Part II: The system of Estates: Chapter 5 Co-Ownership

Common Law Concurrent Interests

Co-ownership is when two + people have Concurrent rights of present or future possession

Types, Characteristics, Creation of Concurrent Interests

Tenancy in Common:

  • Separate, undivided interests in the property
  • Descendible, may be conveyed by deed or will
  • No rights of Survivorship
  • Default unless JT is expressly Declared.

Joint Tenancy:

  • Regarded as a single owner “pre my et per tout”
  • Right of Survivorship
  • Must be expressly declared.
  • Requires 4 Unities: Time, Title, Interest, Posession.
  • When 1 Unity fails  TIC
  • One person can defeat the right of survivorship by destroying a unity.
  • Avoids Probate upon death of one JT. (no interest passes)
  • A JT can terminate the JT and create a TIC, no straw man needed (Riddle v Harmon)
  • A mortgage(mortgagor: borrower) is a lien, and does not destroy a JT. Does not survive the death of the mortgagor (Harms v Sprague)
  • A mortgage (mortgagee: lender) is a transfer of titles, destroys a JT severs unity of interest and possession.

Tenancy by the Entirety:

  • Only husband and wife
  • Requires 4 Unities: Time, Title, Interest, Posession + Marriage
  • When 1 Unity fails  TIC
  • Right of Survivorship
  • Regarded as a single owner “per tout et non per my”
  • Neither person may defeat the right of survivorship by conveyance to a third party.
  • Divorce Terminates

English CL:Favored JT over TIC.Ambiguous JT

Modern:TIC unless JT is expressly declared.

Severance of Joint Tenancies

Riddle v HarmonGets rid of need for a straw man to convert a JT to a TIC

p. 345

Married couple owns property in JT. She attempts to sever the JT with an instrument to transfer her interest from JT to TIC. She got rid of right of survivorship if severance is successful.

Issue:Is a Straw-man required to terminate a JT?

Rule:No. A JT should be able to terminate a JT and transfer their interest to themselves in TIC.

CA Civ Code 683.2 Unilateral transfers need to be recorded, w/in a short time, to be valid.

Harms v SpragueA mortgage does not sever a JT and does not survive the death of p.350 the mortgagor

Harms Brothers had property in JT. Deceased Bro signed a promissory note and a mortgage.

Issue:Does a mortgage sever a JT?

Does the mortgages survive the death of the mortgagor as a lien on the property?

Rule:A mortgage is a lien not a transfer of title. It does not sever the JT.

The mortgage does not survive as a lien on the property after the death of the mortgagor.

Joint Tenancy Bank Accounts:

Majority:

  • The surviving JT takes the sum remaining on deposit in a joint account unless there is clear and convincing evidence that a convenience account was intended.
  • Assumed, that during the lifetime of the parties the joint account belongs to the parties in proportion to the net contribution of each party.
  • BOP is on the person challenging the surviving joint tenant.

Relations among Concurrent Owners

Partition

  • The privilege of each co-owner to transform a concurrent estate into estates held in severalty.
  • Available to JT or TIC
  • When a voluntary agreement on how to terminate a cotenancy can’t be reached.

Partition in Kind:Divide the property and give each co-T a portion of the land. “Owelty” is a payment by one party to the other used to even the value of the distribution when using Partition in Kind.

Partition by Sale:Sell the property and split the money.

Some Courts prefer Partition in Kind, as property is considered unique (Delfino v Vealencis)

Modern: Partition by Sale is used in a majority of cases b/c the parties all wish it or b/c the courts are convinced that sale is the fairest method or resolving the conflict.

Partition by Sale, see test below

Delfino v Vealencis

p. 359Property owned as TIC. To decide between partition by sale or in kind. This court prefers partition in kind, as does property theory generally b/c property is considered unique.

Test for Partition by Sale:only do it when

  1. the physical attributes of the land are such that a partition in kind is impracticable or inequitable.
  1. the interests of the owner would be better be promoted by partition by sale.

Trial Court:found economic harm to P’s land development by D’s garbage business. Planning commission may not approve development. Business violated zoning.

Appeals:A partition in kind was practicable in this case.

Johnson v Hendrickson:Partition with 6 owners. Court doesn’t give credit to the fact that the co-T’s wanting the partition are living on the property or own property adjacent.

Sharing the Benefits and Burdens of Co-ownership

  • All co-T’s have an equal right to possession of the property.
  • When rent is paid it is equally split by the co-T’s, as are the costs of regular operation.
  • If a co-T is making payments for non-discressionary expenditures (taxes, maintenance, mortgage payments…) they can recoup some of the expenditures through:

1. partition action

2. action for an accounting: equitable proceeding, usually based on actual receipts not fair market value.

3. action for contribution from co-Ts

  • Co-T’s are not required to pay for discressionary improvements made by another at the time of the improvement. At the time of sale, the co-T who made the improvements will be reimbursed for the improvement, up to the increase in the property’s value. The person improving can ask for a “contribution” for mandatory payments (ex: taxes) only.
  • A JT can force anther co-T, through a lease, to be a co-T with a person they don’t approve of (Swartzbaugh v Sampson)
  • Majority jx: co-T making payments for or making necessary repairs has no affirmative right to contribution from other co-Ts in the absence of an agreement.
  • “Ouster” describes:
  1. the beginning of the running of the statute of limitations for AP and
  2. the liability or an occupying co-T to pay rent to other co-Ts

Ouster allows T who is denied access to collect their share of the rent, that T must try to possess the property to establish an ouster. (Spiller v Machereth)

Spiller v MackerethIf a person exercises their right of possession, Without “ouster”, a p. 369 TIC does not owe rent to a co-T

Co-owners of a building in TIC. Lessee vacates and D uses structure as a warehouse. P writes demanding D vacate or pay rent, half of the rent. D refuses.

