Another Deed in the Drawer goes Bad

By Doug Chalgian on January 13, 2023

 

Husband and Wife own homestead as tenants by entireties.   Prior to leaving for a trip, they execute a deed conveying their homestead to themselves as co-trustees of their joint trust.  They give the deed to their attorney with the instruction that he record the deed only in the event that they die simultaneously on their upcoming trip.  Otherwise, their express intent at the time of signing the deed is that: if there is no simultaneous death, the real estate will pass to the survivor per the existing joint tenancy.

Husband dies.

After husband dies, the wife ladybird deeds the house to her child.

Then wife dies.

The deed to trust is never recorded.

Beneficiary of ladybird deed seeks quiet title when beneficiaries of joint trust challenge her ownership.

Issue is whether deed in the drawer was delivered when it was executed, because if it was delivered, the subsequent ladybird deed had no legal significance.

In the unpublished decision in Chakmak Family Trust v Koss, the Michigan Court of Appeals holds that the property is a Trust asset because when the couple executed the deed conveying it to themselves as co-trustees, they accomplished delivery and the instructions to their lawyer re recording were, more or less, irrelevant.

The opinion includes this explanation:

… in this case Albert and Joan did not place a condition upon the delivery of the deed; rather, they delivered the deed to themselves, then deposited the deed with their attorney with the instruction to record the deed only upon the happening of a future event, thereby placing a condition only upon the recording of the deed.

Interestingly, the COA (citing an 1886 Michigan Supreme Court Decision) holds that a deed not delivered during the life of the grantor is per se ineffective.

Moral of this story:  Deeds in the Drawer are, and always have been, a bad idea.

Or just remember the old rhyme:

Where there’s a Deed in the Drawer,

You’ll be Needin’ a Lawyer.

 

BTW, and only tangentially related, I recently wrote an article on non-lawyers who draft their own deeds.  Click here to read: DIY Deeds (done dirt cheap).

 

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mm By: Doug Chalgian
Doug Chalgian

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