and then I won't ever see my 197,000k because all of the profit would have been dispersed (and unevenly I might ad). Because the property was greatly improved, thanks to US and the new house, it just doesn't seem fair...did I tell you I need strong guidance?

• Category: Real Property
• Subcategory: Joint Tenants
• Date: 04/07/2025
• State: New York

Answer:

You asked if you should change the deed back to tenants in common, which makes it appear that it is currently titled as joint tenant with right of survivorship. In such a case, the surviving tenants will automatically inherit the deceased tenant's share. If not, the mother may indicate in a will or trust who will inherit her share of the property. If you do not wish to share the occupancy of the property with heirs/beneficiaries after her death, it may be possible at that time to file a partition action to have the property sold and the proceeds divided. Your contributions to the property may be considered in dividing the proceeds in a partition action. You may be able to have the parties sign a promissory note, agreeing to repay your contributions to the property. You may also wish to consider a post-marital agreement to protect your right to recover the contributions made to the property in the event of a divorce.

Joint tenancy is a form of ownership by two or more individuals together. It differs from other types of co-ownership in that the surviving joint tenant immediately becomes the owner of the whole property upon the death of the other joint tenant. State law, which varies by state, controls the creation of a joint tenancy in both real and personal property. Joint tenancy property passes outside of probate, however, it may be severed so that the property becomes part of one person's estate and passes to that person's heirs. A joint tenancy between a husband and wife is sometimes known as a tenancy by the entirety. Tenancy by the entirety has some characteristics different than other joint tenancies, such as the inability of one joint tenant to sever the ownership and differences in tax treatment. In some jurisdictions, to create a tenancy by the entirety the parties must specify in the deed that the property is being conveyed to the couple "as tenants by the entirety," while in others, a conveyance to a married couple is presumed to create a tenancy by the entirety unless the deed specifies otherwise. Each joint tenant has an equal, undivided interest in the whole property. All joint tenants, and their spouses, must sign deeds and contracts to transfer or sell real estate. A joint tenant may convey his or her interest to a third party, depending on applicable state law. This conversion would in effect terminate the joint tenancy and create a tenancy in common.

Joint tenancy comes into being, or is created, by a specific act of the parties involved. For example, real estate held in this fashion is typically the result of a property transfer by deed. Each joint tenant owns an equal share of co-owned property. When the first joint-tenant dies, the title designation transfers the property immediately and automatically to the surviving joint tenant. This ownership arrangement is said to be a will substitute because it eliminates probate of this particular asset. Avoiding probate does not mean the property will not be included in the taxable estate of the first co-owner to die, or that state and a federal gift and estate taxes will be avoided. Estate planning experts feel joint tenancy is a poor method of planning property transfer for two reasons. First, each co-owner has given up the right to leave the property to anyone other than the other co-owner. Circumstances may change and either tenant may later want to leave the asset to someone else. Either party can usually dissolve a joint tenancy during life, but this may not always be possible or practical. Second, where taxes are an important consideration in planning an estate, holding assets in joint tenancy does not permit one joint tenant to leave their share of the assets in such a way as to save taxes. Upon the death of the first joint tenant, the asset goes outright to the survivor. This causes the survivor’s taxable income and taxable estate to be increased. Careful consideration should be given to the tax consequences of dissolving existing joint tenancies because additional gift and estate tax obligations may be created. Tax implications should be fully explored with tax experts before changes are made and, particularly, before new joint tenancies are created. Joint tenancy with the right of survivorship reflects the desire of many husbands and wives to hold title to property in a way that the survivorship characteristic prevails. When either dies, they each want the surviving spouse to acquire full ownership in the property and to do so with a minimum of time, trouble, and red tape. Thus, they take or hold title to property as “Joint Tenants and to the Survivor.”

Tenants in common hold title to real or personal property so that each has an "undivided interest" in the property and all have an equal right to use the property. Tenants in common each own a portion of the property, which may be unequal, but have the right to possess the entire property. There is no "right of survivorship" if one of the tenants in common dies, and each interest may be separately sold, mortgaged or willed to another. A tenancy in common interest is distinguished from a joint tenancy interest, which passes automatically to the survivor. Upon the death of a tenant in common there must be a court supervised administration of the estate of the deceased to transfer the interest in the tenancy in common.

Tenancy in common is another form of co-ownership of property that can exist between any two or more persons. Tenancy in common can be created by deed, will, or by law. Tenants in common, like joint tenants, must act together to decide how they are going to enjoy and use the property. Problems about the management and improvement of the property, and how the income stream is to be divided, can exist. A distinguishing characteristic is that there is no right of survivorship. Each tenant can dispose of their separate and distinct, yet undesignated, interest in the property in any way they choose.

Each co-owner can sell it or give it away. They can direct its eventual disposition by last will and testament, or they can ignore the problem. Each co-owner’s property will be distributed, when they die, according to the law of property descent and distribution. Several of the more important characteristics of a tenancy in common are:

1. Each tenant in common has the power to dispose of their separate and distinct, yet undesignated interest, in whatever property is involved, any way they choose.

