hard · National Real Estate Exam property-ownership

In a lien-theory jurisdiction, an owner holds a property as a joint tenant with two others.

If this owner takes out a second mortgage on their interest and then dies intestate, what happens to the deceased owner's interest?

  1. The joint tenancy automatically converts into a tenancy by the entirety for the two remaining surviving co-owners.
  2. The interest passes to the surviving joint tenants by operation of law, potentially extinguishing the lender's security interest.
  3. The lender may foreclose upon the entire property, including the shares of the other joint tenants, to collect the debt.
  4. The interest passes by the laws of intestate succession to the deceased owner's heirs, who become tenants in common with the two survivors.

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