Q. Let’s say a husband and wife own a rental property with a joint tenancy with rights of survivorship deed. Later, they divorce without changing the deed, and 10 years later, one of them passes away.
Does the remaining owner automatically pick up the ownership for the deceased owner’s share? Does the divorce revoke the survivorship deed and make it a deed in common, with a 50/50 split?
A. In some states, the mere fact that two joint tenants decide to get divorced would not automatically terminate a joint tenancy.
There may be valid reasons why two people want to retain ownership of the property as joint tenants even after a divorce. It may be that neither has the money to buy the other out.
As a practical matter, most dispositions of real estate between divorced couples are settled as part of the divorce decree. As part of this process, one of the spouses typically transfers his or her interest to the other spouse.
Generally, one of the joint tenants must take specific action to break the joint tenancy to then create a tenancy in common. In a tenancy in common, each owner of a property owns a percentage interest in the home and can sell that interest. If that owner dies, his or her will or the inheritance laws in that state would dictate who would then become owner of that share of the home.
So one of the owners would have to sell or convey his or her interest in the home to break the joint tenancy or execute some form of a document to give notice that the joint tenancy has ended. Whether the divorce document is sufficient to do that is questionable, unless there was a court order stating that the joint tenancy should be terminated and a tenancy in common was created.
But in the absence of any action taken by either or both parties, I believe the joint tenancy would remain in effect and the surviving joint tenant would become the 100 percent owner of the property upon the death of the deceased joint tenant.
Laws vary from state to state, and for a definitive answer to this question you should consult with a capable real estate or estate-planning lawyer licensed to practice in your state.
Q. I am a retired 63-year-old with a combined income of $37,000 annually. My wife will begin collecting an additional $704 per month in Social Security starting this November. We both have excellent credit scores of 800.
Here’s our situation: We purchased our home in 2004 for $125,000, and we have a balance of $76,000 on the loan. We are considering selling our house because we would like to move to Las Vegas. With our fixed income, are we qualified to buy a $200,000 house with at least 30 percent down on a 15-year fixed mortgage?
A. According to Mike Rose, a loan officer for Wells Fargo, you may technically qualify for the loan terms you’re seeking, but the caveat is that you must have the additional income from Social Security in place by the time you’re ready to purchase your property.
If you can sell your home and walk away with $50,000, that’s a 25 percent down payment. If you increase that to 30 percent, and get a 15-year fixed-rate loan for the rest of the sales price, you’d wind up with a monthly payment of around $1,000 with a 3.75 percent interest rate, excluding taxes and insurance.
Based on your income, Rose said you should search for a property that carries a property tax burden of less than $3,000 per year — though he admits that, being based in Atlanta, he is not entirely familiar with the property tax structure in Nevada.
Your debt burden will also be a consideration. To qualify for the purchase of a new home at around $200,000, you would need to get a fair amount of cash from the sale of your current home, and perhaps to add some money to that, but you may be stretched to qualify for that loan.
What about buying a less expensive home? You’re moving to Las Vegas, where home prices have fallen 50 to 60 percent in some cases. It’s possible that you are overestimating the amount of money you’ll need to purchase a quality home in a neighborhood you like.
If you could spend just $150,000 or less to purchase a home, that should make it easier for you to qualify for a mortgage and might even allow you a little extra pocket change for other expenses.
Remember, getting a mortgage these days is harder than it was a couple of years ago. Have all your paperwork in order, and make sure you know your expenses now and what they will be after you move. Know how much cash you have saved, not only for the purchase of your home but for emergency situations, and how much money you will need for your health-care and retirement expenses.
Ilyce R. Glink is an author and nationally syndicated columnist. Her latest book is “Buy, Close, Move In!” If you have questions for her, write to Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022, or contact her through thinkglink.com.