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Property I - COOURSE OUTLINE - Co Ownerships

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Property I - COOURSE OUTLINE - Co Ownerships Powered By Docstoc
					CO-Ownerships CO-Ownerships
Tenants in Common
      Separate but undivided interests in the property Each interest is descendible Each interest may be conveyed by deed or will No survivorship rights Each tenant owns an undivided share Most states, NOT CL, now presume TiC in ambiguous conveyances (what we need to know)

Joint Tenants
 CL Presumption o If an instrument is ambiguous, a JT is presumed o Abolished in most states;  A TiC is presumed If a deed provides for survivorship. Most likely to have intended JT Right of survivorship Each owns an undivided whole of the property If a tenant dies, his interest is extinguished. Four unities must exist Interests acquired or vest at the same time Time Same instrument Title Joint adverse possession Never by intestate succession Equal undivided shares – identical interests Interest Possession Right to possession of the whole One tenant can voluntarily give exclusive possession to the other joint tenant o If any of the unities is later severed, it converts to TiC Joint Tenancy can be destroyed by mutual agreement or unilaterally o Ex: wife deeded to herself a new deed converting a joint tenancy with H to a TiC. o Can convey to self (CA) or third party  Common sense and legal efficiency dictate that a JT should be able to accomplish directly what he could achieve by use of elaborate legal fictions. o (Riddle) An indisputable right of each tenant is the power to convey his or her separate estate by way of gift or otherwise without the knowledge or consent of the other joint tenant and the thereby terminate the Joint Tenancy. o At CL one could not create a joint tenancy between himself and another by direct conveyance  Ex: under CL, H can not devise „to H & W as joint tenants‟.  Strawman was required  A transfers to STRAMAN for a day  Next day conveys back to A o Divorce does not terminate JT o Lease does not sever o Murder of one JT by another severs the JT and turns it into TiC o Simultaneous death: Half goes to A‟s estate and the other half to B‟s estate (if 2 JTs) Practically equivalent to a will; o Probate is avoided  Because no interest passes on death of the joint tenant Creditor can reach interest while Joint tenant is alive – but not after. Unequal Shares o CL required equal shares o Ex: where equal shares have been found not to be required  Co-habitants with unequal contributions  Presumption of equal shared rebuttable by evidence of contrary interest  Bank accounts in proportion to contributions Mortgages o Title Theory – CL view

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Mortgage conveys legal title Mortgage destroys the unity of interest  That is: it severs the JT o Lien Theory  A mortgage is a lien and not a conveyance  Joint tenancy is not severed when one JT executes a mortgage on his interest in the property, since the unity of title has been preserved  The holder of the mortgage takes only a lien. After foreclosure of a mortgage and until delivery of the master‟s deed under the foreclosure1 sale, purchaser acquires no title to the land either legal and equitable.  Upon death of a JT, the deceased‟s interest ceased to exist and along with it the lien of the mortgage.  The surviving JT takes the property free of the mortgage. Lease: A lease does not destroy the JT o Ex: A&B are JTs. A leases to C for 10 yrs. At A‟s death, B owns 100%  

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Tenancy by the entirety
       Created only in H&W JT Unities + Marriage Surviving tenant has right of survivorship Divorce terminates the tenancy o Becomes TiC If conveyance says „to H&W‟, CL presumes Tenancy by the entirety. Under Common law, H had dominion. He could convey it. W took the whole if she survives him Married Women’s Property Acts changes that. o Majority: Equality by  Giving both H and W equal rights to possession during marriage but  Forbid either to alienate the interest without the consent of the other (neither can alienate anything).  Result: a creditor can obtain satisfaction from the entirety property only if the debt is an obligation of both spouses. o Minority: Giving same rights to W. Elevating her to same level as H without taking anything from H  Each can alienate o Minority: Achieve equality by Allowing each to alienate the survivorship right only

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a creditor can reach whatever interests are voluntarily alienable by the debtor Each spouse owns the whole. Neither can sell without the other‟s consent. At death, the other owns whole. interest of one spouse is not subject to levy and execution by his or her individual creditors Ex: H&W held TBTE. When H owed $ to people he injured in a car accident, he and wife conveyed interest to son. Conveyance is ok and not fraudulent because, anyway, ∏, as creditor, could not reach the property because only the H is a debtor. TBTE allowed in personal property. o Ex: H&W own house in TBTE. House burns down and H dies 5 days later. Insurance company should pay the proceeds to the surviving wife and not to H‟s estate. Insurance proceeds are assets held by the TBTE. Innocent Owner’s defense o Ex: H&W owned pharmacy in TBTE. H sold drugs illegally. W did not know and was innocent. Gov sought forfeiture. No forfeiture. Innocent owner‟s defense protects interest of W until either H survives her or tenancy severed. Gov can have a lis pendens. o Ex: H indicted of $ laundering. H&W held home in TBTE. Gov sought forfeiture of home. Action dismissed because home was not used for the H‟s criminal activity. A federal tax lien does not attach to a TBTE f only one spouse owes tax and state law prevents creditors from proceeding against a TBTE. Fed Gov is treated as an ordinary reditor.

