Concurrent Estates - Concurrent Ownership - Co-ownership - YouTube

Concurrent Estates.

A concurrent estate is when two or more people own the same piece of property.

These people are called cotenants (or co-owners).

Before we begin, it is important to keep in mind one characteristic that exists for all

the concurrent estates: All cotenants have the right to use the whole property.

This is simple enough, however sometimes the “right to use the whole” is confusing

for students because it is often referred to in different ways:

The right to possess the whole, The right to enjoy the whole, and

It is also called an undivided share.

These are all the same.

In this lecture, the form that will be used is the “right to use the whole.”

There are three kinds of concurrent estates and the basics of each are as follows:

The tenancy in common is the simplest concurrent estate.

Thus it is no surprise that it is also the default concurrent estate.

Cotenants can have different percentages of ownership.

And when a cotenant dies, his share of the land passes to his heirs.

The joint tenancy is different, Cotenants can only have equal shares in ownership.

And when a cotenant dies his share passes to the other cotenants instead of his heirs.

This distinguishing factor is the most defining characteristic of the joint tenancy.

It is referred to as the Right of Survivorship.

The tenancy by the entirety is almost the same as the joint tenancy.

Its defining characteristic is that it involves marriage.

Now we will proceed with more detail on each concurrent estate.

Tenancy in common As we already mentioned, the tenancy in common

is the default concurrent estate.

When the type of concurrent estate is not stated, the courts favor the tenancy in common.

The tenancy in common is also the easiest concurrent estate to learn because the characteristics

to remember are open-ended.

The tenancy in common: Allows for any proportion of shares; equal

or unequal.

And, these shares can be transferred to anyone for any reason.

When a cotenant dies, the property goes to that particular cotenant’s heirs.

And, like all concurrent estates, each owner has the right to use the whole property.

If a cotenant wants to end a tenancy in common, he has the right to petition the court to

divide the property amongst the cotenants.

This is called partition.

There are two ways that a court will partition the property.

A partition in kind means that the Court will make a physical division in the property.

If a physical division is not in the best interest of the cotenants, than a partition

by sale will occur.

A partition by sale means that the court will force a sale of the property and divide the

proceeds amongst the cotenants.

Joint Tenancy.

Like all concurrent estates, cotenants of a joint tenancy have the right to use the

whole property.

The most distinguishing characteristic of the joint tenancy is the Right of Survivorship.

The right of survivorship means that when one cotenant dies, the other cotenants take

over his share of the property.

Note: The deceased cotenant’s heirs do not get any of the property.

For Example: A and B own a ranch together as joint tenants.

B writes a will which states, “I assign my share of the ranch to C when I die.”

When B dies, B’s share of the ranch does not go to C because A has the right of survivorship

which is superior.

The right of survivorship must be clearly indicated.

The simplest way to do this would be for the grantor to include the words “right of survivorship”

in the conveyance.

However, if not such words exist, it is enough to show that the grantor’s intent was to

have a “right of survivorship”.

In addition to the right of survivorship, the joint tenancy has 4 requirements.

They are called the 4 Unities: Time, Title, Interest, and Possession.

The Unity of Possession requires that each cotenant have the right to use the whole.

It is the first and easiest Unity that we cover because it is review.

We already know that all cotenants from any concurrent estate have the right to use the

whole.

The slight difference here is that other concurrent estates can alter this right.

But a joint tenancy cannot because it is a required by the Unity of Possession.

For Example: O conveys, “to A and B as joint tenants with right of survivorship, but B

can’t use the lake because he will eat all the fish.

This joint tenancy fails because B does not have the right to possess the whole.

Instead, A and B have a tenancy in common.

In another Example: O conveys, “to A and B as joint tenants with right of survivorship,

but A can’t use the land in the fall because he will shoot all the deer.

This joint tenancy fails because A does not have the right to possess the whole.

Instead, A and B have a tenancy in common. The Unity of Time requires that the cotenants

acquire the property at the same time.

The Unity of Title requires that the cotenants have the same title to the property.

At common law, this created a problem when someone who owned a property wanted to create

a joint tenancy with himself and another person.

To remedy this problem, the owner would have to set up what is called a straw man.

The straw man approach is best understood through an example:

A has a property in FSA but now he decides to create a joint tenancy with B. To do this

A must first convey his property to a disinterested 3rd party, i.e. the straw man.

Then the straw man conveys the property to both A and B as joint tenants with right of

survivorship.

The Unity of Interest requires that each cotenant must have the same interest in the property.

This means that the percentage of ownership is identical and that the type of ownership

is identical.

For example: O conveys, “to A and B, 70% and 30%, respectively, as joint tenants with

right of survivorship.”

Here the joint tenancy fails because the percentage of ownership is not equal.

What if O conveys, “to A and his heirs but also to B for life, as joint tenants with

right of survivorship.”

Here the joint tenancy fails because the types of ownership are different.

B’s Life Estate is different than A’s Fee Simple Absolute.

A joint tenancy will end when there is Severance.

Severance occurs when any of the 4 unities are interrupted.

However, the usual causes for severance are: Partition, Transfer, and sometimes Mortgage

in some states.

Similar to how a tenancy in common can end by partition; a joint tenancy can be severed

by partition.

See the above section on partition for the tenancy in common.

Any transfer during the cotenant’s lifetime will cause a joint tenancy to be severed.

It is important to note that severance will be found to have occurred even with the simplest

act of entering into a contract to sell, where the deal has time before it closes and thus

the actual transfer of property has not occurred.

This is based on the doctrine of Equitable Conversion.

