Presentation on theme: "Chapter 8 Co-ownership of Real Estate. Co-Ownership of Real Estate Co-Ownership Covered. Concurrent undivided interest in the same property. – Tenancy."— Presentation transcript:
Chapter 8 Co-ownership of Real Estate
Co-Ownership of Real Estate Co-Ownership Covered. Concurrent undivided interest in the same property. – Tenancy in Common – Joint Tenants – Tenancy by the Entirety Other Methods of Co-Ownership. – Easements – Air rights – Life estates 2
Joint Tenants 1. Right of survivorship. A form of co-ownership where the entire estate passes to the survivor on the death of the other joint tenant. 2. Rights of Joint Tenants. Each co-owner holds an equal right to possession of the entire property. 3. Severance. Unities: 1. Possession. Each has an undivided right to possession. 2. Interest. Each receive the same type of estate and each have an equal fractional interest. 3. Time. Interests must have been received at the same time. 4. Title. Interests must derive from the same legal document.
Tenancy in common 1. Definition. A form of concurrent ownership in which each owner possesses an undivided right to the entire parcel of land. 2. Creation. This is the default form of co-ownership today. 3. No Right of Survivorship. 4. Share Proceeds. Each owner entitled to share in proceeds from rent/other. 5. Transferability - inter vivos or testamentary. May acquire and transfer separate from other owners. 6. Death of tenant: interest passes to heirs ABC C C dies AB C Jr.D (daughter)
The Severance of a Joint Tenancy Figure 8.1
Countrywide Home Loans, Inc. V. Reed (#7) 725 SE32d 667 (NC App 2012) Joint Tenants. Mom (Smith) and daughter (Reed, along with the daughter’s husband) bought a home together as joint tenants. Countrywide Loan. Smith financed the home with a $117,000 loan. Only Smith signed the loan (oddly, Smith’s daughter, Reed, signed for Smith as her attorney-in-fact, but Reed did not sign for herself). Loan Default in Smith went into default on the loan. Smith Dies – Before the foreclosure happened Smith dies. Issue: Who owns the house? It was a joint tenancy? Holding: Mortgage severed joint tenancy and created tenants in common. The case was in North Carolina which is a “title theory state” meaning the mortgage holder actually holds title to the property. So what happens to the home? Who owns it? 6
End-of-Chapter Q: 2, p. 174 Sisters as Joint Tenants. Althea Lynley and Agnes Peach hold title to 640 acres in Montana as joint tenants. One Sister Moves to CA. Within five years of buying it, Althea married and moved to San Diego. Other Sister Builds Life on Land. Agnes stayed in Montana, got married and developed the property as a ranch. Montana Sister Dies. Agnes died in 1994, her husband and children assumed they would inherit the property as named beneficiaries, do they?
8 Consider 8.1, p. 155 – Termination of a Joint Tenancy, Is a Strawman Needed? Taylor owned in fee simple a ranch He executed a deed “… to Taylor and Canterbury as joint tenants” Later a new deed “…to sever the joint tenancy … and to create a tenancy in common” He died a couple of years later and Canterbury claims the full property because she did not sever her joint tenancy at the same time. Can one side unilaterally terminate a joint tenancy? What did she lose from a property interest perspective?
9 Ethical Issue – p. 161 – Joint Owner Kills Other Joint Owner Cohabitants. Clara Sanders and James Newton lived together and owned as joint tenants a property. Reckless Homicide. Sanders got drunk and belligerent and Newton held her down by choking her and ended up killing her. Kentucky Statute – Prohibits Benefiting from Murder. The statute does not allow a joint tenant to take the property if the joint tenant murdered the other tenant. The statute also assumes the murderer pre-deceased the murdered property owner. In this case, that would give Sanders heirs the full property? Is that the best approach? Making the murderer give up his property rights as well?
Joint Tenants Continued 10 End-of-Chapter Q: 5, p. 175, not assigned. James and Syvilla Ballantyne acquired a title to a lot as joint tenants. James died and his will gave Syvilla a life estate with the remainder to his eight children from a previous marriage. Syvilla died leaving the property to her sisters and brother. Who gets the property? James Syvilla Sister 2 Brother Sister 1 Kid 4 Kid 3 Kid 2 Kid 1 Kid 8 Kid 7 Kid 6 Kid 5 Joint Tenants Syvilla’s will left property to her sisters and brothers James’s will left Syvilla a life estate with remainder to kids
11 Consider 8.2, p. 158 – Inheriting Tenants in Common Owned 2 Land Parcels. Gallota owned two parcels of land with her cousin Lauriello. Brooklyn Property Held as Joint Tenants – BUT Changed to tenants in common. Lauriello Dies. Lauriello dies leaving her half interest in the property to Christopher and Louis Lauriello. What do Christopher and Louis get? They claim to each get an undivided 25% interest in the property. Correct?
Tenancy in the Entirety Must be Married 1. Definition. Co-ownership of property by husband and wife that is non- severable without the consent of both; on the death of either, the survivor remains as sole owner. 2. Survivorship. 3. Requires Four Unities of Joint Tenancy 4. Half the States Recognize this Form of Ownership. 5. Termination. The husband and wife are considered a single entity so the Tenancy cannot be terminated without the consent of both. If one spouse incurs debts, the property held in Tenancy in the Entirety cannot be seized to pay those debts.
