Three business partners — Tom, Jerry, and Lisa — purchase a commercial building in Newark, New Jersey, as joint tenants. Tom later conveys his interest to his corporation without informing Jerry or Lisa. What is the ownership structure after Tom's conveyance?
Correct Answer
B) Tom's corporation holds a one-third interest as a tenant in common; Jerry and Lisa remain joint tenants with each other for their two-thirds.
Under New Jersey property law, a joint tenant may unilaterally convey their interest, which severs the joint tenancy as to that interest only. Tom's conveyance to his corporation destroys the four unities (specifically unity of time and title) as between the corporation and the remaining joint tenants. The corporation takes Tom's one-third as a tenant in common. However, Jerry and Lisa's joint tenancy with each other remains intact — they still hold their combined two-thirds as joint tenants with right of survivorship between themselves.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
A leasehold estate grants the right to possess and use property for a defined period of time, without conferring ownership.
A life estate is a freehold estate that grants ownership rights for the duration of someone's life.
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