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If a joint owner of a bank account spends a significant portion of money without the other’s permission and doesn’t ascribe ownership of the purchases to the other parties, what are the legal and non-legal remedies available?

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    Cancelling the shared account or keeping a sum < N in it, where N is the maximum amount you'd be comfortable with if it was spent without prior discussion. Since this has already happened, I'd go with the first option. – infinitezero Jul 10 '22 at 08:15
  • A joint bank account is typically one where either (or if more than two, any) account holder can appropriate the entire funds for themselves at any time. Monies once withdrawn from the joint account, or any purchases resulting, are not themselves co-owned by the other account holders. – Steve Jul 10 '22 at 08:49
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    Did the bank not explain the potential consequences when the account was set up? – Robbie Goodwin Jul 10 '22 at 21:20
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    Can we be clear whether "If the person who shares a joint bank account with…" means "If one of the people who share a joint bank account…"? In every-day English, guesswork would be fine but let's remember, the Question supposes a serious and detailed legal problem… – Robbie Goodwin Jul 10 '22 at 21:22
  • More facts regarding the relationship of the parties, the reasons the account were created, and their relative contributions to the account would be needed, for their rights vis-a-vis each other. Vis-a-vis a third-party the payment would be valid. – ohwilleke Jul 11 '22 at 17:19
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    What country? Legislation vary wildly on that. – Mołot Jul 11 '22 at 21:31
  • Did this happen, or are you just asking about potential problems before opening a joint account with someone? If it happened and you're looking for help dealing with it, we probably need more info as @ohwilleke said. – Peter Cordes Jul 12 '22 at 06:04

2 Answers2

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In most cases, there is no direct legal recourse for such a withdrawal. Money in a joint account is co-owned, and any account holder may withdraw any of it for any lawful purpose.

As the article "What is a joint bank account?" from Bankrate.com states:

The money in joint accounts belongs to both owners. Either person can withdraw or spend the money at will — even if they weren’t the one to deposit the funds. The bank makes no distinction between money deposited by one person or the other, making a joint account useful for handling shared expenses. But a joint bank account should only be opened with someone whom you trust, since that person has equal control over the account’s funds.

If the account holders have a contract or legal agreement that controls what money can be withdrawn and for what purposes, then a violation of such an agreement might be a cause for legal action. But merely opening a joint account does not create such an agreement nor imply it.

feetwet
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David Siegel
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    I'm going to go out on a limb and say such an agreement between the parties always exists; but in either case there is only recourse against the other party not against the bank except in very limited circumstances. – Joshua Jul 10 '22 at 22:20
  • @Joshua I agree that there is noi recourse against the bank. If the co-owners of the account do not make an explicit agreement (and often they do not) what implicit agreement do you think exists and why? – David Siegel Jul 10 '22 at 22:27
  • I haven't heard of a case with no agreement yet, but only cases where the two disagreed on what it was after. – Joshua Jul 10 '22 at 22:29
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    @Joshua I have been a co-owner of more then one joint bank account in my life. In no case did I enter into any explicit agreement with the other co-owner on who could withdraw how much or for what purpose. Can you cite any law or regulation that requires such an agreement, or any case where a court found such an agreement to be implied? I have not found any such law, regulation, or case. All account holders do have an agreement with the bank, but that in no way covers the rights of one co-owner as against another, and is not the kind of agreement I am talking about in my answer. – David Siegel Jul 10 '22 at 22:35
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    There isn't one. I'm surprised you would be a co-owner of a joint account without an agreement with the other holder though. (I'm not surprised you would not write it down. That happens all the time.) – Joshua Jul 10 '22 at 22:37
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    @DavidSiegel the point Joshua is tiptoeing around is that if you share a bank account with someone you probably have a common understanding of the purpose of that account which could be read as tacit contract. – hobbs Jul 11 '22 at 03:31
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    @Hobbs A "common understanding" will in many cases not be construed by a court as an enforceable contract. – David Siegel Jul 11 '22 at 13:55
  • @DavidSiegel yeah I know. "Could be". I'm just translating here :) – hobbs Jul 11 '22 at 14:00
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    @Joshua: Spouses routinely do this, although it's not universal. They might or might not have some sort of informal understanding about how money is to be spent, but it will rarely have enough specificity to give rise to a bona fide meeting of the minds under contract law. For example, if both spouses are relatively frugal, the understanding might consist entirely of "be reasonable and pay the bills on time." – Kevin Jul 12 '22 at 03:02
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    @Kevin: I will argue the marriage is the agreement in the case of spouses with commingled assets. – Joshua Jul 12 '22 at 03:26
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    @Joshua: A marriage probably does not give rise to specific enforceable contractual rights with respect to those commingled assets. A prenup might, but that would be a separate agreement. – Kevin Jul 12 '22 at 04:27
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    @Joshua You have things backwards there. The act of opening a joint bank account is explicitly an agreement that all money in that bank account may be used by any account holder for any purpose they see fit, without requiring any authorisation from other account holders. It's really that simple. If you wanted to restrict withdrawals then you'd need to require co-signing. But the contents of the account are explicitly owned (equally) by all account holders, unless there's some external legal document saying otherwise. – Graham Jul 12 '22 at 11:34
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It would depend heavily on your juresdiction and what the relationship between the account holders was.

For example, if the account is owned by a married couple in a state/country with community property laws then there would likely be no criminal or civil recourse unless the money was withdrawn under false pretenses. In which case fraud laws "may" be applicable.

As a rule of thumb, I would say that no action could be taken immediately, through the existence of the withdrawal might be a factor in the division of property after a divorce.

Michael Lorton
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Aaargh Zombies
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    What kind of "pretense" is needed to withdraw money from an account, such that there might be false ones? The bank doesn't care why you're withdrawing money, so who would you be defrauding? – Barmar Jul 10 '22 at 21:35
  • How does the relationship between account holders factor in? I don't see how it matters if they are spouses, relatives, friends, or business partners - they are joint account owners who both freely agreed to make all the money in the account available to both parties. – Nuclear Hoagie Jul 11 '22 at 13:59
  • @Barmar Your "account partner". – glglgl Jul 12 '22 at 08:01
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    @NuclearHoagie Did they? They agreed with the bank that both have the right to withdraw money from that account. But regarding their mutual agreements, there might be rules set between concerning what purpose is the money for. – glglgl Jul 12 '22 at 08:02
  • @Nuclear Hoagie, because some States have community property laws which would make it much harder to bring any kind of action. – Aaargh Zombies Jul 12 '22 at 12:15
  • @Barmar, if you said you were paying for child care but spent it on gambling then it could be ground for a fraud claim by the other account holder. Joint accounts depend on mutual consent, in the case of fraud consent would have been broken – Aaargh Zombies Jul 12 '22 at 12:18
  • @AaarghZombies This would only be fraud if the withdrawal required mutual consent, and you lied to them to get them to agree. Joint bank accounts don't require mutual consent, either account holder has full rights. There might be a tort between the account holders, though. – Barmar Jul 12 '22 at 15:30
  • Laws vary between states. If the money was withdrawn for something like gambling then it could be used in a divorce case to count against community property laws. – Aaargh Zombies Jul 12 '22 at 18:16