Gayton v. Kovanda(#x) 857 NE2d 929 (Ill App 2006), p. 160 Home Held as Joint Tenants. Monica and Joseph Gayton owned a home in joint tenancy. Transfer of Ownership 100% to Wife. Joseph transferred his portion of the home to Monica via quick claim deed. Judgment Creditor. Kovanda obtained a judgment against Joseph for $414,000. This is why Gayton transferred ownership to his wife – to avoid the judgment. Fraudulent Transfer? Kovanda claimed the quick claim deed was fraudulent to avoid his judgment. Joseph died on Nov 26, 2003 before Kovanda recorded the notice of judgment which he did on December 3, Kovanda filed lien late. Issue: Does Monica own the land in fee simple? Holding: If fraudulent transfer – then deal undone. If not, then transfer is valid. 13
Community Property States Community Property - 50/50 marital property ownership 1. Separate property remains separate 2. Commingling results in community interests 3. Jointly liable for community debt 4. Marital property protections in divorce and death
16 Consider 8.4 – Right of Tenants to Contribute to Expenses Partners in Land with Equal Shares. One Builds a Cabin. One owner of land held in equal shares builds a cabin and rents it. Rent. $1,000 month collected in rent or $50,000 for the year $1,120 in monthly mortgage payments for the cabin Taxes = $180/month with cabin and $140/month without Partner Demands Share of Rent Other Partner Demands Share of Expenses
More Co-Ownership Issues Rights and responsibilities of cotenants Rents Expenditures Partition and ouster Marital property rights Common law – dower rights Common law – curtesy rights Statutory marital law – community property
Partition Property? 18 Consider 8.5, p Single family home owned by “Nabil J. Asterbadi and Maureen Bell Asterbadi his wife.” Could rent it for $50,000 per year. A creditor obtained a judgment and brought a foreclosure action against Mr. Asterbadi’s share. Capital Finance purchased that interest for $551,000. What can Capital Finance do? How do Capital and Mrs. hold the property? (Joint tenants, tenancy in common, tenancy by the entireties?) How did the couple hold the property – why does it matter? Rent the property? Partition the property? Use the property?
Ten Steps to an Airtight Prenup 1. Make sure there’s no hint of coercion. To nail this down, make sure your spouse-to- be has his or her own lawyer. 2. Make sure you don’t lie. If your spouse can prove you were hiding assets, you could be in big trouble. 3. Be prepared for a few surprises. Some are pleasant, some not. 4. Avoid any appearance of forcing a deal at the last minute. Sign at least a month before the wedding. 5. Don’t give the prospective spouse the idea that you regard your assets as more precious than your spouse’s. 6. Don’t throw in anything mean: like the provision Stan Lotwin recently saw imposing a $1,000 penalty for every pound a wife gained. 7. Consider increasing your spouse’s cut over time to make the agreement more equitable. 8. See that your spouse stands to inherit something if you die first. Without such a provision, taxes could soak up everything—including your 401(k). 9. Don’t count on escaping alimony payment. In New York and a few other states, a spouse can waive the right to alimony. 10. Be very careful about mixing premarital and postmarital assets. Because if you cannot absolutely prove what was yours before the marriage, you could stand to lose it. End-of-Chapter Q: 6, p. 177, DeLoreans entered into an antenuptial agreement hours before they were married. Cristina said that John did not give her full information about his assets. They were married 13 years and had two minor children.
Consider 8.9, p. 172 In re Marriage of Tamraz not reported Joel Tamraz an attorney drafted a prenuptial agreement and asked Patricia to sign it the day before she was flying to Las Vegas to get married. She did not get an attorney’s advice, did not even get a clean fax of the agreement, and did not sign a waiver agreeing to lack of independent legal counsel. 20
Williams v. Ormsby (#X) 966 NE2d 255 (Ohio 2012), p. 165 Co-Habitating Couple. Amber Williams and Frederick Ormsby moved into Amber’s house together in May Man Paid for House. Ormsby paid the $310,000 outstanding mortgage on the home. Women Gave Title to Man. Williams gave a quick-claim deed to Ormsby Fight. Amber left the house. Contract #1: March - Agreement to Sell House and Allocate the Proceeds. He gets the first $324,000 with the rest to Amber. Other details were also delineated. Contract #2: June - Two Months Later New Agreement to be “Equal Partners” in House. He signed an agreement giving her ½ interest. This agreement was supported only by a “loving relationship.” 2007 Split. Issue: Is a loving relationship valid consideration? Who gets the money from the house sale? How much? 21
In Re Domestic Partnership of Branam and Beaver (#X) 202 P3d 886 (Or App 2009), p. 170 Co-Habitants. Deal. Randy Beaver gave up his fishing captains license to live with Jan Branam in Oregon on the condition that his name is put on the title to the house. \ Jan Paid $170,000 for House. Jan bought a house with her money and put both names on the title with rights of survivorship. No Discussion on What Happens in Separation. The two did not discuss what happens in a breakup and they broke up and sold the home. Issue: Should Jan be credited the original purchase price in the division of the assets? I.e. should Jan get back the money used to purchase the house first before they split the gains? Yes, here, no for married couples.
23 Consider 8.6, p. 169 – Property Rights for 20 Years of Co-Habitating? Should Jerry Hall get anything after separating from Mick Jagger? Four kids. Consider 8.7, p. 169 Should William hurt have to pay Sandra Jennings? She claimed Hurt promised to support her if she had his child. Violates public policy? Consider 8.8, p. 170 Cocaine Addiction Wife consented the resumption of marital relations on the condition that the husband abstain from the use of … [drugs]. If he does use drugs, she gets everything. Allowed?
Extra Credit – 10 points Bring in a copy of your lease. 24