WHO GETS THE CO-OP, P.2

 

However, in a 4-1 decision, Judge David B. Saxe reversed the lower court, and granted Michele the half-ownership specified in Adam's will. Citing two precedents that involved separation rather than divorce, the court ruled that Adam and Pamela's divorce agreement expressed their mutual belief that they owned the co-op shares by the entirety, with the implicit, expectation that upon their divorce their tenancy would be automatically converted into a tenancy in common.

As Saxe wrote:

"While Adam and Pamela did not specifically state in their separation agreement an intent to convert their ownership … from joint tenancy to a tenancy by the entirety, as they had a right to do, their failure to do so appears to be based on their (albeit incorrect) understanding that their ownership already took that form. There can be little doubt from the language of their separation agreement that Adam and Pamela intended, and assumed, that upon entry of their divorce judgment they would automatically become tenants in common without any right of survivorship. …[T]here no indication that Adam intended to waive his (or his estate's) property interest in the co-op, or that Pamela thought he had done so…."

The dissent 'ignores the

clear understanding of

both husband and wife'

Judge Karla Moskowitz cast the lone dissent, saying she didn't agree that "the separation agreement's mere expression of Adam and [Pamela's] mistaken belief that they held the co op shares as tenants by the entirety changed the status of the property from a joint tenancy with right of survivorship to tenants in common…." That Pamela entered into the November 2007 agreement with Michele to sell the apartment with Michele getting half the net proceeds also didn't matter to Moskowitz, since Pamela's actions were based on a mistaken assumption.

She wrote:

"As the majority admits, 'there is no direct assertion of intent to alter their joint tenancy.' But, a 'direct assertion of intent' is precisely what is necessary to alter the form of ownership. It remains that there was nothing Adam and [Pamela] did … to change the form of ownership of the shares to the apartment. For example, they could have changed the stock certificate to hold the co-op shares as tenants in common."

The majority, however, called that "an overly strict formalistic application" of the law that "ignores the clear understanding of both husband and wife at the time they entered into their 1989 separation agreement as to how they would own the apartment upon entry of the divorce judgment…."

Intent matters, and until and if the case continues to the Appellate Court and a ruling is rendered there, a divorced couple's actual intent rather than the stock certificate's language is the final arbiter. But it never hurts to err on the side of caution — so if you're divorced and remarried, make that change to "tenants by the entirety." It'll give your new spouse peace of mind — and guarantee a piece of the apartment.