CONCURRENT INTEREST More than one person has present possessory interest ♦ TENANCY IN COMMON Tenants have separate but undivided interests and are seised to whole. Interests are descendible and conveyable. No survivorship rights between tenants. A grant to two or more people is assumed to be a tenancy in common, unless grantors intent for joint tenancy is express. Interests can be unequal. ♦ JOINT TENANCY (MUST BE CREATED EXPRESSLY) Tenants have right of survivorship Tenants have undivided shares of the whole and are seised to whole. At death of cotenant, government assumes equal shares for taxation at death, but will tax according to each tenant’s share, if surviving tenant can prove contributions. Survivorship—when one tenant dies, his interest vanishes; estate continues in cotenants. To create and maintain a joint tenancy, four unities must be present to all tenants: 1. TIME—interest of each tenant must vest at the same time. 2. TITLE—interest of each tenant must be acquired by same instrument or by joint adverse possession; never by intestate succession or law. 3. INTEREST—each tenant must have an equal undivided share and identical interest measured by duration. 4. POSSESSION—each tenant must have right to possession of whole, but one can give right of exclusive possession to another tenant. If four unities are severed after creation, joint tenancy becomes a tenancy in common. Severance can occur only by expression of intent to sever in: Mutual agreement AND action on agreement among joint tenants to convert, Conveyance of one joint tenant to a third party, or Judicial partition of property into separately owned parts. ♦ TENANCY BY THE ENTIRETY (AVAILABLE IN 35 STATES, NOT COMM. PROPS.) 1. Tenancy exhibits four unities above plus unity of marriage. 2. Surviving tenant has right of survivorship 3. Only conveyance by both in mutual agreement will sever survivorship rights 4. Neither party can unilaterally convey or seek judicial partition 5. Divorce ends tenancy by entirety and converts it into a tenancy in common.
CONCURRENT INTEREST
SPECIAL RULES FOR JOINT TENANCY CREATION Common law rule: Joint tenancy cannot be created in self and another because unity of time and title would not exist. Modern rule: Joint tenancy may be created by conveyance of owner of property to himself and others without the use of a strawman1. SEVERANCE Common law and Majority: NEED STRAW: One tenant cannot unilaterally sever a joint tenancy and retain interest in tenancy in common without use of a straw. Minority: NO STRAW NEEDED: One tenant can unilaterally sever a joint tenancy and retain interest in tenancy in common without use of a straw, but deed must be recorded.
Riddle v. Harmon 1980: Before her death, wife granted to herself an undivided one-half interest in property, terminating joint tenancy, and prepared will disposing of interest. Rule: Minority—no straw needed; legal ritual should not be maintained, for sake of efficiency. ☼ MORTGAGE
Majority: LIEN THEORY—a lien on a joint tenant’s interest will not sever JT, unless lien goes unpaid and there is a conveyance of title at expiration of redemption period; mortgagor keeps title and mortgagee is given a lien or encumbrance on property. Minority: TITLE THEORY—mortgage does sever JT, mortgagee is conveyed title which exists between him and mortgagor, who has right to redeem title once lien is paid. Split in jurisdiction exists over whether or not a lien survives death of granting tenant.
Harms v. Sprague 1984: Joint tenant cosigned note with Defendant on his interest in JT, unbeknownst to fellow tenant. Cosigner dies and leaves all property to Defendant before mortgage is recorded. Rule: By lien theory, mortgage did not sever JT; so at death of cosigner, his interest and lien vanished. Divestment by will had no effect on property in joint tenancy, because it ceased to exist.
If A gives lien on interest, while B is alive, A can lien only attaches to half interest in property. If B dies, lien survives with A and attaches to whole property.
1
Anyone but a minor can be a strawman.