Partition
o Termination can be accomplished through voluntary agreement

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What is the effect of foreclosure?

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o o But if impossible, recourse is an equitable action. 2 ways to partition a JT or TiC o Partition by sale

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 FMV of the remaining land will decline;  Some potential building lots will be lost to accommodate the trash business; and  A proposed subdivision road must be relocated  Sale is justified when the value of the land when divided into parcels is substantially less than its value when owned by one person  Ex: 7 cotenants. Land would be split into very small tracts. Known fact that bigger tracts are worth more. So, sale justified here. Partition in kind  Law prefers partition in kind  In one case: Property is divided and tenants draw lots to determine who receives which parcel.  Ex: (Delfino) Court looked at these factors to determine that in-kind was practicable:

Court may not order sale unless 2 conditions: 1. the physical attributes of the land are such that physical partition is “impracticable” or “inequitable 2. the interests of the ALL owners would be better promoted by a sale o not merely the economic gain of one tenant, or a group of tenants if too many interests, too many TiCs, by sale is better Burden is on party requesting sale to show that sale will better promote parties‟ interests. Ex: (Delfino) court considered

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Rectangular in shape House on it Roads abut it Only 2 interests Home on it ∆ earns livelihood from it she had actual and exclusive possession for many years only 2 co-tenants

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One party may have to pay owelty to equalize the shares and compensate for any adverse impact  Ex: one party ran a garbage bus on a part of the land which reduces the value of the other TiC. She paid him $26 to compensate for adverse impact. Agreement against partition o Ex: 2 co-tenants in writing with the other never to bring an action to partition the land. One later brings an action to partition o Doctrine likely invoked: No unreasonable restraints on alienation  The time stated must be reasonable in terms of the purposes of the agreement

Rent
o o o o o Rule: A cotenant in possession is not liable for the value of his use and occupation UNLESS o an agreement to pay rent or o an ouster of a cotenant Co-tenant out of possession has the right to share rentals from 3rd parties and in profits derived from use of the land Ex: A used bldg as warehouse after tenant left. B, cotenant, demanded that A vacate half the bldg or pay rent. A does not have to pay rent. If co-tenant demands rent, o Majority: not liable for rent o Minority: liable for rent On JT cannot get rent for occupancy of the property or for profits derived from the other‟s own labor.

Ouster
o One tenant wrongfully excludes another from possession of the whole or part  sought but was prevented from moving onto land o the other is deprived of the right to possession

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o o Demand to vacate half or pay rent is not ouster. Ouster occurs in 2 situations: 1. AP: cotenant asserts absolute ownership a. renting part without accounting b. hunting c. cutting timber d. assessing and paying taxes e. treating land as if owned it completely f. sale under deed purporting to convey entire 2. Liability for rent a. Entitled for rent for period excluded form possession. If one co-tenant ousts another, she must pay his share of the reasonable rental value

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Fiduciary duties
o o o Rule: co-tenants are not fiduciaries of each other  Each is expected to look after own interests There are exceptions: Cotenants are members of same family ?????

Leases
o o o o o o o A GEE (or Lessee) takes subject to the contingency of the loss of the premises if upon partition they are not allotted to the GOR. JT out of possession can not assert against the GEE any action he can not assert against GOR. It is trespass for a cotenant expels a LEE A lessee can not dispute his landlord‟s title nor hold it in AP The act of one JT without the express or implied authority or consent of his cotenant cannot bind or prejudice the other‟s rights. Ex: H&W are JTs. H leased piece of land to T against W‟s wishes. She tried to have the lease declared null and void. Lease is valid. The grantee only acquires such rights as the grantor had.

Accounting
o Benefits
  Examples: Rents, profits from business purposes, then he realized by use of property as a residence Rents and Profits:  must account two cotenants for amounts received if collected from third parties  Ex: cotenant in possession: leases farm, mineral lease, cuts and sells them there absent ouster, accounting is based only on actual receipts not fair market value Majority Rule: cotenants in possession need not account two cotenants out of possession for the reasonable rental value of the property Examples: taxes a mortgage payments, maintenance and repairs, improvements Recoupment:  partition action  action for an accounting  action for contribution Taxes, mortgage payments, other charges  right to contribution up to a mounts of the value of other cotenants Estates o cotenants being more then they share, deceit a credit  if value if use and enjoyment > be taxes of interest  no contribution action repairs and improvements  no right to contribution action, absent an agreement, for necessary repairs

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Expenditures
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 Improvements  no right to contribution  the interests of the improved are to be protected if this can be accomplished without detriment to the interests of other cotenants o ex, in partition action, the improved portion is awarded to the improving ctenant if that does not diminish the interests of the other as they stood prior to making the improvements o ex, if partition by sale, distributed in such a way as to all work to the improved are the added value o owelty  Improvement cost v. benefit o Majority  If cost > yield, improver bears the full downside risk  if improvements increased value beyond cost, improver gets full upside o Minority  Downside borne by improver  Upside shared by all

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