In previous posts I’ve written about the unintended consequences that may arise from needlessly putting real estate into a trust. I’ve also discussed the importance of knowing and using the correct tenancy when drafting a deed. And one of my more frequently viewed blog posts concerns the pros and cons of adding family members to a deed.
An Appeals Court opinion published late last week dealt with a legal dispute that covers all of the above. A homeowner in Revere, prior to his death, placed his real estate into a trust for the benefit of his two adult children.
The children, as beneficiaries, signed a written agreement in 1997 stating that the use of the property would be divided—with one sibling residing on the second floor and the other renting the first floor—and that all bills associated with the home would be paid 50/50 by the parties.
Additionally, the siblings agreed that the property would be transferred out of the trust and to the siblings personally by a deed which made them “tenants in common.” According to this form of tenancy, if one of the siblings died, his or her ownership in the real estate would pass to his or her heirs—and not to the surviving owner/sibling.
Despite the agreement’s terms, the property was transferred from the trust to the siblings by a 2013 deed which made them “joint tenants.” This meant that if one of the siblings died, the surviving sibling would become the sole owner of the house.
After the property was deeded out of the trust, the siblings abided by the terms of their agreement from for the next 20 years. Conflict arose after both siblings died and their heirs began legal proceedings to establish ownership rights.
The key issue was whether the deed from the trust to the children created a “joint tenancy” or a “tenancy in common.” The plaintiffs (who did not inherit the real estate interest as a result of the 2013 deed) also claimed that the 1997 agreement created partnership and fiduciary rights which were violated by the defendants’ actions.
The court concluded that the plaintiffs’/heirs’ legal claims were time barred since the “joint tenancy” deed was known to all parties for over seven years prior to the commencement of the lawsuit:
[T]he plaintiffs’ complaint, filed some seven years later, is untimely — whether it is grounded in a partnership theory or not. Under any view of the evidence…whether the plaintiffs’ claim is considered a tort, a breach of contract, or a breach of partnership or fiduciary duty created by the 1997 agreement, the statute of limitations lapsed before this action was commenced. See G. L. c. 260, § 2A (three-year statute of limitations applicable to tort actions); Barber v. Fox, 36 Mass. App. Ct. 525, 527, 529 (1994) (contract statute of limitations six years and applies to breach of fiduciary duty claim arising from failed promises).
So when does the statute of limitations being to run?
[O]ur courts have applied a “discovery rule” that tolls commencement of the statute of limitations to a date when a plaintiff discovers, or . . . should reasonably have discovered, that she has been harmed or may have been harmed by the defendant’s conduct. (Citations and quotations omitted.)
To read the opinion in its entirety, click the document below: