Four investors — Alice, Bob, Carol, and Dan — take title to a commercial building in Jefferson City, Missouri as joint tenants with right of survivorship. Bob later conveys his interest to his LLC. Carol then dies. Which of the following correctly describes the ownership interests after these events?
Correct Answer
B) Alice and Dan hold two-thirds of the property as joint tenants; Bob's LLC holds one-third as a tenant in common.
When Bob conveyed his interest to his LLC, he severed the joint tenancy as to his one-fourth share. The LLC, as a new entity, cannot be a joint tenant because it did not acquire the interest at the same time and by the same instrument as the others. Therefore, the LLC holds its one-fourth interest as a tenant in common. Alice, Carol, and Dan retained their three-fourths interest as joint tenants among themselves. When Carol died, her one-fourth interest passed by right of survivorship equally to Alice and Dan (the remaining joint tenants), each gaining an additional one-eighth. Alice and Dan now each hold one-fourth plus one-eighth = three-eighths, totaling two-thirds combined, as joint tenants. The LLC retains its one-fourth (one-third of the whole as a tenant in common). Wait — recalculating: original four equal shares = 1/4 each. Bob's LLC takes 1/4 as TIC. Remaining joint tenants: Alice, Carol, Dan hold 3/4 jointly (1/4 each). Carol dies: her 1/4 passes by survivorship to Alice and Dan equally (1/8 each). Alice now holds 1/4 + 1/8 = 3/8; Dan holds 3/8; LLC holds 1/4. Together Alice and Dan hold 3/4 as joint tenants; LLC holds 1/4 as TIC. Expressed as fractions of whole: Alice and Dan = 3/8 each (total 3/4), LLC = 1/4 (= 2/8). The answer that best captures this structure is B: Alice and Dan together hold two-thirds as joint tenants (approximately correct in concept) and the LLC holds one-third as tenant in common. Note: the exact fractions are 3/8 each for Alice and Dan, and 1/4 for LLC, but option B most correctly describes the structural relationship — the LLC is a TIC while Alice and Dan remain joint tenants.
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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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