"Novel" Joint Tenancy Argument May Protect Real Property Assets of Madoff Widow
Professor James Webster defines the issue of rights of survivorship, as to a joint tenancy, as follows:
"The most important characteristic of the joint tenancy is the right of survivorship, which means that upon the death of one joint tenant, his interest in property jointly owned enures to the benefit of the surviving joint tenant or joint tenants. Upon the death of a joint tenant the surviving joint tenant or joint tenants take nothing from the decedent but instead take the whole by virtue of the original conveyance which created the joint tenancy; the surviving joint tenant or joint tenants take the whole which has been owned all the time. If all joint tenants die except one, the survivor owns the whole property in severalty. The heirs or spouse of a deceased joint tenant take nothing upon his death. A joint tenant cannot devise his interest upon his death."
Webster's Real Estate Law In North Carolina, section 7.02 (2011).
In other words, if one joint tenant dies, the decedent's ownership interest in that real property essentially evaporates and the surviving joint tenant owns the real property alone and outright.
Dry, though, this topic may be, it's proving instrumental in Trustee Irving Picard's efforts to wrest two properties away from Stephanie Mack, the widow of Bernie Madoff's deceased (by suicide) son Mark Madoff.
As reported today in the Wall Street Journal, "Ms. Mack's lawyers have made novel legal arguments about why the trustee can't touch either the two properties she owned jointly with Mark Madoff." It seems Ms. Mack's attorneys are arguing that the two pieces of real estate—a loft in Manhattan's SoHo neighborhood and a waterfront house in Nantucket—automatically became hers alone, as joint tenant with a right of survivorship, when Mark Madoff died in December 2010. Importantly, at the time of her husband's suicide, Ms. Mack was not named in Trustee Picard's lawsuit. What's amazing, in a morose twist, the deadline for naming Ms. Macks in the lawsuit apparently expired on the day of Mr. Madoff's suicide and, thus, the day Ms. Mack claims title to the two properties vested in her, solely.
Are you wondering about the value of the homes? So am I. The article continues that that the loft was purchased in 2005 for "nearly $6.1 million" and the Nantucket home "cost $6.5 million".
With some sharp legal minds at work on solving Bernie Madoff's mess, wading in the waters of "high" finance, it's good to see a relatively straightforward "joint tenancy" argument hit a Wall Street Journal reporter (and perhaps Mr. Picard, himself) as "novel".