Concurrent Estates & Leaseholds Flashcards
concurrent estates - general rule & three types
• Only one present possessory interest may exist at a time, but multiple people may share that interest.
• The law recognizes three types of concurrent ownership:
– A. Tenants in Common
– B. Joint Tenants with Right of Survivorship (JTROS)
– C. Tenants by the Entirety
tenants in common - 5 rules (how created; ownership shares; transfer; creditors)
• 1. A tenancy in common is created by any language that does not create a joint tenancy with right of survivorship; if language is ambiguous, the law favors a tenancy in common (unless the conveyance is to a married couple in a tenancy by the entirety state).
– If two or more people inherit property from a decedent who dies intestate, they own as
»> Tenants in Common
– O transfers Blackacre “to my sisters, A and B.” A and B own Blackacre as
»> Tenants in Common
- A tenancy in common is the most favored concurrent estate at law. Each co-tenant owns an individual part with the right to possess 100% of the property (i.e., unity of possession - only unity required), regardless of that tenant’s proportional share or contribution to the purchase price.
- Equal shares are not necessary for a tenancy in common. For example, one tenant may hold a 75% interest and the other a 25% interest. However, unless the grant clearly specifies unequal shares, the law presumes equal shares.
- Each tenant may transfer his or her interest during life and at death because there are no survivorship rights.
- Each tenant’s creditors may attach his or her portion and force a partition and sale.
JTRS - creation; common law rule
• 1. Creation (and continuance) of a JTROS requires the four unities (“TTIP”):
– Unity of Time (interests were acquired at the same time)
– Unity of Title (interests were acquired by the same title—e.g., deed or will)
– Unity of Interest (each tenant holds the same proportional interest—e.g., 50/50 or 1/3-1/3-1/3)
– Unity of Possession (each tenant has the right to possess 100% of the property)
– **if any of the above is missing, it becomes a TIC
• 2. At common law, if an owner of land wished to convert individually-owned land into a JTROS with another person, the owner was required to use a strawperson so as to establish the four unities; BY STATUTE (so follow CL on bar unless there is a statute) in most states, an owner may convert individually-owned land into a JTROS with a direct conveyance (i.e., no strawperson required).
JTRS - specificity of language
• 3. Joint tenancy language must be precise. In some states, it must include “survivorship” language. Joint tenancies are not favored; thus, the granting language must be very clear.
– “to A and B, jointly (or as joint owners)” creates a
• Tenancy in Common
– “to A and B, concurrently and together” creates a
• Tenancy in Common
– “to A and B, as joint tenants with right of survivorship” creates a
• JTROS
– If the MBE refers to co-tenants as “joint tenants” with no survivorship language, the co-tenants own the property as
• JTROS
JTRS - ROS and 7 severance events
- Joint tenants own by the whole and by the part with right of survivorship. When one tenant dies, that tenant’s share passes automatically to the surviving joint tenants, assuming there has been no severance event. (NOT devisable or descendible)
- A JTROS is severed by:
– a. An inter vivos transfer (including secret deeds) by one joint tenant, but only that tenant’s share is severed (no knowledge or consent of other tenants necessary!)
– b. A valid contract of sale by one joint tenant
– c. A voluntary or judicial partition. Tenants in common and joint tenants have a right to a partition (and an accounting). If a judicial partition is sought, the law favors a partition in-kind over a forced sale, but only if an in-kind partition is fair to all parties.
– d. A creditor’s SALE, including a foreclosure sale by a mortgagee or lien creditor.
– e. Intentional and felonious homicide of one joint tenant by another joint tenant (by statute)
– f. Simultaneous deaths of co-tenants (by statute)
– g. one tenant taking out a mortgage in a TITLE THEORY state
JTRS - severance rules (what is it NOT severed by - 4 categories)
• 6. A JTROS is NOT severed by:
– A mortgage by one joint tenant, EXCEPT in a title theory state (minority view)
»> think about it – mortgage only severs when it turns into a valid ppty interest – so for lien theory states, it won’t become a ppty interest (and sever the JT) until it is executed upon; for a title theory state (minority), it becomes a ppty interest immediately, severing the JT
»> ***if the JT with the mortgage dies, his interest will pass to the other JTs NOT SUBJECT TO THE MORTGAGE B/C IT WAS NOT FORECLOSED ON IN TIME
– A lease by one co-tenant (a co-tenant has the right to lease her interest in the property, even over the objection of the other co-tenants; however, a lease by one joint tenant is not considered a severance event)
– A creditor’s lien against one joint tenant’s share that has not yet reached foreclosure sale
– The execution of a will by one joint tenant devising her interest in the joint tenancy (though that devise will likely be void because the other JTs have a ROS)
tenancy by the entirety - general rules (unity; 2 examples; conveyances/mortgages; creditors; severance)
**minority of states!
• 1. A tenancy by the entirety requires the four unities (TTIP) of a JTROS, PLUS one additional unity: unity of person. To satisfy unity of person, the co-tenants must be a validly married couple. In most tenancy by the entirety states, the estate is presumed unless the conveyance clearly provides otherwise. Tenants by the entirety have rights of survivorship.
– In a tenancy by the entirety state, O transfers property “to A and B.” A and B are validly married. What type of co-tenancy has been created?
• Tenancy by the Entirety
– In a tenancy by the entirety state, O transfers property “to A and B as joint tenants with the right of survivorship.” A and B are validly married. What type of co-tenancy has been created?
