The issue of gifting comes up with some frequency in family law cases. Generally, gifts from third parties that are not subsequently commingled are exempt from equitable distribution. Parties also make gifts to children and sometimes parents, and that sometimes raises issues in our cases.
But what happens when the recipient of the gift, doesn’t know that they are the recipient of a gift. This exact issue came up in the case of Branco v. Rodrigues, a reported (precedential) Appellate Division opinion decided on June 20, 2023. While admittedly, this is not a family law case, per se, though I’m somewhat surprised that claims for palimony and equitable relief were not included in the litigation, the issue of a gift unkown to the recipient was front and center in this case of first impression in NJ.
The facts are pretty straight forward. Jose and Lidia lived together in a long term relationship for approximately twenty-five years until he died. The two were never married. Jose was an entrepreneur who owned several entities and properties, including a sixteen-unit multifamily, income producing residential building in Newark, that he owned since 1996. In 2007, 12 years into the relationship, Jose transferred title to the multifamily property to himself and Lidia, as joint tenants with rights of survivorship and had the deed recorded. Jose never told Lidia about the transfer, and she did not discover the conveyance until after his death, more than thirteen years later, when the executor started sending her rent checks and she did a title search to confirm her ownership. At that that time, she formed a real estate holding company and transferred title of the property into that entity.
In December 2020, Lidia filed a complaint seeking various relief including a request to quiet title. She ultimately filed for summary judgment on that issue which the trial court granted. Interestingly, the defendant’s took the position that the gift was not effective, because she never knew about it thus never accepted the gift. The trial court found, irrespective of Lidia’s lack of awareness of her property interest during Jose’s lifetime, the fact the deed was recorded constituted constructive notice to third parties about Lidia’s property interest, and therefore favored her. The Appellate Division affirmed.
The decision included an analysis of joint tenancies and transfers of interests in property via deeds. The court noted the case law that said that “A deed transfers a property interest ‘upon delivery'” and that “Delivery can be shown by ‘[a]nything that clearly manifests the grantor’s intention that the deed become immediately operative and that the grantee become the owner of the estate purportedly conveyed.'”
The court also addressed the legal elements of a gift: (1) actual or symbolic delivery of the gift, (2) donative intent to give; (3) acceptance of the gift; and (4) the relinquishment of ownership by the owner.
The court noted that while issues regarding donative intent based upon undue influence are frequently litigated, issues regarding acceptance are not. Similarly, there have long been challenged to a gift where the deed was never recorded, but not like, as in this case, where the deed was long since recorded. In this case, because there was a recorded deed that both satisfied the statute of frauds (requiring a writing for the transfer of property) and the recording statute, the argument regarding acceptable had to fail, particularly since Lidia accepted the gifts (i.e. did not disclaim it) once she learned of it. Moreover, relinquishment was satisfied because he upon the transfer, he no longer owned the entire property nor could he have revoked the gift by changing title again.
It will be interesting to see if this case can will be used in divorce cases. If a parent gives a gift of an income producing property to a child that they don’t know about, can it be considered for purposes of alimony and child support if it is discovered? What about transfers to children that predate a divorce which was not contemplated when the transfer was made? Will it be harder to the other spouse to try to claw the property back into the marital estate? I am sure that there are other permutations and variations where the issue could come up. Stay tuned.
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