The doctrine of Equitable Conversion provides a saying: "Equity sees that as done what ought

to be done."

In simple words, this means that: out of fairness, something that will truly be completed in

the future is treated as having already been completed.

This doctrine is best understood with an example: A and B own an apartment building as joint

tenants with right of survivorship.

B enters into a contract to sell his ownership of the building to C on June 1st.

On August 1st the transaction closes.

According to the doctrine of Equitable Conversion, the joint tenancy is severed on June 1st and

not August 1st.

In a minority of states which apply Title Theory, a mortgage will sever a joint tenancy.

Title Theory is where if one joint cotenant takes out a mortgage or lien on his share

of the property, then the joint tenancy is severed to that share.

However, the majority of states apply Lien Theory where if one joint cotenant takes out

a mortgage on his share the joint tenancy will stay intact.

Note: When a joint tenancy is severed, the remaining estate is a tenancy in common.

However, if there are three or more cotenants, then the joint tenancy remains intact among

the non-severing cotenants.

For example: If a joint tenancy has 3 cotenants, and one cotenant conveys his share to another

person, then that person owns a 1/3 share on a tenancy in common basis.

The other two original cotenants continue to hold the remaining 2/3s on a joint tenancy basis.

Tenancy by the entirety.

The defining characteristic of the tenancy by the entirety is that the owners are married.

It is similar to the JT in that it has a right of survivorship and that the 4 unities are

required.

But in addition, the unity of marriage is also required.

In the minority of states that practice the tenancy by the entirety, property which is

conveyed to a married couple is presumed to be a tenancy by the entirety.

However, this presumption can be rebutted if it can be shown that the grantor had a

different intent.

The tenancy by the entirety is a highly secure form of coownership.

Each spouse cannot transfer his share of the property without the other spouse’s consent.

This also means that the property is protected from the debt of the other spouse.

For Example: A and B own a house as tenants by the entirety.

A loses his job and can’t payback his debts.

The creditors will not be able to collect their debt by taking the house because such

a transfer would require consent by both spouses.

A tenancy by the entirety only ends when the marriage ends.

Thus, a tenancy by the entirety will end by death and the tenancy by the entirety will

end by divorce.

Now let’s review some of the main elements of each concurrent estate.

There are three concurrent estates.

The Tenancy in Common is the default concurrent estate.

The Tenancy in Common is also the concurrent estate for which there can be a varying percentage

of ownership.

All the concurrent estates hold the Right to Use the Whole.

The Tenancy in Common and the Joint Tenancy hold the Right to Partition.

The Joint Tenancy and the Tenancy by the Entirety hold the Right of Survivorship.

The Joint Tenancy and the Tenancy by the Entirety also require the 4 Unities with the Tenancy

by the Entirety also requiring Marriage.

Rights and Duties of Cotenants.

The first two rights to be covered here are review from above.

Partition.

Cotenants of a tenancy in common or a joint tenancy have the right to petition the court

to divide the property amongst the cotenants.

However, it is important to remember that a Tenancy by the Entirety does not have this

right because it only ends when the marriage ends.

Possession.

As we mention now for the fifth time, all cotenants have the right to use the whole

property.

If one cotenant A prevents cotenant B from any part of possession, then A has ousted

B. And, B can bring a cause of action for Ouster.

Adverse Possession.

If one cotenant leaves the property for an extended period of time, the cotenant that

stays in possession cannot gain the entire title to the property by adverse possession.

This is because the hostility element of adverse possession is missing.

However, if the cotenant with possession has ousted the cotenant that has left, then the

hostility element is satisfied.

Profits.

If the property makes money, each cotenant is entitled to a share equivalent to their

share of the property.

For Example: A and B own some land as tenants in common.

A owns 80% and B owns 20%.

A leases the land to a farmer for $1000 per month.

B is entitled to his fair share of $200 per month.

If one cotenant is left in exclusive possession of the property, he is not liable to the other

cotenants for rent.

However, if the other cotenants were ousted by the tenant with exclusive possession, then

that cotenant is liable for rent.

For example: A and B share a condo as tenants in common.

A owns 80% and B owns 20%.

B leaves A with exclusive possession and travels the world for 4 months.

Upon B’s return he demands that A pay him rent for the time that he was in exclusive

possession.

B cannot collect any money from A unless he can prove that he was ousted.

Costs.

If the property costs money, i.e. taxes or mortgage payments, each cotenant is responsible

to pay an amount equivalent to their share of the property

Repairs and Improvements.

In general, there is no right to contribution for repairs or improvements.

However, there are two exceptions.

If a cotenant gives notice to the other cotenants of a reasonably necessary repair, then there

is a right to contribution of an amount proportional to ownership of the property.

For example: A and B own a house as tenants in common.

One of the windows has recently broken and B decides that it is reasonably necessary

to repair the window.

B pays for the window to be repaired and is now asking A to pay his fair share for the

repair.

A does not have to pay B for the repair because there is no right to contribution for repairs.

Instead imagine that in addition to the above facts, that B had told A that the window was

broken and she was going to pay for it to be repaired.

Now B has a right to contribution.

A must pay B for the repair because B gave A notice and the repair was necessary and

reasonable.

When cotenants decide to sell their property, and it sells at a premium due to a modification

made by one of the cotenants, then that cotenant is entitled to that premium in full.

Note, that the opposite is also true.

If the property is sold at a discount, the responsible cotenant bears the burden in full.

Waste.

Cotenants must not commit waste.

Remember the three kinds of waste: Voluntary, Permissive and Ameliorative.

For review, see the Present Estates video lecture at 10:15 minutes.