Smith v. Bank of America
Justice Cheryl Chambers
Smith's 1999 quitclaim deed conveyed certain property to herself and Hassid as joint tenants with right of survivorship. Hassid's 2006 loan of $300,000 from Bank of America (BofA) was secured by a mortgage on the subject property. In 2009, after Hassid died, BofA declared the loan in default. Supreme Court declared the mortgage null and void, as extinguished by operation of law at Hassid's death so that Smith succeeded to Hassid's one-half interest in the property free and clear of the mortgage. Relying on persuasive foreign authority, Supreme Court reasoned that since in New York a mortgage is considered a lien and not a transfer of title, Hassid's mortgage to BofA did not sever the joint tenancy. On appeal, the Second Circuit held that a mortgage given by one joint tenant absent the other's knowledge does not destroy the unity of interest, and thus does not sever joint tenancy. Because a mortgage is only a lien in New York, Hassid's act of giving a mortgage on the subject property did not act to sever the joint tenancy relationship between himself and Smith. After the mortgage was executed, he and Smith still held equal shares in the property, and BofA acquired no legal or equitable interest in the property as a result of the mortgage.