Concurrent estate

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In property law, a concurrent estate or co-tenancy is any of various ways in which property is owned by more than one person at a time. If more than one person owns the same property, they are commonly referred to as co-owners. Legal terminology for co-owners of real estate is either co-tenants or joint tenants, with the latter phrase signifying a right of survivorship. Most common law jurisdictions recognize tenancies in common and joint tenancies.

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Many jurisdictions also recognize tenancies by the entirety, which is effectively a joint tenancy between married persons. Many jurisdictions refer to a joint tenancy as a joint tenancy with right of survivorship, but they are the same, as every joint tenancy includes a right of survivorship. In contrast, a tenancy in common does not include a right of survivorship.

The type of co-ownership does not affect the right of co-owners to sell their fractional interest in the property to others during their lifetimes, but it does affect their power to will the property upon death to their devisees in the case of joint tenants. However, any joint tenant can change this by severing the joint tenancy. This occurs whenever a joint tenant transfers his or her fractional interest in the property.

Laws can vary from place to place, and the following general discussion will not be applicable in its entirety to all jurisdictions.

Rights and duties of co-owners (general)

Under the common law, Co-owners share a number of rights by default:

  1. Each owner has an unrestricted right of access to the property. When one co-owner wrongfully excludes another from using the shared property, the excluded co-owner can bring a cause of action for ouster. As a remedy, the court may grant the wronged co-owner the fair rental value of the property for the time that they were ousted.
  2. Each owner has a right to an accounting of profits made from the property. If the property generates any income (e.g. rent, farming, etc.) each owner is entitled to a pro-rata share of that income.
  3. Each owner has a right of contribution for the costs of owning the property. Co-owners can be forced to contribute to the payment of expenses such as property taxes, necessary maintenance and repairs, or mortgages for the entire property.

Contribution and improvements

Co-owners generally do not have any obligation to contribute to any costs of improving the property. If one co-owner adds a feature that enhances the value of the property, that co-owner has no right to demand that any others share the cost of adding that feature – even if other co-owners reap greater profits from the property because of it. However, at partition, a co-owner is entitled to recover the value added by his or her improvements of the property if the "improvements" resulted in an increase in property value. Conversely, if the co-owner's "improvements" decrease the value of the property, the co-owner is responsible for the decrease. In an Australian case, [1] the High Court said that the costs of repairing by one co-owner must be taken into account on the partition or final distribution (i.e. sale) of the property.

Mortgages

Each co-owner can independently encumber the co-owner's own share in the property by taking out a mortgage using fractional financing on that share (although this may effectively convert a joint tenancy to a tenancy in common, as described below); other co-owners have no obligation to help pay a mortgage that only runs to another owner's share of the property, and the mortgagee can only foreclose on that mortgagor's share. Bank loans secured by mortgages on individual shares of co-owned property are one of the most rapidly expanding areas in the mortgage lending industry.

Tenancy in common

Tenancy in common (TIC) is a form of concurrent estate in which each owner, referred to as a tenant in common, is regarded by the law as owning separate and distinct shares of the same property. By default, all co-owners own equal shares, but their interests may differ in size. [2]

TIC owners own percentages in an undivided property rather than particular units or apartments, and their deeds show only their ownership percentages. The right of a particular TIC owner to use a particular dwelling comes from a written contract signed by all co-owners (often called a "Tenancy In Common Agreement"), not from a deed, map or other document recorded in county records. [3] This form of ownership is most common where the co-owners are not married or have contributed different amounts to the purchase of the property. The assets of a joint commercial partnership might be held as a tenancy in common. [2]

Tenants in common have no right of survivorship, meaning that if one tenant in common dies, that tenant's interest in the property will be part of his or her estate and pass by inheritance to that owner's devisees or heirs, either by will, or by intestate succession. [2] Also, as each tenant in common has an interest in the property, they may, in the absence of any restriction agreed to between all the tenants in common, sell or otherwise deal with the interest in the property (e.g. mortgage it) during their lifetime, like any other property interest. [2]

Destruction of tenancy in common

Where any party to a tenancy in common wishes to terminate (usually termed "destroy") the joint interest, he or she may obtain a partition of the property . This is a division of the land into distinctly owned lots, if such division is legally permitted under zoning and other local land-use restrictions. Where such division is not permitted, a forced sale of the property is the only alternative, followed by a division of the proceeds.

