Harold and Irene are joint tenants on a property in Cedar City, Utah. Harold, without Irene's knowledge, executes a deed of trust on his interest to secure a personal loan. Harold subsequently dies before the loan is repaid. The lender claims the deed of trust survived Harold's death and that the lien encumbers Irene's now-full ownership. Irene claims the right of survivorship extinguished Harold's interest — and the lien — at the moment of his death. Which outcome is most consistent with Utah's treatment of this issue?

Correct Answer

D) The lender's position prevails; a deed of trust recorded before death survives the joint tenant's death and remains a lien on the property.

This is one of the most contested and nuanced issues in joint tenancy law. Utah follows a 'title theory' approach to deeds of trust — the trustee holds legal title as security. Many courts, including those in title theory states, have held that a deed of trust executed by one joint tenant severs the joint tenancy at the time of execution (not at death), because the conveyance of legal title to the trustee destroys the unity of title. If the joint tenancy was severed at execution, Harold and Irene became tenants in common, and Harold's one-half interest — encumbered by the deed of trust — would pass through his estate (subject to the lien) rather than to Irene by survivorship. The lender's lien survives because the joint tenancy was severed when the deed of trust was executed, meaning Irene's survivorship right never applied to Harold's encumbered interest. This is the prevailing outcome in title theory states like Utah.