Two names on the deed. One owner dies.
One of my estate files started that way: the owner who died and her sister. The report valued the whole house as of the date of death. A value for her share alone would have been a separate assignment with its own scope, and the answer would not automatically have been half.
When title is shared, the first question is whether the owners held the house in joint tenancy or as tenants in common. Under Colorado law, that decides who owns her share now. The second question is what the estate needs valued. The appraisal answers that one, as long as it is ordered for the right interest.
Joint tenancy or tenants in common: what the Colorado deed says
Colorado starts from a default. When a deed conveys a house to two or more people, they are tenants in common unless the deed expressly creates a joint tenancy. The deed has to say it in words, such as “in joint tenancy” or the abbreviation JTWROS. The rule is in C.R.S. 38-31-101.
The two forms part ways the day one owner dies.
- Joint tenancy. Her interest ends at death and the surviving joint tenant holds the whole house. Her share does not go through probate, although it can still count for estate tax, covered below.
- Tenants in common. Her share is an asset of her estate. It passes under her will, or to her heirs if there is no will, and the personal representative accounts for it.
A joint tenant can also end a joint tenancy on her own by recording a deed of her interest to herself as a tenant in common. The original deed is not always the last word on how title stood at death, and that question belongs to the estate attorney.
What the appraisal values
A date-of-death appraisal can value the entire property, and on the sisters’ file it did. The effective date is in the past, which makes it a retrospective appraisal, and the report states which property interest it valued.
The standards I work under, USPAP, require me to identify the property interest I am valuing, including whether it is a fractional interest. The whole property and one owner’s interest are different appraisal problems, each with its own scope of work.
The whole-house value is fair market value in the usual sense: the price a willing buyer and a willing seller would agree on, neither forced to act and both reasonably informed, as of the date of death. The report does not divide that value between the owners. The split comes afterward, from the deed and the tax rules.
Her share is a separate question
A half interest in a house is not automatically worth half the house. A buyer of an undivided interest acquires shared ownership rather than sole control. Co-ownership rights, any agreement between the owners, and the ability to sell or partition the property can affect that interest’s marketability and value.
We own shares like that ourselves. My wife and I bought a mountain house with two other families: three couples, all tenants in common. If one of us died, that share would go to the estate of the person who passed away, not to the other owners. If that share ends up being for sale, anyone buying it would be buying into a house with the rest of us.
Whether the estate takes a position on that difference is a decision for the estate’s attorney and CPA.
At VolkHaus, fractional-interest work is scoped and quoted individually. If you need both the whole-property value and a fractional-interest value, tell me before engagement so I can scope and quote the work appropriately.
Joint tenancy and the tax side of the value
Title and federal estate tax can point in different directions. A joint tenant’s share skips probate, but some or all of the house’s value can still be included in her estate under IRC 2040. How much depends on facts the appraisal does not settle: whether the owners were married, whether a surviving spouse is a U.S. citizen, how the owners acquired the house, and who paid for it. For joint tenants who are not married to each other, the Form 706 instructions generally start from the full value and let the estate exclude only what it can show came from the survivor.
That calculation belongs to the CPA, and none of this is tax advice. What the CPA needs from me is a supported value for the whole house as of the date of death. That number also feeds the basis the survivor and the heirs carry forward, which my stepped-up basis post covers.
On the Colorado side, the personal representative’s inventory lists the decedent’s property at fair market value as of the date of death, under C.R.S. 15-12-706. The personal representative and estate attorney determine which ownership interest belongs on the inventory. My probate inventory post covers the inventory itself.
When the surviving owner wants to buy the share
Under a tenancy in common, the surviving owner may want to buy the estate’s share. That is a current-value question, separate from the date-of-death report, and my estate buyout post covers how that appraisal works. Settle who will rely on each report at engagement, especially if the surviving owner and the estate could end up on opposite sides of the table.
What to send before I quote
- The date of death. It becomes the effective date of the report.
- Whether you need the whole house, the decedent’s share, or both.
- Who will rely on the report. The intended users go in the engagement letter.
Access to the house comes after I am engaged. My estate appraisal checklist covers the rest of the paperwork.
Send me those three things and I will quote from there. Call me at 720-432-0474, or request a consultation.
Charles E. Volk, SRA, is a Colorado Certified Residential Appraiser with 24 years of residential experience across Denver Metro and Boulder County, and a member of the Board of Directors of the Colorado Chapter of the Appraisal Institute. VolkHaus Appraisals works with community banks and credit unions on lender assignments, and directly with estate attorneys, CPAs, fiduciaries, and private clients. Colin O’Connor, our Senior Appraiser and a Certified Residential Appraiser, handles assignments alongside him.