If the parties are unable to agree to a partition, any or all of them may seek the ruling of a court to determine how the land should be divided – physical division between the joint owners (partition in kind), leaving each with ownership of a portion of the property representing their share. Courts may also order a partition by sale in which the property is sold and the proceeds are distributed to the owners. Where local law does not permit physical division, the court must order a partition by sale.

Each co-owner is entitled to partition as a matter of right, meaning that the court will order a partition at the request of any of the co-owners. The only exception to this general rule is where the co-owners have agreed, either expressly or impliedly, to waive the right of partition. The right may be waived either permanently, for a specific period of time, or under certain conditions. The court, however, will likely not enforce this waiver because it is a restraint on the alienability of property. [4]

Joint tenancy

A joint tenancy or joint tenancy with right of survivorship (JTWROS) is a type of concurrent estate in which co-owners have a right of survivorship, meaning that if one owner dies, that owner's interest in the property will pass to the surviving owner or owners by operation of law, and avoiding probate. The deceased owner's interest in the property simply evaporates and cannot be inherited by his or her heirs. Under this type of ownership, the last owner living owns all the property, and on his or her death the property will form part of their estate. Unlike a tenancy in common, where co-owners may have unequal interests in a property, joint co-owners have an equal share in the property. [5]

Creditors' claims against the deceased owner's estate may, under certain circumstances, be satisfied by the portion of ownership previously owned by the deceased, but now owned by the survivor or survivors. In other words, the deceased's liabilities can sometimes remain attached to the property.

This form of ownership is common between spouses, parent and child, and in any other situation where parties want ownership to pass immediately and automatically to the survivor. For bank and brokerage accounts held in this fashion, the acronym JTWROS is commonly appended to the account name as evidence of the owners' intent.

To create a joint tenancy, clear language indicating that intent must be used –e.g. "to AB and CD as joint tenants with right of survivorship, and not as tenants in common". This long form of wording may be especially appropriate in those jurisdictions which use the phrase "joint tenancy" as synonymous with a tenancy in common. Shorter forms such as "to AB and CD as joint tenants" or "to AB and CD jointly" can be used in most jurisdictions. Words to that effect may be used by the parties in the deed of conveyance or other instrument of transfer of title, or by a testator in a will, or in an inter vivos trust deed.

If a testator leaves property in a will to several beneficiaries "jointly" and one or more of those named beneficiaries dies before the will takes effect, then the survivors of those named beneficiaries will inherit the whole property on a joint tenancy basis. But if these named beneficiaries had been bequeathed the property on a tenancy in common basis, but died before the will took effect, then those beneficiaries' heirs would in turn inherit their share immediately (the named beneficiary being deceased).

Four unities of a joint tenancy

To create a joint tenancy, the co-owners must share "four unities":

If any of these elements is missing, the joint tenancy is ineffective, and the joint tenancy will be treated as a tenancy in common in equal shares.

Breaking a joint tenancy

If any joint co-owner deals in any way with a property inconsistent with a joint tenancy, that co-owner will be treated as having terminated (sometimes called "breaking") the joint tenancy. The remaining co-owners maintain joint ownership of the remaining interest. The dealing may be a conveyance or sale of the co-owner's share in the property. The position in relation to a mortgage is more doubtful (see below). For example, if one of three joint co-owners conveys his or her share in the property to a third party, the third party owns a 1/3 share on a tenancy in common basis, while the other two original joint co-owners continue to hold the remaining 2/3s on a joint tenancy basis. This result arises because the "unity of time" is broken: that is, because on the transfer the timing of the new interest is different from the original one. If it is desired to continue to maintain a joint tenancy, then the three original joint co-owners would need to transfer, in the one instrument, the joint interest to the two remaining joint co-owners and the new joint co-owner.

