Harms and his brother owned some property in joint
tenancy. The brother died. The brother's executor (Sprague) refused
to give title to the land to Harms, since there was a mortgage, and the
lender (Simmons) claimed title to the brother's interest in the land as
collateral for the mortgage. Harms sued to quiet title.
In a joint tenancy, if one partner dies, their
property interest dissolves and is automatically split up between the
remaining partners (in this case just Harms).
Actually, Simmons had loaned money to Sprague and the
brother had cosigned for Sprague's loan. So Sprague had an interest in
what happened, he wasn't a neutral party. (Sprague was also got
everything in the brother's will.)
Harms was unaware that his brother had entered a mortgage
agreement on their property.
The Trial Court found for Sprague. Harms appealed.
The Trial Court found that when the brother took out a
mortgage, the joint tenancy was severed.
A joint tenancy is automatically severed under
certain conditions. A joint tenancy requires all the partners
have the same four things in common: time, title, interest and
possession. If one of those is broken, the property becomes a tenancy
A tenancy in common
can be given away in a will, a joint tenancy cannot.
The Court also found that the mortgage survived the
death of the brother.
The Appellate Court reversed on both issues. Sprague and
The Appellate Court found that the joint tenancy
was not severed.
The Court found that the mortgage did not
survive the brother's death.
The Illinois Supreme Court.
The Illinois Supreme Court looked to previous case law
and found that a mortgage does not sever a joint tenancy, unless
the loan goes into default and the property is seized by the lienholder.
A joint tenancy must maintain unity of title.
In this case, the brother never lost title to his interest in the
If the brother had defaulted on the loan prior to dying,
then Simmons would have acquired the brother's interest in the title.
If Harms had died and then the brother defaulted,
Simmons might have acquired the entire title of the house, since the
brother would have acquired Harms' interest.
The Court found that the mortgage did
The whole concept behind joint tenancy is that
upon death that person's interest dissolves. Nothing is transferred to
the other partners. The mortgage is connected to the brother's interest
in the property. That interest was not transferred to Harms, it just
disappeared. So the collateral the mortgage was based on doesn't exist
The bottom line is, don't take property held in joint
tenancy as collateral on a loan because that collateral only exists
while the person is alive and if they die, you can't recover!
Make them file a paper conveying their interest from a joint
tenancy to a tenancy in common. Then their interest survives
their death and you can recover.