CONCURRENT INTEREST
☼ LEASE
Lease or term of years to a third party does not sever JT. In addition, conveyance of right to exclusive possession or rent between tenants does not sever JT. SURVIVING Uniform Simultaneous Death Act—if A and B die in common disaster, one-half of property is distributed as if A had survived and one-half as if B had survived. CA requires clear and convincing evidence of survival of one party in close calls. Uniform Probate Code—if one joint tenant murders another, murder severs JT and converts it into a tenancy in common. BANK ACCOUNTS Majority: presume grantor intended JOINT TENANCY account with survivorship rights. Can be overcome by clear and convincing evidence presented affirmatively by party disputing JT account. During life of parties, joint account belongs to each in proportion to net contribution. Creditors of either party are entitled to presumption that debtor contributed 100% of account; either party can then dispute assumption. ♦ JOINT TENANCY ACCOUNT Present gift of ½ of money with survivorship rights to whole sum on deposit. A can withdraw ½ of money in account while O is alive. ♦ PAYABLE ON DEATH ACCOUNT Created to A with only survivorship rights. Testate conveyance, prohibited in many states by Statute of Frauds. If A withdraws without O’s permission, O can get money withdrawn back. ♦ CONVENIENCE ACCOUNT Created with power to draw on account to pay bills in life but no survivorship Not preferred by banks, because creates power of attny in grantee which only lasts until grantor’s death.
☼ SAFE DEPOSIT BOXES—are not presumed to be held in joint tenancy; contents are
owned either by person who put them inside or by delivery of gift.
CONCURRENT INTEREST
PARTITION EQUITABLE ACTION OF PARTITION, available to tenants in common or joint tenants in the case of disagreement over termination of co-tenancy, divides tenancy into estates held in severalty, with no joined interest.
Partition in kind—preferred method; physical partition of property. Partition by sale—forced sale of property and division of proceeds.
Majority: For partition by sale, burden of proof on party desiring sale to evidence: 1. Physical attributes of land are such that division is impracticable 2. Economic interests of owners better promoted by sale. In partition action for personal property, courts will split time of use or possession between parties to encourage them to make agreements and concessions.
Delfino v. Vealencis 1980: D and V own property as tenants in common; V lives on property and runs garbage business on lot; D seeks to partition by sale so property can be used as residential development. V seeks partition in kind to protect home and business. Rule: court orders partition in kind because because partition by sale would not serve “homestead” interests of V. Johnson v. Hendrickson 1946: children of grantor bring action for partition by sale against step-dad who lived on property with 1/3 interest; step-dad asked for partition in kind because he lived on homestead there. Court orders sale of property, because the required partition (into more than four sections) would seriously devalue property. No weight given to homestead interest.
RESPONSIBILITIES OF COTENANCY ♦ MAJORITY: Cotenant in exclusive possession is not liable to pay proportionate share of rental value of his use or occupation of property to cotenants, unless there is: (1) agreement to pay rent or (2) an ouster of cotenant. MINORITY: Presumption that tenant in exclusive possession must pay cotenant rent. OUSTER—DEMAND by cotenant for entry or use of property and DENIAL by occupier. Majority: Demand to vacate or pay rent does not make a cotenant liable to pay rent. Minority: Demand and continued occupancy afterwards does make cotenant liable.
Spiller v. Mackereth 1976: S and M—tenants in common; S entered building and began using it as warehouse, M writes letter demanding S to either vacate ½ of building or pay ½ rental fee of occupied property. Rule: no ouster, because letter demanding rent did not indicate S had denied access to M.
CONCURRENT INTEREST
♦ Each joint tenant or tenant in common, during existence of joint estate, may convey, mortgage, subject to a mechanic’s lien, or lease binding only his share or property.