A joint co-owner may break a joint tenancy and maintain an interest in the property. Most jurisdictions permit a joint owner to break a joint tenancy by the execution of a document to that effect. But in jurisdictions that retain the common law requirements, an exchange with a straw man is required. This requires another person to "buy" the property from the joint co-owner for some nominal consideration, followed immediately by a sale-back to the co-owner at the same price. In either case, the joint tenancy will revert to a tenancy in common as to that owner's interest in the property.

A significant issue can arise with the simple document execution method. In the straw man approach, there are witnesses to the transfer. With the document, there may not be witnesses. With either method, as soon as the break occurs, it works both ways. Because there may not be witnesses, the party with the document could take advantage of that fact and hide the document when the other party dies.

Mortgages to break joint tenancy

If one joint co-owner takes out a mortgage on jointly owned property, in some jurisdictions this may terminate the joint tenancy. Jurisdictions which use a title theory in this situation treat a mortgage as an actual conveyance of title until the mortgage is repaid, if not permanently. In such jurisdictions, the taking of a mortgage by one owner terminates the joint tenancy as to that co-owner.

In jurisdictions which use the lien theory, the mortgage merely places a lien on the property, leaving the joint tenancy undisturbed. As a lien is not enough to terminate a joint tenancy, if the debtor dies before the creditor sues, the creditor is left with no claim against the property, as the debtor's interest in the property evaporates and automatically vests in the other surviving co-owners. Sana all.

Petition to partition to sever a joint tenancy

A co-owner of a joint tenancy with rights of survivorship deed may sever the joint tenancy by filing a petition to partition. A petition to partition is a legal right, so usually there is no way to stop such an action. When a court grants a partition action for a joint tenants with rights of survivorship deed, the property is either physically broken into parts and each owner is given a part of equal value OR the property is sold and the proceeds are distributed equally between the co-owners regardless of contribution to purchase price. No credits would be issued to any tenant who may have made a superior contribution toward purchase price.

Some states allow a co-owner the option of buying out the other co-owners to avoid a public sale of the property. Some states also allow multiple co-owners to join their shares together to claim a majority ownership to avoid public sale of the property and to have the property awarded to the majority owners. If the property is sold publicly, the usual method is a public auction.

During a partition process, credits may be granted to co-tenants who have paid property expenses in excess of their share, such as utilities and property maintenance. Credit may be given for improvements done to the property if the improvements have increased the value of the property. No credit would be given for excess contribution to purchase price, as joint tenancy with rights of survivorship deeds are taken in equal shares as a matter of law.

Tenancy by the entirety

A tenancy by the entirety (sometimes called a tenancy by the entireties) is a type of concurrent estate formerly available only to married couples, where ownership of property is treated as though the couple were a single legal person. [7] It is based on an old English common law view that a married couple is one legal person for the purpose of owning property. [8] [9] (In the State of Hawaii, the option of ownership in an tenancy by the entirety is also available to domestic partners in a registered "Reciprocal Beneficiary Relationship"; Vermont's Civil Union statute qualifies parties to a civil union for tenancy by the entirety.) [10]

Like a Joint Tenancy with Rights of Survivorship, the tenancy by the entirety also encompasses a right of survivorship, so if one spouse dies, the entire interest in the property is said to "ripen" in the survivor so that sole control of the property ripens, or passes in the ordinary sense, to the surviving spouse without going through probate.

