Tag Archive for: real property

Real Estate Ownership in Pennsylvania

In Pennsylvania, there are several ways that real property (i.e. houses) may be titled. When two or more people own property together, they should be aware of the manner in which the property is owned:

Tenants in Common – When property is owned as tenants in common, each owner owns a certain percentage of the property. Usually, this ownership is equally divided, but can be altered on the deed itself. If you own real estate in this manner, you can do as you please with your share. For example, you can sell your interest in the property, or you can leave it to a friend or family member in your will. When you pass away, your share is distributed through the probate process, and not necessarily to the owners who survive you. Even though all owners own a percentage of the property, they all have the right to enjoyment and possession of the property.

Joint Tenants with Right of Survivorship – When property is owned this way, all owners have the right to enjoyment and possession of the property. However the property passes directly to the survivor(s) upon the death of one of the owners. The owners may not sell or gift their portion of the property without consent of the other owners.

Tenants by the Entirety – This is similar to Joint Tenants, except that the owners must be married to each other. This form of ownership may be dissolved upon death or divorce of either spouse. If it is due to divorce, the ownership reverts to Tenants in Common.

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Interest in Marital Property

A creditor may run into trouble in seeking to pursue their interest through real property of a married couple. Lappas v. Brown, 335 Pa. Super. 108 (Pa. Super. 1984), established that property subject to an order of court is in custodia legis, or under wardship of the court, pending compliance with the order. In Lappas, the underlying dispute involved a defense attorney who confessed judgment to get payment for legal services rendered. Meanwhile, the Commonwealth had seized all available funds as derivative contraband. Ultimately, the attorney was unable to collect his fee due to the existing order of court regarding the forfeiture. City of Easton v. Marra, 862 A.2d 170 (2004), expanded the principle of in custodia legis to actions for divorce and equitable distribution. In City of Easton, a divorce proceeding had been pending since 1988 when the City sought collection of unpaid taxes by forcing a tax sale of the real property the parties owned. A motion to stay the sheriff’s sale was granted since the property remained in custodia legis pending final resolution and equitable distribution per the parties’ divorce action.

Another example of the principle in the context of a divorce action was illustrated in Fidelity Bank v. Carroll, 416 Pa. Super. 9 (Pa. Super. 1992). Husband had a judgment entered solely against him for unsecured loans which went into default. The bank sought to put a lien on the marital residence however the Court held the bank’s lien could not attach to the marital home since the marital home was subject to equitable distribution in the pending divorce action. “Accordingly, the Bank could acquire no greater interest in the marital home than that of [Husband]. Here, it turns out that [Husband] has no interest in the marital home. Therefore, the Bank also has no interest in the home.” Id. at 14. In summary, a creditor cannot touch the interest of a non-debtor spouse, e.g. their share of a marital home.

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Securing an Interest in Real Property

It is a good idea to record your interest in any real property with the Recorder of Deeds as soon as possible. In a divorce matter, if one party is keeping the home, a new deed may need to be drawn up to indicate the sole ownership of the property. Transfers of real property incident to a divorce are exempt from the standard realty transfer taxes. On the other hand, you may need to put a lien on real property to protect your interest in the home’s value or as leverage for other sums due to you. In Philadelphia, an Affidavit of Interest in Real Property should be completed and submitted to the Recorder of Deeds. A copy of the current deed for the home is necessary to refer to the legal description of the property.

In Bucks County, parties can file a lis pendens. A lis pendens serves the same purpose in that it will pop up if a party tries to dispose of the property. A lien might also be put against a home for other unsecured debts. Often, at the time of settlement on a home, many of the debts would need to be paid off first. These unsecured debts are in addition to debts secured by the property such as mortgages or equity lines of credit. Failure to document your interest in real property could result in the home being transferred or sold without notice to you potentially eliminating your ability to recoup your share.

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