Mortgage Declared Void After Joint Tenant Dies

When one joint tenant passes away his interest goes to the other joint tenant, and extinguishes a mortgage Bank of America held on the property.

In 1999 Ms. Teresa Smith was the sole owner of a piece of property in Port Washington, New York. That February she conveyed, by quitclaim deed, her entire ownership in equal shares to herself and David Hassid, as joint tenants with the right of survivorship. Seven years later, in 2006, Bank of America, N.A., provided Mr. Hassid a $300,000 loan that was secured by a mortgage on the property. Ms. Smith was completely unaware of this mortgage on the property until 2009 when Mr. Hassid passed away.

It was then that Bank of America, N.A., declared the loan to be in default for non-payment. Ms. Smith commenced an action for a declaratory judgment arguing that after Mr. Hassid’s death the mortgage was extinguished. She felt she was the sole owner of the property by right of survivorship. When Mr. Hassid acquired the loan Bank of America accepted the mortgage on the property without first seeing that the joint tenancy was severed or that all joint tenants had signed. Regardless, Bank of America contended that not all the unities had been maintained in the joint tenancy.

In creating and maintaining a joint tenancy there are four unities that must always exist; time, title, interest and possession. Bank of America contended that Mr. Hassid’s mortgage destroyed the unity of interest, therefore the joint tenancy too. They argued that this mortgage served as written evidence that he intended to sever the joint tenancy. Furthermore, by destroying this joint tenancy the two owners became merely tenants-in-common. Ultimately meaning that Mr. David Hassid’s ownership would be passed to his estate and the mortgage would be valid.

The Appellate Division, Second Department, brought to light that a mortgage is only a lien on a property and not a transfer of title. The court found that Mr. Hassid’s mortgage on the property did not act to sever the joint tenancy. Upon his death his interest in the property went to Ms. Smith and Bank of America’s mortgage became null and void.

This case is cited as Smith v. Bank of America, N.A., (2nd Dept. 2012) Index #04463/2011. If you have any questions regarding this article, please contact Peter Moulinos at info@moulinos.com.

About Peter Moulinos
The founder and partner of Moulinos & Associates LLC. His experience as an attorney includes practice on matters involving commercial law, real estate law, litigation, international law, employment law, estate practice and trademark matters.

Comments

  1. Wren Owens says:

    Hello, Mr. Mouiinos –

    I was pleased to find your article this morning, as it touches upon a situation I’m currently dealing with. Let me outline it for you.

    A friend of mine and I set up, with the assistance of attorney, a Joint Tenancy with confirmation noted via a will and proper filings for this designation such that both our names appeared on the deeds to the property (two deeds for adjoining lands where I have lived since 2000, and my friend whom I met in 2002 likes to visit). We were both fully satisfied with the pros and cons of joint tenancy. Should either one of us expire before the other, the entire property would belong to the survivor, period.

    We agreed I would have all timber, mineral rights and rights to decision making as to what happens on the land, too, and day to day control as to, say, who is permitted to be on the land, etc., as I lived here for years before we met and it is my home alone, not his and I was not interested in nor looking for a “partner” to come here and take over or even have to confer to about the management of it. He wanted, simply, to be able to visit and enjoy it at his leisure, and protect it for me as needed and make sure my children were able to get it should anything happen to me before him. I have always trusted that if I were to pass before my friend, he would make sure my sons would ultimately receive the property upon his passing. He has no children or heirs, like I do.

    Like Mr. Hibben in your article, my friend obtained a mortgage for the property (2003), and my name is not on that anywhere because I could not agree to paying a mortgage or taking on such debt at the time; however, he fell back to alcoholism a few years after receiving a liver transplant, covertly drinking I suspect as early as 2006; so his entire being began to slip. He did not pay the property taxes for quite a period of time, all while telling me that he had and that all was well and “taken care of,” and that I did not need to pay them because he already had.

    The property was then taken by the county… Well, the deeds were changed out of our names, apparently, by the county without my even knowing it, and put into the county’s ownership. It was being sold on the courthouse steps within days of my discovering this. This was 2009. I was living on the property, of course, and he was living 45 miles away drunk as a skunk and doing nothing to stop it; so, this was particularly upsetting to me.

    The bank holding the mortgage of my friend had apparently not even been called or notified, so when they heard about it they jumped in, paid the unpaid taxes and then proceeded to file a foreclosure against the property. My friend who owed/owes the debt, retained a law firm and filed bankruptcy in order to save the property from being lost…so that I would not lose my home. With all the penalties, late fees and legal fees added, there has been no way for me to be able to pay all that. My friend then had to make my home his primary residence in order to list is as an exemption with a Chapter 13 plan.

    He has been living here in one of my guest rooms for a few years now, but his alcoholism is getting worse and he has near defaulted on his bankruptcy plan now several times, often causing me to have to jump in there and pay part or all of what has been due.

    He has paid about or maybe a little more than half of his plan to date (which includes other personal debt of his, not mine – we are not and have never been married). The bankruptcy attorneys, Trustees and court all seem to be holding my property up to pay ALL of my friend’s debts. It doesn’t seem reasonable or right to me, though. Do I not have rights? Don’t I have legal ownership of this property.

    Your article explained so clearly how a title is very different and more powerful than a lien, which is what the bank has had. I was so glad to read what the Appellate Division “brought to light.” I’m all for whomever is rightfully owed money getting paid what is due them, but I do not feel I should be held liable for the debts and financial management of my friend (not my spouse, romantic partner or even blood relative). He is now so mentally ill, he would rather “dump the property” and keep all his money to himself for more alcohol and cigarettes than do what he is required to in order for the bank not to try to take my home and land and location for my farm business.

    As you can see, this situation is a bit complex, but I’m confident you may be able to help with some input (?). Oh, and also, after the bank paid the arrears property taxes and had the county put our names back on the deeds, apparently (so I’m told) we are now listed as “joint tenants in common” which is not at all what we wanted or set up originally. Can this be reversed back to what it was and what the will displays? The will has not changed at all (the only one that matters in this instance – the one of my friend’s). I believe there is also another title document filed with the clerk’s office that I have which describes our joint tenancy.

    Can you help? I would love to be able to enforce the appropriate laws such that I am not constantly threatened by this man’s alcoholic nightmare of a mess. We met and became connected through my nursing him 24/7 for over a year, basically, and handling all his personal affairs, property, accounts, etc. when he nearly died 3 times due to liver failure, then renal failure and then later he suffered advanced prostate cancer followed by a stroke. He is definitely courting death with the smoking & drinking, but after years of trying, I’ve learned he cannot and will not stop until his body stops altogether. I don’t want to be taken down with him, nor lose my home and the home to all these innocent animals because of this mess. I need help.

    Thank you for your time and attention. I’d really appreciate any input you can provide. I am in Steuben County, New York. Please feel free to email me anytime. I pray I hear from you.

    Sincerely,

    Wren Owens

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