In some jurisdictions, to create a tenancy by the entirety the parties must specify in the deed that the property is being conveyed to the couple "as tenants by the entirety," while in others, a conveyance to a married couple is presumed to create a tenancy by the entirety unless the deed specifies otherwise. [11] (see also Sociedad de gananciales.) [12] Also, besides sharing the four unities necessary to create a joint tenancy with right of survivorship – time, title, interest, and possession – there must also be the fifth unity of marriage. [13] However, unlike a JTWROS, neither party in a tenancy by the entirety has a unilateral right to sever the tenancy. The termination of the tenancy or any dealing with any part of the property requires the consent of both spouses. [14]

A divorce of the parties to the marriage who own a property in a tenancy by the entirety automatically breaks the unity of marriage, leaving the default tenancy. [15] In death or divorce, there is a right of survivorship in the remaining spouse. [15] In New York State cooperatives, where ownership by tenancy by the entirety has been an option for married couples since 1995, upon the couple divorcing either: a) if one spouse requests that their shares of stock in the co-op be reflected as being not in their name and solely in the name of the other spouse, that will automatically and immediately take effect by law and must be so reflected by the registrar and transfer agent of the corporation; or b) if neither spouse makes such a request, then divorce will automatically convert this type of ownership in co-op shares into a joint tenancy. [16] [17]

Some US jurisdictions no longer recognize tenancies by the entirety. [18] [19] Where it is recognized, benefits can include the ability to shield the property from creditors of only one spouse, as well as the ability to partially shield the property where only one spouse is filing a petition for bankruptcy relief. [19] If a non-debtor spouse in a tenancy by the entirety survives a debtor spouse, the lien can never be enforced against the property. On the other hand, if a debtor spouse survives a non-debtor spouse, the lien may be enforced against the whole property, not merely the debtor spouse's original half-interest.

In many states, tenancy by the entireties is recognized as a valid form of ownership for bank accounts and financial assets.

See also

Related Research Articles

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In English law, a fee simple or fee simple absolute is an estate in land, a form of freehold ownership. A "fee" is a vested, inheritable, present possessory interest in land. A "fee simple" is real property held without limit of time under common law, whereas the highest possible form of ownership is a "fee simple absolute," which is without limitations on the land's use.

In common law and statutory law, a life estate is the ownership of immovable property for the duration of a person's life. In legal terms, it is an estate in real property that ends at death, when the property rights may revert to the original owner or to another person. The owner of a life estate is called a "life tenant". The person who will take over the rights upon death is said to have a "remainder" interest and is known as a "remainderman".

A mortgage is a legal instrument of the common law which is used to create a security interest in real property held by a lender as a security for a debt, usually a mortgage loan. Hypothec is the corresponding term in civil law jurisdictions, albeit with a wider sense, as it also covers non-possessory lien.

This aims to be a complete list of the articles on real estate.

A deed, commonly, is a legal document that is signed and delivered, especially one regarding the ownership of property or legal rights. More specifically, in common law, a deed is any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring (conveyancing) title to property. The deed has a greater presumption of validity and is less rebuttable than an instrument signed by the party to the deed. A deed can be unilateral or bilateral. Deeds include conveyances, commissions, licenses, patents, diplomas, and conditionally powers of attorney if executed as deeds. The deed is the modern descendant of the medieval charter, and delivery is thought to symbolically replace the ancient ceremony of livery of seisin.

<span class="mw-page-title-main">Lease</span> Contractual agreement in which an assets owner lets someone else use it in exchange for payment

A lease is a contractual arrangement calling for the user to pay the owner for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial or business equipment are also leased. Basically a lease agreement is a contract between two parties: the lessor and the lessee. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. The lessee also agrees to abide by various conditions regarding their use of the property or equipment. For example, a person leasing a car may agree to the condition that the car will only be used for personal use.

<span class="mw-page-title-main">Probate</span> Proving of a will

In common law jurisdictions, probate is the judicial process whereby a will is "proved" in a court of law and accepted as a valid public document that is the true last testament of the deceased, or whereby the estate is settled according to the laws of intestacy in the state of residence of the deceased at time of death in the absence of a legal will.

