Concurrent Estates Outline

Concurrent Estates Outline Types of co-tenancy 1. Joint tenancy a. Joint tenants treated as one person b. Elements for common law (4 unities PITT) i. Unity of time (interests vested at the same time) ii. Unity of title (interests acquired by the same instrument) iii. Unity of interest (interests of the same percentage of estate and duration) iv. Unity of possession (interests give identical rights to enjoyment). c. Right of survivorship (principle feature) i. Conceptually, when one joint tenant dies, the property is freed from his concurrent interest; the survivor or survivors retain an undivided right in the property, which is no longer subject to the interest of the deceased co-tenant. ii. The survivors do not succeed to the decedent’s interest; they hold free of it. d. Partition i. Any co-tenant may demand partition unilaterally ◦ Unless there is an enforceable agreement not to seek partition ii. No severance till partition is completely finished iii. If one joint tenant dies while partition pending right of survivorship kicks in e. How to sever a joint tenancy i. Mutual agreement ii. *Conveyance ◦ Alienation (inter vivos & testamentary transfer) ◦ To self (strawman) iii. *Mortgage or indebtness (minority of states) iv. *Partition v. Behavior of parties (some courts) *Don’t need permission from other co-tenants & cannot be used to sever a tenancy by the entirety f. How created i. Common law approach ◦ 4 unities PITT ii. Modern approach ◦ The above requirements have been eroded in some jurisdictions; e.g., by statute in some states, an owner can create a joint tenancy in herself and another by a single deed (she need not use a “strawman” conveyance), even though the unities of “time” and “title” are not satisfied. Similarly, as indicated below, a number of transactions are no longer found to sever a joint tenancy despite the seeming absence of continued unities. ◦ Express Language Required Under modern law, joint tenancies are disfavored. Hence, there must be a clear expression of intent to create this estate, or it will not be recognized. The usual language required is “to A and B as joint tenants with right of survivorship.” A joint tenancy results only when an intention to create a right of survivorship is clearly expressed. *Strawman- one cannot convey to themselves so to meet the unity of time and title, original owner must convey all interest to the strawman who will then convey estate back to O and other joint tenants at the same time and title. 2. Tenancy in Common a. Undivided interest; unity of possession i. Co-equal right of possession ◦ Of entire property, regardless of % of ownership b. No right of survivorship c. Separate distinct interest of each TIC: i. Freely transferable ii. Attachable by creditors for separate debts iii. Each is entitled to possession of whole estate d. How created: i. Presumptive form of ownership ii. May own property in equal or unequal percentage shares iii. Presumption that purchase price correlates with percentage of shares in property ◦ Can be disputed that some shares were given as gift (family matters) 3. Tenancy by the entirety e. Married couples only f. Elements (4 unities) i. time ii. title iii. possession iv. interest v. marriage g. Partition i. Cannot be partition unilaterally, only jointly h. How created i. Presumed in states that recognize TBE and is only available to legally married persons i. Notable features i. Each spouse has co-equal possession ii. Not unequal % ownership ◦ Not separate 50% shares ◦ Neither spouse owns separately: Two spouses  one person ◦ One 100% share, each seized of whole iii. TBE state ◦ Presumed on conveyance to married people ◦ Spouses can still use other forms iv. Right of survivorship ◦ Surviving spouse takes whole property ◦ Free of dead spouse’s interest v. Two important issues ◦ Unilateral conveyance or encumbrance 1. Most states hold that neither spouse can unilaterally convey, mortgage, or otherwise encumber the property without the other spouse’s consent. The law will proceed as if the transaction never happened in the first place. 2. Other states hold that either spouse may separately convey his or her interest or “status” as a tenant by the entirety, which would include the conveying spouse’s right of survivorship. ◦ Claims of creditors 1. A single spouse’s interest as a tenant by the entirety cannot be separately alienated or attached by creditors for the debts of one spouse alone, in most states that recognize tenancies by the entirety. Rights and responsibilities of co-tenants 1. Possession and use of (ouster) a. Each co-tenant has the right to possess all portions of the property; no co-tenant has the right to exclusive possession of any part. b. A co-tenant out of possession cannot bring a possessory action unless there has been an “ouster” by the tenant in possession. c. A claim of right to exclusive possession can constitute an ouster. 