Swartzbaugh v. Sampson 1936: Defendant sought lease of fraction of land for boxing pavilion held by Plaintiff and her husband as joint tenants; Husband agreed, plaintiff disagreed; wife sues to have lease terminated. Rule: leases executed by husband were valid and not voidable by Plaintiff. Remedies available to wife, beyond evicting lessee: a. Partition—partition entire 60 acres; husband and wife split land with no guarantee that boxing pavilion will end up on husband’s land, so lessee may lose lease if ends up on wife’s land, b. Ouster—try to enter on lessee; if lessee resisted, then wife could recover ½ of the fair market value of rent for property, or c. Accounting—affirms lease and sues husband for ½ rents or income from property. Though, she cannot bring actions in both ouster and accounting.
♦ RECOVERING COSTS OR PROFITS Types of payments: 1. Taxes, mortgage payments, or other charges which if not paid, risk loss of property. Tenant paying more than his share is entitled to contribution from other cotenants up to amount of value of their shares, accounting, or partition. Exception: If paying tenant has had sole possession of property and fair market value of his use meets or exceeds the maintenance costs, then he is not entitled to contribution from other tenants. 2. Necessary Repairs No affirmative right to contribution by other cotenants without agreement; Credit for in accounting or partition. 3. Improvements No affirmative right to contribution or accounting; Credit in partition action. Options:
A. If partition in kind, improved portion is awarded to improving cotenant. B. Partition in kind and owelty.2 C. Property sold, and added value, if any, given to improver.
Owelty—payment by noncontributing cotenants to improver for increased value of their share due to improvement.
2
CONCURRENT INTEREST
4. Rents and Profits Affirmative right to accounting for profits from land which are in excess of tenant’s share, in absence of prior agreement; Based on actual receipts, not fair market value. Minority: Extraction of minerals or cutting timber is waste, so if one cotenant seeks injunction against extraction, it must be stopped, even if majority of tenants support it. MARITAL INTERESTS ♦ COMMON LAW Property acquired during marriage is owned separately, can be unilaterally conveyed, and can be devised as long as property is not held in joint tenancy or tenancy by entirety. Married Woman’s Property Act—reversed common law provision enabling only the husband to convey property by providing that no conveyance, encumberance, lease, or mortgage of property could be made without wife’s consent. Is interest of one spouse in tenancy by entirety subject to levy by individual creditors? Group II—Minority: Spouse’ interest can be sold or levied upon for separate debts, subject to other spouse’s contingent right of survivorship. Creditor gets LE in CR contingent on whether debtor survives spouse. Group III—Majority: An attempted conveyance by either spouse is void; estate may not be subject to individual debts. Group IV—Minority: Contingent right of survivorship is separately alienable by each spouse and attachable by creditors. Creditor gets CR contingent if debtor survives spouse with no right of present possessory right.
Sawada v. Endo 1977: Plaintiff injured in car collision at fault of Defendant; before complaint filed, Defendant, who did not have insurance, and his wife conveyed property which they held by tenancy in entirety to sons. Rule: Group III and MWPA—Because neither spouse can convey interest, neither interest can be subject to claims of individual creditors during their joint lives—so conveyance was not in fraud of judgment.
CONCURRENT INTEREST
♦ COMMUNITY PROPERTY Property acquired during marriage (excluding by gift, devise, or descent) is owned by community, cannot be unilaterally conveyed, but is devisable as long as property is not held in joint tenancy. None of community property states recognize tenancy by entirety. Tenancy in common and joint tenancy are permitted as separate property, but husband and wife cannot simultaneously hold community property and cotenancy. Community property unlike tenancy in common and joint tenancy: 1. CP can exist only between husband and wife, 2. Neither spouse, acting alone can convey their share of CP except to spouse, 3. Neither spouse can convert CP without consent of other, 4. Each spouse has power to dispose by will of ½ CP at death with no survivorship.
☼ TAX ADVANTAGE
Stepped up tax basis on property at death = value of property at decedent’s death. In community property, both halves are stepped up with taxable income only that earned above value of property at death. In cotenancy, only ½ of property gets stepped up bases, other is taxable along with income above value of property at death.
CONCURRENT INTEREST