A real estate contract is a contract between parties for the purchase and sale, exchange, or other conveyance of real estate. The sale of land is governed by the laws and practices of the jurisdiction in which the land is located. Real estate called leasehold estate is actually a rental of real property such as an apartment, and leases cover such rentals since they typically do not result in recordable deeds. Freehold conveyances of real estate are covered by real estate contracts, including conveying fee simple title, life estates, remainder estates, and freehold easements. Real estate contracts are typically bilateral contracts and should have the legal requirements specified by contract law in general and should also be in writing to be enforceable.

<span class="mw-page-title-main">Estate planning</span> Process of planning for inheritance of property

Estate planning is the process of anticipating and arranging for the management and disposal of a person's estate during the person's life in preparation for a person's future incapacity or death. The planning includes the bequest of assets to heirs, loved ones, and/or charity, and may include minimizing gift, estate, and generation-skipping transfer taxes. Estate planning includes planning for incapacity, reducing or eliminating uncertainties over the administration of a probate, and maximizing the value of the estate by reducing taxes and other expenses. The ultimate goal of estate planning can only be determined by the specific goals of the estate owner, and may be as simple or complex as the owner's wishes and needs directs. Guardians are often designated for minor children and beneficiaries with incapacity.

The four unities is a concept in the common law of real property that describes conditions that must exist in order to create certain kinds of property interests. Specifically, these four unities must be met for two or more people to own property as joint tenants with legal right of survivorship, or for a married couple to own property as tenants by the entirety. Some jurisdictions may require additional unities.

A partition is a term used in the law of real property to describe an act, by a court order or otherwise, to divide up a concurrent estate into separate portions representing the proportionate interests of the owners of property. It is sometimes described as a forced sale. Under the common law, any owner of property who owns an undivided concurrent interest in land can seek such a division. In some cases, the parties agree to a specific division of the land; if they are unable to do so, the court will determine an appropriate division. A sole owner, or several owners, of a piece of land may partition their land by entering a deed poll.

<span class="mw-page-title-main">Disclaimer of interest</span> Legal concept

In the law of inheritance, wills and trusts, a disclaimer of interest is an attempt by a person to renounce their legal right to benefit from an inheritance or through a trust. "If a trustee disclaims an interest in property that otherwise would have become trust property, the interest does not become trust property."

<span class="mw-page-title-main">Same-sex marriage law in the United States by state</span>

This article summarizes the same-sex marriage laws of states in the United States. Via the case Obergefell v. Hodges on June 26, 2015, the Supreme Court of the United States legalized same-sex marriage in a decision that applies nationwide, with the exception of American Samoa and sovereign tribal nations.

<span class="mw-page-title-main">Interest in possession trust</span>

An interest in possession trust is a trust in which at least one beneficiary has the right to receive the income generated by the trust or the right to enjoy the trust assets for the present time in another way. The beneficiary with the right to enjoy the trust property for the time being is said to have an interest in possession and is colloquially described as an income beneficiary, or the life tenant.

<span class="mw-page-title-main">English land law</span> Law of real property in England and Wales

English land law is the law of real property in England and Wales. Because of its heavy historical and social significance, land is usually seen as the most important part of English property law. Ownership of land has its roots in the feudal system established by William the Conqueror after 1066, but is now mostly registered and sold on the real estate market. The modern law's sources derive from the old courts of common law and equity, and legislation such as the Law of Property Act 1925, the Settled Land Act 1925, the Land Charges Act 1972, the Trusts of Land and Appointment of Trustees Act 1996 and the Land Registration Act 2002. At its core, English land law involves the acquisition, content and priority of rights and obligations among people with interests in land. Having a property right in land, as opposed to a contractual or some other personal right, matters because it creates priority over other people's claims, particularly if the land is sold on, the possessor goes insolvent, or when claiming various remedies, like specific performance, in court.

