legal analysis

A Tale of Three Halves

By January 30, 2016No Comments

Last fall, the Illinois Appellate Court, First District, Second Division, ruled on an interesting case of “first impression” involving our probate courts. The case, Harris v. Adame, involved incapacity and property ownership with respect to joint tenancy, an issue that is likely to appear more often over the next few years, given our aging population.

Two brothers, Arnold and Arthur, once owned a home together in joint tenancy with rights of survivorship.

A House Divided, C Glass, U.S.

A House Divided, C Glass, U.S.

In 2002, Arnold was in a car accident that left him in a coma. The court appointed a guardian of the person and estate for Arnold, who later recovered but kept the guardian.

A few years later, in 2005, the guardian helped sell the brothers’ home to Jose Adame. The title packet included a form stipulating that Arnold was subject to guardianship.

Less than a year later, Arnold died without a will, i.e., intestate, leaving his brother, Arthur, as his sole heir.

In 2008, Cook County’s Office of the Public Guardian (OPG) was appointed guardian for Arthur. Next, in 2009, the OPG filed a citation to recover assets against Adame in an attempt to void the entire 2005 home sale.

At trial, Adame argued that he was an innocent bona fide purchaser (BFP). OPG argued that the entire transaction was void because Arnold was incapacitated when he signed the conveyance, despite the fact that Arthur had capacity. Adame stated that he did not have legal notice of Arnold’s incapacity before the 2005 closing. Adame further argued that if the transaction was found void, then, because he was a BFP, he should to be reimbursed for the money he paid for the home.

The trial court, in 2012, ruled in favor of the OPG on the issue of whether the entire transaction was void but decided not to rule on whether Adame was a BFP and, therefore entitled to reimbursement.

Huh?! I know, right?

Enter a timely and appropriate appeal by Adame questioning whether the aforementioned ruling was erroneous. The appellate court, rightfully, found just that. In particular, the court found that the transaction regarding Arnold’s joint tenancy interest was void, but the sale of Arthur’s was valid and Arnold’s estate now had Adame as a tenant in common. Essentially, Arthur wasn’t due Arnold’s entire estate only Arnold’s half.

The court explained the rule that without a court order, neither a person who has been adjudicated disabled nor that person’s guardian can sell the disabled person’s property interest. Here, the guardian acted without leave of court, so the transaction selling Arnold’s interest was void.

As a response, OPG argued that Arthur’s part of the transaction should be considered void because at the time of the trial, Arthur was also incapacitated. The court found the OPG’s timing was off and required proof that Arthur was incapacitated at the time of executing the sale contract. OPG provided no such proof, so Arthur’s transaction was not void.

Not depending on the appellate court to get the law right, Adame argued that even if the entire transaction was deemed void, the after acquired title property doctrine should apply. The after acquired title property rule provides that a transaction may be found void if a ne’er do well tried selling a property – the entire enchilada – when they don’t have marketable title. However, only half of the interest was sold to Adame, so the doctrine was inapplicable in this case.

Well, if only half of the transaction is valid – or void – depending on one’s perspective, then the entire transaction must be void, OPG stated, to which the court responded with a first-year law school lesson in joint tenancy. First, the court again reminded OPG that, in law, a party needs evidence to support one’s arguments, and OPG provided no evidence, i.e., case or statutory law providing that an entire transaction is void simply because one party’s joint tenancy interest was not conveyed. On the contrary, the court provided ample support for the rule that one tenant can server joint tenancy without the other tenant’s knowledge or consent, transforming the joint tenancy into a tenancy-in-common with the new interest holder. And Arthur did just that: he created a tenancy-in-common relationship between Arnold’s estate and Adame.

Now, to ensure that all parties were on the same page, the court then explained the fact that when a party severs joint tenancy, even if the action was a mistake, the agreement severing the joint tenancy is still enforceable. Thus, the appellate court found Adame owned ½ interest in the home and further instructed the trial court to determine whether, since Adame paid consideration for an entire house but only obtained ½ interest, Adame should be reimbursed for the other ½ of the consideration paid.

Seems like an easy determination…

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