“Ouster”:prevents other co-T from coming on to the property

  1. the beginning of the running of SOL for AP
  2. the liability of an occupying co-T for rent to other co-T’s

An “ouster” allows T who is denied access to collect their share of the rental value.

Rule:D installed new locks on the building and refused to pay rent, but this isn’t found to be an “ouster” as P didn’t try to possess the building. D did nothing to deny the rights of P.

Swartzbaugh v SampsonA JT can force their co-T, through a lease, to be co-T with a person

p. 373 they don’t agree to.

Couple own land as JT. He transfers his right of possession through a lease that she doesn’t approve of.

Issue:Can a JT force their co-T, through a lease, to be co-T with a person they don’t agree to?

Unless there is an “ouster” of Mrs. S, she is not entitled to rent. If there was an ouster Mrs. S would be entitled to ½ of the rental value.

Mrs. S’s options:

  1. she could bring an action for a partition for the duration of the lease.
  2. she could sue her husband for part of the rent he is collecting
  3. she could go onto the property that is leased to Sampson

Part IV: Transfers of Land: Chapter 7 The Land Transaction

A. Intro to Buying and Selling Real Estate

CA doesn’t use lawyers much here due to:

transaction costs

attnys are perceived as deal killers

title co’s (research history of ownership of land)

title insurance (compensation usually goes to the lender)

Jx are split to how far a non-attny can go before they are practicing law(564-565)

NJ case:docs should be explained by attny’s, but it isn’t against the public interest for sale w/out an attny if people are aware of the risks involved.

B. The K of Sale

  1. The Statute of Frauds

SOF:beginning of ability to send land w/out having to comply with livery of season

Creates proof that land transaction or K had occurred w/out dirt ceremony

To satisfy: a memo of sale must

  • Be signed by the party to be bound
  • Describe the real estate
  • State the price, if no price is stated the court can imply a RA price.

Purposes: Protect RA expectations and to Prevent Fraud

  1. K for sale of land be in writing

No action shall be brought upon the sale of land or interest to convey any interest in land unless the memo is in writing signed by the person you are enforcing it against. Both seller and buyer should sign.

  1. Transfer of an interest in land

No interest in land may be created/transferred by an instrument signed by the party to be bound thereby. Exception: leases for less then 3 yrs.

Some states require that the agreement:

Contain material terms(essential terms, including price)

Subject matter

Parties(identity)

Exceptions to the K part of the SOF:(not of the deed part)

Part Performance of the K, to the sales K

Requires acts that unequivocally require that some action related to the K has occurred. Evidence that there is a belief that there is a K between the parties. Usually something other than part payment alone.

Estoppel

Court can enforce a written K if there is “unconscionable injury” and a “serious change of position” on the part of the person seeking enforcement of the K. The change in position must be RA reliance on the K. Unjust enrichment of the party who is seeking to avoid the K, restitution or specific performance may be ordered.

Walker v ireton:(579) no specific performance because the reliance wasn’t foreseeable.
Daniels v Anderson

p.706Daniels: payment of portion of purchase price after notice

If buyer learns of another interest during the executory time, payments made after that notice are made at the buyer’s peril.

3 Approaches:

1)Give land to person with prior interest and give payments made back to the buyer. Damages to buyer as seller is in breach of the K of sale.

2)Give a fractional interest in the property to the buyer

Court can award the land to they buyer and payments are made from the buyer to the holder of the previous interest.

Lewis v Superior Court

Les Pendes does not show up on the record until the day after title passed to the Lewis’. There is no way for them to know about the Les Pendes until it is indexed. Lewis’ are BFPs have no knowledge of the Les Pendes.

The purchase price was paid b/f the time the Les Pendes was entered into the index, Lewis’ are first in time.

INQUIRY NOTICE

Harper v Paradise

1922SusanMaude LE

M’s children R

Susan Dies

1928Deedheirs  MaudeRefers to previous deed. Anyone who takes under this deed has notice that there was a previous deed.

1933Maude  Ella TSecurity Mortgage to secure a $50 loan. Ella forecloses.

Ella  A

A  B

B Paradise 1940

Waldorff v Eglin National Bank

1973purchase agreement for unit 111. Exchange of consideration Choctaw gives the property in exchange for letting Choctaw’s loan be considered paid.

TITLE INSURANCE

Walker Rogge v Chelsea

COAs:

1)shortage was an insurable loss under the policy

2)negligence: didn’t disclose info they had from previous survey

Insurance co claims the loss was not covered under the policy b/c the policy had an exclusion “this policy does not insure against loss or damage by ra of the following… encroachments, overlaps, boundary line disputes or other matters which could be disclosed by an accurate survey and inspection of the premises”

The disclosure of the defect is discovered by a survey.

When a policy is issued is there a duty on the title insurance co to disclose any info that would affect the decision to purchase the property? NO Duty on insurance co