Bar News - May 17, 2013
Real Propery Law: Qualified Disclaimers: A Trap for the Unwary Real Estate Lawyer
By: Rolf Goodwin and Robert A. Wells
While property disclaimers are intended primarily as an estate planning tool, they can have an impact on real estate that is important for real estate practitioners to recognize.
Uniform Disclaimer laws allow people to relinquish property rights and change the way property rights pass. In New Hampshire, the effect may often cause title to pass in ways quite contrary to those that real estate practitioners expect. This topic is not discussed in the current New Hampshire title standards, so real estate attorneys need to look elsewhere for enlightenment.
The NH Uniform Disclaimer Act gives a person who has inherited or otherwise come into a right to property the ability to give up that right with a written disclaimer. The following fact patterns provide examples of how the Act can be relevant in the real estate law context. These fact patterns are by no means exclusive.
Fact Pattern 1: Husband and wife obtain a title to real estate as joint tenants with rights of survivorship. Husband dies, but the next link in the chain of title passes through his will.
Fact Pattern 2: Husband and wife obtain title to real estate as tenants in common. Husband dies intestate, and there is one adult child. But the next link in the chain of title passes through wife. The title lawyer will need to check whether a disclaimer has been recorded in the applicable registry of deeds, in Fact Pattern 1, by the wife, in Fact Pattern 2, by the adult child, and to check the probate file.
If there is a recorded disclaimer, the lawyer will need to check that it complies with the provisions of the Act. If so, the disclaimer trumps the terms of the joint tenancy, in Fact Pattern 1, and of the will, in Fact Pattern 2. The disclaimant (the wife, in Fact Pattern 1) is treated as having predeceased her husband. In Fact Pattern 2, the disclaimant is the adult child, who is treated as having predeceased the father.
The statute is reasonably brief and reasonably clear. It walks the reader through the different interests that may be disclaimed, the requirements for a valid disclaimer, and the effects of a disclaimer.
One can disclaim all or a portion of any property or a specific asset. One can disclaim a future interest. The language of the statute explains: "Any future interest that takes effect in possession or enjoyment after the termination of the estate or interest disclaimed takes effect as if the disclaimant had died before the event determining that the taker of the property or interest had become finally ascertained and the takerís interest is indefeasibly vested. A disclaimer relates back for all purposes to the date of death of the decedent, or of the donee of the power, or the determinative event, as the case may be."
New Hampshire practitioners dealing with clients with properties in multiple states should be aware that joint tenancies with rights of survivorship may arise in other states without any statement to that effect in a deed.
For example, in Massachusetts, a tenancy by the entirety may be treated as a joint tenancy when applied to a married couple. In Florida, the New Hampshire presumption is turned on its head; instead of deeming that no joint tenancy exists among married people unless explicitly stated, Florida assumes a joint tenancy unless explicitly denied.
As a matter of best practice, the next link in the chain of title should refer to the disclaimer and briefly explain the effect on the title.
In addition to the Uniform Act, real estate practitioners should be aware of Probate Court Procedure Bulletin 16. A useful discussion may be found in section 37.2.1 of DeGrandpre & Zorn, NH Practice, volume 10, Probate and Administration of Estates, Trusts and Guardianships.
Rolf Goodwin is an attorney at the McLane firm and a member of the firmís real estate/commercial lending and corporate departments.
Robert A. Wells is a director at the McLane firm and is a member and former chair of its trust and estate department.