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Title Insurance Claims and Lessons for Underwritting: The Missed Tenancy

Articles from The Massachusetts Focus

Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Fall 2004, Volume 3, Number 4

Title Insurance Claims and Lessons for Underwriting: The Missed Tenancy
by Richard Urban, Vice President and Massachusetts State Counsel

Unbeknownst to common perception, title insurance claims do get filed with Stewart. Although claims are not popular topics of conversation for a variety of reasons, they, however, present opportunities for agents to learn about mistakes so that they don't find themselves in similar predicaments.

Stewart's claims management system is designed so that claims are handled in the field. My colleague Pam O'Brien and I handle Massachusetts claims, and if you've never had the occasion to discuss a claim with either of us, well, keep up the good work!

Conveyancing these days requires an attorney to at least recognize, if not comprehend, a smorgasbord of legal practice areas such as probate, bankruptcy, corporations, condominiums, trusts, etc. I've always referred to the state of conveyancing in Massachusetts as evolving into a full contact sport in which we are getting more and more removed from the days of touch football.

Claims are no different. They also run the full gamut of practice areas. Occasionally, though, identical scenarios may present themselves in a number of claims. Although it might be dramatic and histrionic to describe such claims as a "pattern," nevertheless their frequency makes them worthwhile to discuss because of both their troublesome nature and exposure to loss to a title insurance company, under the respective title insurance policy, and to a closing attorney, particularly in a purchase transaction in which a title certification is given as required by G.L.c. 93, §70.

For example, various claims have been recently filed under both owners and loan policies in which tenancies-by-the-entirety were misinterpreted:

  • A 1966 deed to "John Doe and Jane Doe, husband and wife." Jane dies in the early '80s. In 1992, John remarries and conveys the title to the property to himself and his new wife as tenants-by-the-entirety. John subsequently dies. Second wife produces a death certificate and an estate tax lien affidavit for John and subsequently sells the property to the insured owners as the "surviving" tenant-by-the-entirety.
    There's no question that the second wife was certainly a surviving tenant-by-the-entirety upon John's death pursuant to the tenancy established in 1992. Unfortunately, though, the earlier 1966 deed failed to properly establish an initial, unequivocal, tenancy-by-the-entirety. It created a tenancy-in-common and, thus, when John remarried and conveyed his interested to his new wife, he could only convey what he owned at the time, namely, his own interest arising from the 1966 deed as well as any interest he picked up from Jane's estate. In this case, the complexity of the claim increased since no probate existed for Jane; it was later determined that she died intestate survived by children from John's first marriage to her. Moreover, these same children were now found to be estranged from John's second surviving wife.
  • A 1974 deed to "John Doe and Jane Doe, husband and wife, tenants in common." John dies thereafter; Jane then conveys the property to the insureds as a purported surviving tenant-by-the-entirety. Jane is now deceased as well and, although neither she nor John have a probate, they both died intestate and survived by children.
  • A 1992 deed to, simply, "John Doe and Jane Doe." Jane dies in 1999 and an estate tax lien affidavit from the surviving spouse lists a variety of properties, (including one that is later insured) which were held by the Does as tenants-by-the-entirety. John conveys title to insured owners as a purported surviving tenant-by-the-entirety. A probate exists for Jane; she dies intestate, and multiple children are named in the probate petition.

In each of the above examples, the one critical reference that is missing from each grantee clause is a clear and succinct statement that title is being held as "tenants-by-the-entirety. A reference to the marital status alone; i.e., "husband and wife," is not enough to establish a tenancy-by-the-entirety in a deed. G.L.c. 184 §7 states that:

A conveyance or devise of land to two or more persons or to husband and wife, except a mortgage or a devise or conveyance in trust, shall create an estate in common and not in joint tenancy, unless it is expressed in such conveyance or devise that the grantees or devisees shall take jointly, or as joint tenants, or in joint tenancy, or to them and the survivor of them, or unless it manifestly appears from the tenor of the instrument that it was intended to create an estate in joint tenancy. A devise of land to a person and his spouse shall, if the instrument creating the devise expressly so states, vest in the devisees a tenancy by the entirety.

In essence, the statute remains consistent with some 220 years of statutory and common law disfavor of establishing survivorship tenancies in a deed unless expressly stated, regardless of the fact that a husband and wife are involved.[1]

The resolution of claims such as the ones presented here can range from the conventional to the complex. It begins with assimilating and assembling as much information as possible relative to the family status of the deceased spouse whose interest, and tenancy, was misinterpreted.

For example, is there a probate? An existing probate for the estate of the deceased spouse will identify the names and addresses of family members that can be reached for assistance. The need to file a probate simply compounds the problem of obtaining release deeds from heirs or devisees.

Does any suggestion of estrangement exist within the family? Children of the deceased spouse are typically being notified for the first time that they may have succeeded to an interest in a piece of property that they never knew about. Sometimes they are many years removed from the date of a parent's death and the unexpected request for a release deed will be greeted with suspicion and reservation. In a situation in which a child is estranged from a deceased parent, cooperation is not only unlikely but a demand for money can be anticipated as well, although such a demand is not uncommon even with otherwise cooperative heirs or devisees.

However, while a conventional cure in the form of release deeds is much preferred and desired, immediate capitulation to an heir whose response is unreasonable and extortionist does not have to be made. The subject deed should be closely scrutinized to see if it "manifestly appears," as suggested by G.L.c. 184 §7, that a joint tenancy was intended.

Moreover, if the surviving spouse and the majority of the heirs are cooperative, and if there are only one or two heirs that feel they've struck the mother lode and are making simply outrageous demands for money, then it may be worthwhile to examine the merits of a reformation action based on mutual mistake and/or a mistake of the deed's draftsman. See, for example, Franz v. Franz, 308 Mass. 262, 32 N.E.2d 205 (1941). Testimony from at least the surviving spouse will be helpful to establish the intent of the parties at the time the subject deed was prepared and executed, and the threat of litigation may cause unreasonable minds to become more practical and fair.

In summary, don't rely on a reference to only the marital status of two individuals in a grantee clause of a deed in order to conclude that a tenancy-by-the-entirety or even a simple joint tenancy has been created.

1 For excellent discussions of the historical underpinnings of what is now G.L.c. 184, §7, especially as it relates to the creation of tenancies by the entirety, see Hoag v. Hoag, 213 Mass. 50, 99 N.E. 521 (1921) and the more recent case of DiCenzo v. Board of Assessors of the Town of Framingham, 372 Mass. 523, 526, 362 N.E.2d 913, 915 (1977). [Back to Text]