Rose Greer leased land to David and Jene Nunnery. Section 3 of the lease - which extended until July 31, 2025, in automatically renewing one year terms - stated:
In the event of the death of the Lessor, this lease agreement shall not terminate, rather the rights and obligations of Lessor shall immediately be transferred to Linda Ball, who will also have the right to receive payments hereunder.
Greer later executed a will devising all her property to John Oakes. Following Greer's death, Oakes filed a declaratory action challenging the lease provision. Oakes asserted that the lease provision was testamentary in character (that is, it left an asset at Greer’s death) and therefore was required to comply with the formalities of a will. Linda Ball argued that it was merely an assignment of Greer’s rights under the lease to Ball. The chancery court agreed with Ball that it was an effective assignment to her.
The Court of Appeals and Mississippi Supreme Court reversed. The Supreme Court opinion stated:
Since at least 1855, we have recognized that when an instrument, however styled, conveys an interest in property, but “the intention was, that it should have only a future operation after death,” courts must treat the instrument as a will. Wall v. Wall, 30 Miss. 91, 96 (1855)
The Court noted that this rule has been applied to deeds in Mississippi, but its application to other contracts has never been raised in this state. In a matter of first impression the court held that section 3 of the lease contract did not provide a vested interest in the daughter and was, therefore, a testamentary provision, contained within a contract, that lacked the formalities of a will (such as attesting witnesses) and was unenforceable.
Estate of Greer, 2017 WL 2377562 (Miss. June 1, 2017)
The moral of this story: Be careful how you transfer assets to others. Use the correct form and formalities to achieve your intended results.
For more questions and concerns on this topic, contact the experienced lawyers at Courtney Elder Law Associates by calling 601-987-3000.