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WHERE HAVE ALL THE FLOWERS GONE?
The rough terrain of tenancy by the entirety

Real estate and, since January 1, 1996, stock in a co-operative apartment, owned by married couples have one feature which is unique in the law of property -- the indestructible right of survivorship of each spouse. The failure to consider this concept can lead to unexpected results.

Mary Ann was excited. She had just closed on her first house. It was February and she could not wait until the weather warmed so that she finally could putter around in a garden all her own.

David was sad. His neighbor for over twenty years had sold his house and moved away. George wasn't the same after his wife Veronica died almost four years ago. "Too many memories in that house, no doubt", thought David. "I'm sure going to miss George's help in the garden."

Spring arrives. Both Mary Ann and David rush outside to start that timeless ritual of getting the garden ready for planting. But what's this? David sees his new neighbor knocking down the fence that encloses his garden. "Excuse me", cries David. "What do you think you're doing?"

"I'm cleaning up my yard", answers Mary Ann.

"But that fence is for my garden. Leave it alone."

"Your garden??", an incredulous Mary Ann responds. "How can that be? This fencing is right in the middle of my backyard -- nowhere near your property."

With that David enters his house and soon reappears holding a 1977 deed. "I bought this plot in the middle of the Hofnauer backyard and have been using it as my garden for the last 19 years. Surely George must have told you."

"No, he didn't. This is the first I'm hearing of this."

"Well your title search should have turned up my deed", says David. "See" -- pointing to the deed -- " it was recorded right after I bought the garden."

"This is impossible," exclaims Mary Ann. "I'm calling my lawyer." So into the house goes Mary Ann, soon to return, saying, "My lawyer says that you have no right to my property. So get off!" David -- in true American fashion -- yells back:

"I'll see you in court."

While no doubt this dialogue never occurred, something similar to this dramatization may have happened just before David L. Bobker instituted litigation to determine his rights to a portion of Mary Ann White's backyard. Their dispute turned out to be a real life application of the rules on tenancy by the entirety. Bobker v. White (Sup. Ct. Putnam County October 27, 1998).

The facts

On March 5, 1964, George Hofnauer and Veronica Loeffler married. The couple's marriage ended when Veronica died on April 3, 1992. At the time of their marriage, Veronica owned real estate known as Lot 17. On May 9, 1964, she conveyed Lot 17 to "George Hofnauer and Veronica Hofnauer, his wife". The deed was recorded by the Putnam County Clerk on May 13, 1964.

On July 30, 1977, Veronica gave a deed to David Bobker to a portion of Lot 17. For some unknown reason -- probably because no title search was done -- Mrs. Hofnauer was identified on the deed under her previous name -- "Veronica Loeffler". George did not join in the conveyance. Although the Bobker deed also was recorded by the Putnam County Clerk, it did not turn up in the title search commissioned by Mary Ann's attorney because the deed was indexed under the name of "Loeffler" and therefore lay outside George's chain of title.

On February 29, 1996, George sold all of Lot 17 to Mary Ann. The deed from George to Mary Ann was recorded by the Putnam County Clerk on April 2, 1996.

The prevailing principles

Unlike other forms of joint ownership, the tenancy by the entirety enjoys one crucial distinction. The ownership rights of the spouse who outlives the other cannot be destroyed by the unilateral action of the other spouse. First Am. Title Ins. Co. of New York v. Kevlin, 203 A.D. 2d 681, 682, 610 N.Y.S. 2d 361, 363 (3d Dep't 1994) and Lawriw v. City of Rochester, 14 A.D.2d 13, 15, 217 N.Y.S. 2d 113,114 (4th Dep't 1961), aff'd, 11 N.Y.2d 759, 181 N.E.2d 631, 226 N.Y.S. 2d 695 (1962).

"The specific rights arising from this unique form of co-ownership are the logical corollary of the legal fiction that husband and wife were but one person." V.R.W., Inc. v. Klein, 68 N.Y.2d 560,563, 503 N.E.2d 496,498, 510 N.Y.S.2d 848,850 (1986). Where property is held in a tenancy by the entirety "and one spouse dies, the surviving spouse takes the entire estate, not because of any right of survivorship, but because that spouse remains seized of the whole." In re Estate of Violi, 65 N.Y.2d 392,395, 482 N.E.2d 29, 31, 492 N.Y.S.2d 550, 552 (1985). See also, Kahn v. Kahn, 43 N.Y. 2d 203, 207, 371 N.E. 2d 809, 811, 401 N.Y.S. 2d 47, 49 (1977). "As long as the marriage remains legally intact, both parties continue to be seized of the whole, and the death of one merely results in the defeasance of the deceased spouse's coextensive interest in the property." V.R.W., Inc. v. Klein, 68 N.Y.2d at 564, 503 N.E.2d at 498, 510 N.Y.S.2d at 850.