<i>Williams v Hensman</i> English trusts law case

Williams v Hensman (1861) is an English trusts law case.

<i>Harris v Goddard</i>

Harris v Goddard [1983] 3 All ER 242 is an English land law and matrimonial law case, concerning co-owned land between spouses and finding as to the effect of a divorce petition.

<i>Kinch v Bullard</i>

Kinch v Bullard [1998] 4 All ER 650 is an English land law case, concerning co-ownership of land and an act of severance of a joint tenancy, whether caught by the deemed-delivered provisions of the common law postal rule.

<span class="mw-page-title-main">Real property</span> Legal term; property consisting of land and the buildings on it

In English common law, real property, real estate, immovable property or, solely in the US and Canada, realty, refers to parcels of land and any associated structures which are the property of a person. In order for a structure to be considered part of the real property, it must be integrated with or affixed to the land. Examples include crops, buildings, machinery, wells, dams, ponds, mines, canals, and roads. The term is historic, arising from the now-discontinued form of action, which distinguished between real property disputes and personal property disputes. Personal property, or personalty, was, and continues to be, all property that is not real property.

References

  1. ↑ Brickwood v Young, (1905) 2 CLR 387; 11 ALR 154.
  2. 1 2 3 4 Sprankling, John G. (2018). Property : a contemporary approach. Raymond R. Coletta (4 ed.). St. Paul, MN. pp. 378–439. ISBN   978-1-63460-650-9. OCLC   1051777575.{{cite book}}: CS1 maint: location missing publisher (link)
  3. ↑ "Clear Answers and Explanations on Tenancy In Common (TIC)". andysirkin.com. Retrieved 7 April 2018.
  4. ↑ Destruction of tenancy in common Lawyerment Legal Dictionary. Retrieved on 29 December 2016.
  5. ↑ Joint Tenants vs Tenants in Common ABKJ Lawyers. Retrieved on 2014-10-07.
  6. 1 2 3 4 Todd, Trevor (23 August 2019). "The Nature of a Joint Tenancy". Disinherited. Retrieved 27 July 2023.
  7. ↑ Essentials of Practical Real Estate Law – Daniel F. Hinkel – Google Books
  8. ↑ Modern Real Estate Practice in Pennsylvania – Herbert J. Bellairs, Thomas J. Bellairs, James L. Helsel, James L. Goldsmith, Jim Skindzier – Google Books
  9. ↑ Michie's Jurisprudence of Virginia and West Virginia, Husband and Wife § 29.
  10. ↑ Florida Real Estate Pre-License Course for Sales Associates – Cutting Edge Real Estate Academy – Google Books
  11. ↑ "Civil Code of Puerto Rico of 1930, Article 1295, Sociedad de Gananciales". lexjuris.com. LexJuris. Retrieved 7 October 2014.
  12. ↑ es:Sociedad de gananciales
  13. ↑ Kentucky Probate – William Allen Schmitt, Glen S. Bagby, J. Robert Lyons, Jr. – Google Books
  14. ↑ The Language of Real Estate – John W. Reilly – Google Books
  15. 1 2 Modern Real Estate Practice in Illinois – Fillmore W. Galaty, Wellington J. Allaway, Robert C. Kyle – Google Books
  16. ↑ "New Law Provides Protection for Married Co-op Owners – Tenancy by the Entirety" – The New York Cooperator, The Co-op & Condo Monthly
  17. ↑ Reports of Cases Decided in the Appellate Division of the Supreme Court, State of New York, Volume 3; Volume 72- Marcus Tullius Hun, Jerome B. Fisher, Austin B. Griffin, Edward Jordan Dimock, Louis J. Rezzemini...
  18. ↑ Denis Clifford, Plan Your Estate, Nolo, 9th ed. (April 2008), p. 168.
  19. 1 2 Estate Planning Strategies: A Lawyer's Guide to Retirement and Lifetime Planning – Jay A. Soled – Google Books
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