Lyle and his son, Steven, purchased a house in 2007, which became Lyle’s personal residence. The title to the property was conveyed to: “Lyle, a single man, and Steven, a single man.” Lyle passed away several years later. The Michigan Department of Health and Human Services (DHHS) filed a claim against Lyle’s probate estate for unpaid Medicaid bills in the amount of $48,084.95. DHHS sought to have the bills paid from Lyle’s share of the property.
Steven filed a petition to reform the deed to indicate a joint tenancy with rights of survivorship, arguing that Lyle intended to create a joint tenancy so that his interest in the property would pass to Steven upon his death – avoiding DHHS’s claim. DHHS responded arguing that by law, the ownership estate created by the deed between Lyle and Steven was a tenancy in common because there was no express language in the deed declaring an intent to create a joint tenancy or an intent to grant a right of survivorship.
The trial court agreed with Steven’s argument and found that the deed created a tenancy in common, but that a latent ambiguity existed regarding the survivorship right. On the basis of the ambiguity, the trial court reformed the deed to comport with Lyle’s intent to own the property with Steven as joint tenants with a right of survivorship. Under the trial court’s ruling, DHHS could not satisfy Lyle’s unpaid bill from Lyle’s interest in the property, because Lyle’s interest automatically passed to Steven upon his death. DHHS appealed.
The Court of Appeals reversed the trial court, holding that although the trial court was correct in finding that the deed’s granting clause (to “Lyle, a single man, and Steven, a single man”) created a tenancy in common between Lyle and Steven, the language of the deed, on its face, was not ambiguous and, therefore, the deed could not be reformed. The Court of Appeals ruled that based upon the clear and unambiguous language in the deed, Lyle’s interest in the property did not pass to Steven automatically upon his death and, therefore, DHHS could satisfy Lyle’s unpaid Medicaid bills from Lyle’s interest in the property.
Under Michigan law, a deed conveying title to two or more persons is presumed to create a tenancy in common unless the deed language expressly declares an intention to create a joint tenancy or a right of survivorship. As happened in Lyle’s case, the death of one co-owner under a tenancy in common does not extinguish the deceased owner’s interest in the property. That interest survives to his probate estate where creditors, like DHHS, can seize it to satisfy their claims. And the courts are powerless to help.
With any legal document, what you meant to say matters little – what matters is what your document actually says. Deeds and other documents must be carefully drafted to clearly express and carry out your intentions. Poor drafting can have disastrous consequences. In Lyle’s case, not having the correct language in his deed cost Steven tens of thousands of dollars ($48,084.95 to pay the DHSS claim, plus legal fees).
Work with competent legal counsel to ensure your documents are properly drafted. It can save you and your family a fortune in the long run.