2. Ouster a. Two types of ouster - Adverse possession (don’t worry not on final) - Ouster may be used by a joint owner to sever a joint tenancy. However, the ouster is liable for fair rental value or for judicial partition. b. Under the unity of possession, each co-tenant is entitled to possess and enjoy the whole of the property subject to the equal right of her co-tenant. c. If one tenant wrongfully excludes another co-tenant from possession of the whole or any part of the whole of the premises, there is an ouster. d. The ousted co-tenant is entitled to receive his share of the fair rental value of the property for the time he was wrongfully deprived of possession. 3. Fiduciary duties a. In most jurisdictions (but not all), a co-tenant in possession has the right to retain profits gained by her use of the property. b. A co-tenant in possession need not share such profits with co-tenants out of possession, nor reimburse them for the rental value of her use of the land, unless there has been an ouster or an agreement to the contrary. c. However, a co-tenant out of possession has a right to share in rents from third parties and in profits derived from a use of the land that reduces its value (e.g., removal of minerals, etc.). 4. Accounting A legal action to compel a defendant to account for and pay over money owed to the plaintiff but held by the defendant - Where a co-tenant in sole possession of the property receives rent from a thirdparty lessee. - If the possessing co-tenant holds on to more rent than his proportionate share, then to that extent he is holding on to money that rightfully belongs to his fellow cotenants. - Under those circumstances, the non-possessing co-tenants can bring an action for an accounting to recover their share of the rent monies. 5. Contribution Is the right that gives one of several persons who are liable on a common debt the ability to recover proportionately from each of the others when that one person discharges the debt for the benefit of all. a. Repairs - A co-tenant who pays more than her pro rata share of the cost of necessary repairs is entitled to contribution from the other co-tenants in actions for accounting or partition. - Although the courts are split on whether a co-tenant who makes necessary repairs can maintain an independent action for contribution against the other co-tenants, - The majority view is that she can compel contribution, provided she has notified the other co-tenants of the need for repairs. Moreover, several decisions authorize contribution even without such notice. ◦ Minority view: is the common law view was that because no co-tenant has a duty to make necessary repairs, a co-tenant who makes such repairs cannot bring an action to compel contribution from the other co-tenants. b. Improvements - Generally, there is no right of contribution for the cost of improvements, nor can they be set off in an action for accounting. - Only in an action for partition can the value of improvements be recouped. c. Taxes and Mortgages - Each co-tenant has a duty to pay her share of taxes and payments due on mortgages on the entire property. - A tenant who is not in sole possession can pay the taxes and mortgage payments and then compel contribution from the other co-tenants. - However, a co-tenant in sole possession will receive reimbursement only for the amount that exceeds the rental value of the property. Partition: • Terminates the co-concurrent ownership • Ensues when co-tenant(s) don’t want to own together • Divvies up property • No court intervention needed if co-tenants agree Two steps: 1. Determine each co-tenant’s share of equity a. Percentage of ownership interest 2. Decide how to divide equity fairly a. Partition in kind (physical division) i. The court will subdivide the property into discrete parcels. ii. Each co-tenant gets one parcel, that she owns separately from the rest. iii. The value of her parcel should correspond closely to her equity share in the property, as determined by the court in step one. b. Partition by sale (sale- division of proceeds) - When the property cannot be divided equitably, so that one co-tenant can’t get her fair share of the equity. ◦ Courts have the option of owelty which would enable and a partition in kind anyway ◦ Where the court exercise the “owelty” option, it orders a partition in kind, but then also orders cash payments between the co-tenants to make up for the disparity in value, and it ensures that each party gets what she is entitled to receive, but no more. ◦ The payment itself is called “owelty.” - Partition in kind is very much the preferred method of partition, and there will generally be no sale unless physical division would cause “great prejudice” to the parties. - Prejudice: ◦ physical division of property is simply impracticable ◦ interest of co-tenants better served through sale than physical division ◦ realize more value through sale than physical division ◦ one party unfairly prejudiced by physical division - Agreements Restraining Partition (Michalski v. Michalski) ◦ Oral agreement (statue of frauds) ◦ Unreasonably long time ◦ Enforcement harsh, oppressive, inequitable, manifestly unjust Alienation ◦ The transfer or sale of real property. Waste ◦ Ameliorative- unwanted or undesired enhancement done to property (not common) ◦ Omissive/permissive- damage caused by negligence. Tenant has a duty to “ordinary” repairs. ◦ Commissive/affirmative- voluntarily or intentionally damaged property; includes exploiting minerals on the property unless the property was previously so used