So strong is a tenancy by the entirety that, absent a spouse's death, it may be destroyed only "by certain definitive acts: a conveyance of the property in which both spouses join; a judicial decree of separation, annulment or divorce; or execution of a written instrument which satisfies the requirements of section 3-309 of the General Obligations Law which permits division or partition of real property held in a tenancy by the entirety if clearly expressed in such an instrument". In re Estate of Violi, 65 N.Y.2d at 395, 482 N.E.2d at 31-32, 492 N.Y.S.2d at 552-53.

Bobker bet his begonias but lost.

Let's apply these points to the backyard brawl between Mary Ann and David. By the 1964 deed, George and Veronica Hofnauer became tenants by the entirety in Lot 17. Estates, Powers and Trusts Law §6-2.2(b), Real Property Law §240-b and Armondi v. Dunham, 221 A.D. 679, 680, 225 N.Y.S. 87, 89 (3d Dep't 1927), aff'd, 248 N.Y. 603, 162 N.E. 542 (1928).

In 1977, when Veronica gave her deed to David, the Hofnauers had not employed any of the means by which a tenancy by the entirety can be destroyed, i.e. a joint conveyance, a judicial decree in a matrimonial action or a §3-309 instrument.

This did not mean that the 1977 deed was a worthless piece of paper for "there is nothing in New York law that prevents one of the co-owners (in a tenancy by the entirety) from mortgaging or making an effective conveyance of his or her own interest in the tenancy. To the contrary, each tenant may sell, mortgage or otherwise encumber his or her rights in the property, subject to the continuing rights of the other (citations omitted). Since the status of a tenant by the entirety is reserved exclusively to those co-owners who are married to each other, the interest acquired by a grantee or mortgagee of such a unilateral conveyance is not denominated a tenancy by the entirety, but rather is labeled a tenancy in common. Nonetheless, the grantee's or mortgagee's rights in the property are essentially the same as those possessed by the grantor or mortgagor: a right to shared possession and ownership subject to the original cotenants' reciprocal rights of survivorship. (citations omitted).

"Since the grantee or foreclosing mortgagee, in effect, steps into the shoes of the grantor or mortgagor, his survivorship rights are measured by reference to the lifetimes of the original parties to the tenancy by the entirety. If the grantor or mortgagor predeceases the spouse whose interest in the property has been retained, the grantee or mortgagee is left with no interest in the property at all. Conversely, if the latter predeceases the former, the grantee or mortgagee acquires full rights to the property, unencumbered by the deceased spouse's former interests." V.R.W., Inc. v. Klein, 68 N.Y.2d at 565, 503 N.E. 2d at 499, 510 N.Y.S. 2d at 851.

Thus, David did acquire an interest in part of Lot 17. Unfortunately for him, his interest "died" with Veronica. Since George survived Veronica, he succeeded to the entire estate which meant that when George conveyed title to Mary Ann, she became the sole owner of all of Lot 17, including David's daisies.

Not all gamblers lose

Debra Goldman sued her husband Scott for divorce. To secure payment of her legal fees, Debra's attorney, Phyllis Gelman, had Debra give her a mortgage on the marital residence which Debra and Scott owned as tenants by the entirety. Ms. Gelman recorded the mortgage in 1991. About three years later, Debra and Scott were divorced with Scott being awarded title to the home.

Scott sought to have the mortgage discharged, arguing that since Debra's interest in the tenancy by the entirety was terminated by the judgment of divorce which awarded title to Scott, the mortgage was likewise extinguished since Ms. Gelman's rights in the realty were no greater than Debra's. Goldman v. Goldman, 260 A.D. 2d 537, 540, 688 N.Y.S.2d 601, 604 (2d Dep't 1999) (McGinity, J., dissenting).

Not so, said the Court of Appeals. "(Debra) was legally entitled to mortgage her interest in the tenancy during the pending divorce action. In turn, Gelman acquired a contingent interest in all the rights (Debra) possessed at the time of conveyance (citations omitted). Once the trial court rendered a final judgment of divorce and (Debra's) interest ...transmuted into a tenancy in common, Gelman retained an interest in the tenancy in common (citation omitted). Accordingly, while the distributive award divested (Debra) of her interest in the property, Gelman's bundle of rights, acquired before the final judgment of divorce, was not impaired." Goldman v Goldman, 95 N.Y.2d 120, 122, 733 N.E. 2d 200, -- , 711 N.Y.S. 2d 128, 130 (2000).

Conclusion

As these two cases illustrate, trafficking in conveyances by only one spouse is tricky business. After almost twenty years tilling the soil, David Bobker was certain that he was the owner of that cabbage patch behind Mary Ann White's house. Yet he wound up on the compost pile. On the other hand, knowing that the eventual divorce decree would convert the tenancy by the entirety into a tenancy in common made Phyllis Gelman come out smelling like a rose.

CAUTION

Tenancy by the entirety is a concept which originated in the English common law. Because certain states, such as California, Nevada and Arizona -- to name a few -- were not originally settled by the English, notions of property ownership differ from the "common law" states, such as New York, New Jersey and Connecticut. In California for example, property owned by married couples usually is "community property".

No opinion is given as to how the two cases which are the subject of this article would have been decided in a "community property" state.