When legislators change the laws, it can result in unintended consequences.
We put the condo on the market and got two offers fairly quickly. The first wanted us to "take back" a note (mortgage) with the buyer paying cash for the rest. As I have noted before, this can be advantageous from a tax perspective, as instead of having a one-time capital gains, you can have a spaced-out income stream (including interest!) over a number of years. That offer did not pan out.
A second buyer quickly came in, looking to buy and then rent out the condo as a landlord. They offered $150,000 cash with closing in two weeks. We moved closing to January 7th so as to have the reported income in 2025, not 2024. But then all hell broke loose.
The title insurance company balked, claiming there were "clouds" in the title. The chain of title is pretty short. The condo company bought the apartment complex from the original landlord and then created the condominium and sold off the individual units to buyers. The first buyer, in 1982, was a flight attendant who bought the place for $38,000, with her Father co-signing the loan, I believe. They were listed as "Joint Tenants" on the title. Nearly two decades later, she sold the unit to us in 1999 for.... $38,000. The units had appreciated to over fifty grand in the interim, but the real estate bubble of 1989 burst and it wasn't until the 2000's that the properties started appreciating again.
Her Father had since died, and as was the practice in the 1980s, a copy of the death certificate was filed, which under the old law would have perfected title solely in the flight attendant's name. She, in turn, conveyed title to us, in fee simple, as the sole owner of the property.
So now, 25 years later, we are trying to sell. What's the problem? Well, under Title 55-20.1 of the Virginia code as amended in 1999, the term "Joint Tenants" no longer includes "survivorship" unless explicitly set forth in the deed, for example by saying "Joint Tenants With Right of Survivorship" or "JTWROS" as they say on car title deeds.
I talked about JTWROS a long time ago. If you own a property in JTWROS with another person, when one of you dies, the property automatically conveys to the remaining party(s). No will, no intestate, no probate. Just record a copy of the death certificate and you're done.
Property can be held in a number of ways. You can be a sole owner, own through an LLC or other corporate entity, own as Tenants in the Entirety (if you are married) or as Tenants in Common or as Joint Tenants. (We will leave Life Estates for trick questions on the Bar Exam). Tenants in the Entirety is similar to JTWROS, in that if one spouse dies, the property automatically conveys to the other. Each spouse owns the "entirety" of the property, hence the name.
Tenants in common means each tenant owns a share of the property - usually 50/50 for two owners. When we bought Washington Road in 1989, the title company handling the closing put us down as Tenants in Common. I asked him to correct this to JTWROS and he balked. "If you died, Mr. See would get the whole house? Don't you want your half to go to your family?" Being gay back then was something of a novelty still - and may soon become so again. But the documents were corrected and the closing attorney shook his head in amazement that two men would want to own a property together in JTWROS.
And by the way, I made sure the phrase "with right of survivorship" was in the deed. And it is a good thing I did, as at that time, the law in Virginia had been changed, such that unless those magic words were included, "Joint Tenants" was presumed to mean Tenants in Common. The raises the question, if Joint Tenants (sans magic words) means Tenancy in Common, then why have two legal terms for the same thing? It makes no sense at all.
I am not sure what the impetus to change the law was. My gut reaction is that it was a housekeeping statute, designed to bring Virginia property code in line with the Uniform Commercial Code (UCC) a movement that has been going on for some time to bring various State Laws into conformity with one another so as to avoid confusion. In this case, it created it.
Or maybe they changed the law because those nasty gays were buying houses in Joint Tenancy and during the AIDS crises, families who threw their gay kids out of the house as teens, now wanted half of the rapidly appreciating homes the gays bought in gentrifying neighborhoods. Let's hope it wasn't that! Then again, what explanation makes any sense?
The question is, of course, whether it was meant to be retroactive. I found one source that said it was not (I cannot find it again, thanks Google AI!). Meanwhile, Google AI, without any sources, other than the code, claims it was. If the latter is the case, it throws the validity of a huge number of property titles in the Commonwealth of Virginia into question. In the hundreds of years property has changed hands in the State, surely there is a "Tenants in Common" deed in the chain of title of nearly every property!
This Richmond School of Law, Law Review article seems to imply that the legislative intent was to make the law retroactive, unless....
"The better view would suggest that the amendment and reenactment of the effective date provision in section 55-9, which occurred in pari materia with the enactment of new section 55-20.1, shows a legislative intent that section 55-20.1 should be treated the same way, i.e., retroactively, except to the extent that such retroactivity would affect vested rights. See id. §§ 55·9, -20.1 (Cum. Supp. 1999)"
In this case, after the death of her Father, the flight attendant had vested rights. He died in 1989, vesting her rights to the property a decade before the law was passed. It seems so simple to me!
So, 25 years have passed. Believe it or not, the flight attendant is still alive, but it appears that there may be other heirs descendant from her Father. If they can be found and persuaded to sign a quitclaim deed, the problem is solved. But of course, what is their motivation to sign? They might argue that they are entitled to a share of the property - maybe even up to one-half! Although I suspect the flight attendant is one of the heirs and thus the share would be far less.
There are other options, of course. We could (and probably will) bring a Motion to Quiet Title to perfect out title claim. If my legal argument is correct and the "new" Title 55-20.1 doesn't apply retroactively, then the issue is moot. I would also argue that since we have been "notoriously occupying" the property for 25 years, we take title by adverse possession. What constitutes notorious occupation varies, but paying the property taxes and utilities is one sure sign. There may be some statute of limitations issues, but I am not sure of that. 25 years is a long time.
No matter what happens, it appears we lost the buyer and we will have to put the property on the rental market again, as it may take months to sort this all out.
But what about title insurance? Yes, we had a policy - for $38,000 - and the title insurance company went bankrupt in the meltdown of 2008. We can file a claim with the State Insurance Commission, but that may return only pennies on the dollar and take years (I plan on doing it anyway). Meanwhile, a motion to quite title will run $5,000 to $10,000 in attorney's fees.
This leaves the original title company - do we sue them? They should have "errors and omissions insurance" of their own, which should cover the cost of the motion to quiet title.
In any event, it is a real hot mess, and if you know someone who wants to rent a condo in NoVa, let me know!
