Tom and Jerry are unmarried co-owners of a duplex in Indianapolis, Indiana, holding title as joint tenants with right of survivorship. Tom executes a mortgage on his interest to secure a personal loan without Jerry's knowledge or consent. Which of the following best describes the legal effect of Tom's mortgage under Indiana law?
Correct Answer
B) The mortgage severs Tom's interest from the joint tenancy, converting his share to a tenancy in common, and the lender's lien attaches to Tom's undivided interest
Under Indiana property law, a joint tenant may individually encumber their interest. When Tom mortgages his interest, this act of encumbrance severs the joint tenancy as to his share because it destroys the unity of interest required to maintain joint tenancy. Tom's interest converts to a tenancy in common, and the lender's mortgage lien attaches to Tom's undivided interest. Jerry retains his original interest but now holds it as a tenant in common with Tom (or the lender, if foreclosure occurs), rather than as a joint tenant.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Community property is a form of ownership recognized in certain states where property acquired during marriage is considered equally owned by both spouses, regardless of who earned the money or whose name is on the title.
Condominium ownership involves owning a unit of airspace within a multi-unit building plus an undivided interest in the common elements shared with other unit owners. Each unit is separately taxed and financed.
In a cooperative (co-op), the building is owned by a corporation, and residents purchase shares of stock in the corporation that entitle them to a proprietary lease on a specific unit. Residents are shareholders, not property owners.
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