Riddle v. Harmon
162 Cal. Rptr. 530 (1980)
- Mrs. Riddle was reviewing her will and found that her home was held in joint tenancy with her husband. She requested that the joint tenancy be terminated so she could put the property in her will.
- Property held in joint tenancy automatically transfers to the surviving owners upon death. It cannot be put into a will.
- Mrs. Riddle essentially sold her interest in the property to herself.
- You can sell an interest in a joint tenancy while you are alive. If one partner sells an interest in a joint tenancy, then the joint tenancy is broken and becomes a tenancy in common. An interest in a tenancy in common does not transfer to the other partner upon death and can be placed in a will.
- In order to have a joint tenancy, all the partners must have the same four things in common: time, title, interest and possession. If one of those is broken, the property becomes a tenancy in common. By selling the property to herself, Mrs. Riddle was trying to make it appear that she and her husband acquired the property at different times. That breaks one of the four unities required for joint tenancy.
- Mrs. Riddle died and Mr. Riddle challenged the will.
- The Trial Court found for Mr. Riddle, and gave him title to the property. Harmon (Mrs. Riddle’s executrix) appealed.
- The Trial Court found that in order to break a joint tenancy, you typically had to use a straw man. Historically, you had to actually sell your interest to a friend for a nominal fee, who would then immediately sell that interest back to you. There is no historical precedent for selling the property to yourself.
- The Appellate Court reversed.
- The Appellate Court looked at a bunch of cases where people had used loopholes to destroy joint tenancies. The Court reasoned that since loopholes existed, and the original doctrine was based on archaic legal principles anyway, there was no reason not to change the common law and allow joint tenancies to be broken without the need for a straw man or other loophole.
- You always had the right to sever a joint tenancy by selling your interest, so why can’t you sever it in other ways too?
- California’s Legislature had passed a Statute saying that you could create a joint tenancy without the requirement of a straw man.
- The new rule (in California anyway) is that a joint tenancy can be broken unilaterally without the requirement of a fictional transfer through a straw man.
- A question still left to be resolved is whether there is a requirement for one partner to notify the other partners of the severance. For example, what would have happened if Mrs. Riddle wrote out a document selling her interest to herself, didn’t tell anyone, and Mr. Riddle died first? Since Mr. Riddle (and everyone else besides Mrs. Riddle) believed that a joint tenancy was still in effect, his property interest would have automatically transferred to Mrs. Riddle, even though she was not technically entitled to it.
- Lack of notification requirements makes it easy to commit fraud by keeping the severance a secret from the other partners!
- Of course, the change in status must be reported to the Recorder of Deeds (for tax purposes), so the other joint owners could always periodically check to see if the status has changed.