Two people own a house as joint tenants. One co-tenant executes a promissory note secured by a deed of trust against her interest in the house. Which of the following statements is true?
A. This defeats one of the unities required for joint tenancy.
B. This invalidates the promissory note because the co- tenant only had a partial interest in the property.
C. This places the beneficiary in a precarious position, since the lien created by the deed of trust will be extinguished upon the death of the borrower.
D. This creates a security interest in all other properties owned by the borrower.
Answer: C. This places the beneficiary in a precarious position, since the lien created by the deed of trust will be extinguished upon the death of the borrower.
Explanation: A lien or other creditor's claim against one co-tenant's interest in a property held in joint tenancy will terminate upon the death of that co-tenant. A valid promissory note may be secured by a deed of trust against one person's interest in a joint tenancy, but it's unlikely that a lender would agree to that arrangement, since the lender's security interest would terminate if the borrower died.
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