2. When a co-owner dies, their interest does not pass to the surviving tenant-in-common. It passes to the surviving co-owner spouse, or to some other person or party, but only if the property owner so indicates his wishes in his last will and testament. Otherwise, the property passes under the laws of intestacy.

In the case of a life tenant who holds a life estate, when the life tenant dies, their interest may pass to the remaindermen. Title may also return to the person giving or deeding the property or to his/her surviving children or descendants upon the death of the life tenant--this is called "reversion."
A postmarital agreement is normally used in situations where one or both parties: has significant wealth or expects to receive a large inheritance, has a personal business, wish to keep all assets and debts separate, were previously married, and/or have children from a previous relationship. Generally, inheritances and property owned before marriage are separate property, but separate property may be claimed as marital property in certain cases, such as when it has been commingled with marital property or the other spouse contributes to separate property.

It can be used to accomplish many legal and financial objectives, but in general couples use it to protect separate property (a family business, for instance), support an estate plan, define what is marital or community property, reduce conflicts and save money in the event of divorce, and establish procedures for deciding future events.

There are three main issues that are typically addressed by a court if the agreement is challenged:

a. Was the agreement entered into voluntarily;

b. Did the parties have the opportunity to have the agreement reviewed by counsel of his/her own choosing; and

c. Was there full disclosure of all assets, liabilities and income?

 

If these three items can be proven, then the burden to set aside the agreement shifts to the other side (with a higher burden of proof) and the primary focus will be on whether the agreement was "unconscionable" at the time of enforcement, which shall be determined by the court as a matter of law.

A postnuptial agreement may be declared invalid under the following circumstances:

a. Unconscionability. A postmarital agreement must be fair and reasonable. A postmarital agreement can't cause financial hardship to the other party. Unconscionable contracts are often found to be invalid in the courts.

b. Both parties didn't have independent counsel. Each party must have his or her own lawyer. Many people mistakenly believe that they can have one lawyer represent both of them. However, each party must have his or her own legal counsel. A lawyer must make it clear to the unrepresented party that he or she does not represent him/her, and further advise them to obtain their own lawyer.

 

If a party needs to have the document translated due to language barriers and is prevented from doing so, this may lead to a challenge based on a lack of understanding and/or duress that prevented a fairly and knowingly made agreement.

 

c. The agreement has incomplete information. There must be full disclosure when negotiating a postmarital agreement. Quite often a person will try to hide some assets when he or she negotiates. If a person does not make full disclosure during the negotiation of a postmarital agreement, there can eventually be strong grounds to void the agreement.

 

d. The agreement has false information. A postmarital agreement can't be based on false and misleading financial information. A person must make full disclosure during the negotiations.

 

e. Invalid provisions. A postmarital agreement can't limit child support or any other child support-related areas. If a postmarital agreement contains clauses that try to limit child support or child support-related areas, then that specific clause will be invalidated. In most cases, the court will only strike the illegal clause, and enforce the remainder of the postmarital agreement, provided that it is fair and equitable.

 

f. Reasonable time for consideration. These agreements must be thoroughly reviewed and considered.

 

g. Undue pressure. Postmarital agreements are often challenged once the parties get divorced. One of the most popular challenges to a postmarital agreement is an allegation that a person was pressured by his or her spouse, the lawyer, or the in-laws to sign the postmarital agreement. Some attorneys suggest that the signing of the agreement be videotaped.

 

h. No written agreement. All postmarital agreements must be in writing. An oral postmarital agreement is not enforceable.

 

The following are the essential requirements that must be satisfied in order for a postmarital agreement to be upheld:

 

a. There must be full and fair disclosure of the earnings, property, and financial obligations of the parties. A complete and comprehensive financial statement must be attached to the agreement that sets forth the parties' earnings, property, and financial obligations. A CIS should also be attached to the agreement.

 

b. Both parties should be represented by attorneys. A postmarital agreement will likely not be enforceable if the other party did not consult with an attorney, or did not waive the right to do so in writing.

 

c. The agreement must not be unconscionable. An unconscionable postmarital agreement is defined as an agreement that would leave a spouse as a public charge or close to it.These situations are as follows:

(i) When a spouse is rendered without a means of reasonable support.

(ii) a spouse becomes a public charge

(iii) When a spouse is provided a standard of living far below that which was enjoyed before the marriage.

It is critically important that all parties have adequate time to review and sign a postmarital agreement. A period of six to eight weeks should provide the parties with enough time to negotiate an agreement and allow everyone to reflect upon its terms at their leisure, without feeling undue pressure. While six to eight weeks is ideal, this does not mean to suggest that an attorney cannot successfully complete a postmarital agreement in less time. If there is a short period of time for the preparation and negotiation of the agreement, it may be stated in the body of the agreement that the parties recognize that they have come to an understanding within a limited period of time, and feel that the time frame did not in any way affect their ability to freely and voluntarily enter into the agreement or cause them to do so under any coercion, duress, or undue pressure.