Answer: When not titled correctly.
Currently, I am working with a cleint that would like a property solely titled in her and her sister’s names as her 5 other siblings who are on the deed are now deceased. Simple enough…however, the deed is titled as “tenants in common”. This means that a deceased parties’ interest passes to their heirs or whom they designate in their will instead of passing to the remaining tenants on the deed. With 5 of the 8 siblings deceased, the heirs of the deceased now have a beneficial fractional interest in the property. Thus, retitling the property becomes a bit difficult as there are now an additional 12 tenants!
With that being said, here is the list of unfavorable, costly, and time-consuming options:
1.) Have all of the heirs complete a Transfer by Affidavit Form that would transfer their fractional interest into their names. If the fractional interests are less than $50k and assuming the estates of the deceased were either probated or under $50k total, this form (completed by each heir) would replace the deceased siblings with the heirs on the deed. Once the heirs have their names on the deed, they then would be able to transfer or sell their interest over to the desired tenants.
2.) If the estates of the deceased were already probated or passed through trusts, you could have the personal rep or trustee of those estates transfer the interest of the deceased to the desired tenants through a personal rep deed. Of course, the personal representatives/trustees have a fiduciary duty to the beneficiaries, but if the beneficiaries/heirs are in agreement, this can be done informally for the most part.
3.) Partition sale. A court would arrange for a partition sale of the property and each tenant/heir would be entitled to a proportional share of the proceeds. With this type of order, it wouldn’t matter if an heir disagrees with the sale.
4.) Clean up the deed for the fractional interest of ownership that the desired tenants have. This would involve filing Transfer on Death Deeds, so the fractional interests can pass to whom the desired tenants designate (and not unintentionally pass to even more heirs).
5.) Do nothing. If you did nothing and let the property go (stopped paying taxes), a tax sale may result. This a forced sale of the home where the governmental taxing authority would be paid back for back taxes (basically, the government would take over the home and sell it).
As one can see, the remaining options are not desirable (and I know there are even more undesirable options) and probably not what the original grantors intended when drafting the deed. To avoid a similar result, double-check to make sure your deeds are titled properly and have an attorney review it for accuracy. Your beneficiaries will be forever grateful!