• Joint Tenancy with Right of Survivorship
- An individual spouse CANNOT convey or mortgage his or her share of a tenancy by the entirety. Such conveyances are VOID
- The creditors of ONE SPOUSE CANNOT attach that spouse’s portion of the tenancy or sever the tenancy, except for the Internal Revenue Service
• 4. A tenancy by the entirety may be SEVERED only by:
– a. Divorce or annulment (severs unity of person, becomes TIC) - NOT JUST SEPARATION
– b. Voluntary partition
– c. Execution of a lien by joint creditors of BOTH SPOUSES
– d. Intentional and felonious homicide of one tenant by the other (by statute)
– e. Simultaneous deaths of co-tenants (by statute)
CT rights and duties - possession; rent; adverse possession
• 1. Possession: all cotenants have the right to possess 100% of the property, regardless of contribution or proportional ownership
– if a tenant wrongfully excludes another tenant, this is considered an “ouster” and courts will order the ousting party to re-open the land (in this case, the live-in tenant is required to pay rent to the ousted tenant IN THE AMOUNT OF THE OUSTED TENANT’S OWNERSHIP INTEREST)
– Co-tenants may informally agree among themselves for one co-tenant to have exclusive possession or for each co-tenant to exclusively possess an equal or unequal portion; such informal agreements do not sever a JTROS
• 2. Rent: absent an ouster, a co-tenant in exclusive possession does not have to pay rent to the other tenants (even if they are absent) and does not have to share profits from ordinary use of the property (e.g., farming, operating a business)
– However, if the tenant is charging rent to a third party, that rent must be shared among all co-tenants based on their proportional shares
»> The same is true for profits derived from a use of the land that reduces its value (e.g., removal of natural resources)
• 3. Adverse Possession: absent an ouster, a co-tenant may not obtain full ownership of the property by adverse possession because there is no “adverse” or “hostile” possession
CT rights and duties - expenses; repairs; improvements
• 4. Expenses: each co-tenant must pay his or her proportional share of taxes and mortgage payments (i.e. his/her percentage of ownership)
»> **a tenant in sole possession may receive reimbursement only for the amount that exceeds the net income from the property or the property’s fair rental value – commonly tested
• 5. Repairs: each co-tenant must pay his or her proportional share of repairs (i.e. his/her percentage of ownership)
»> **a tenant in sole possession may receive reimbursement only for the amount that exceeds the net income from the property or the property’s fair rental value – commonly tested
»> in some jurisdictions, a co-tenant must notify the other co-tenants before making necessary repairs
»> if a co-tenant pays more than her proportional share of expenses or repairs, that co-tenant may sue the other co-tenants for contribution
• 6. Improvements: a co-tenant has no right to contribution for “improvements,” but at partition the improving co-tenant may be entitled to a “credit” (i.e., a larger portion) representing the increased value attributable to the improvements
CT rights and duties - waste; duty of fair dealing
• 7. Waste: a co-tenant is liable for the same types of waste as a life tenant; an action for waste may be brought during the tenancy
• 8. Duty of Fair Dealing: Co-tenants are not fiduciaries, but they are required to share opportunities on the land
– thus, if one co-tenant re-acquires the land in a tax or foreclosure sale, the other tenant must be given the opportunity to reacquire his or her proportional share by paying an appropriate portion of the purchase price within a reasonable time
leaseholds - what are they
• A leasehold is a present possessory estate. To qualify as a lease, the lessee must have the right to exclusive possession of a defined area. This is what distinguishes a lease from a license, an easement, or a profit.
leaseholds - tenancy for years (duration; notice; writing)
- a. Duration: a tenancy for any fixed period of time; in such leases, the termination date is known by both parties at commencement of the lease
- b. Notice to Terminate: Is not required by law, because the termination date is known by all parties at commencement (**but contract law might require a term date for leases as contracts)
• c. Is a Writing Required? Yes, but only if the term of the lease is for more than one year from the date of the lease agreement
– the Restatement uses the “date of possession” for purposes of the SOF
leaseholds - periodic tenancy (what is it; different ways it can be created)
• a. duration: a lease based on successive, continuous intervals that lasts until it is terminated: e.g., week-to-week, month-to-month, year-to-year
– i. may be created by express language (“To tenant for month-to-month”) or
– ii. by implication or construction:
• if a lease is silent as to its term, but rent is paid on regular intervals (e.g., monthly), this creates an implied (e.g., month-to-month) periodic tenancy
• if an oral lease has a term of more than one year from the date of the agreement (and thus is unenforceable under the SOF), but the tenant makes periodic payments (e.g., monthly rent), an implied (e.g., month-to-month) periodic tenancy will exist
»> prior to acceptance of the first rent payment by the landlord, the parties have a tenancy at will
• if the landlord allows the tenant to HOLDOVER after the end of a lease (rather than evict) and accepts additional rent payments, an implied periodic tenancy arises
> > > ***if the original lease called for annual rent (EVEN IF PAYABLE IN MONTHLY INSTALLMENTS), the new tenancy is probably a year-to-year periodic tenancy (year-to-year maximum b/c of statute of frauds) - ONLY FOR COMMERCIAL LEASES (for residential, we stick with month to month)
> > > if the original lease called for monthly rent, the new tenancy is a month-to-month periodic tenancy
> > > landlord is entitled to raised rent in that situation SO LONG AS HE NOTIFIES THE TENANT of the higher rent BEFORE the expiration of the old lease
leaseholds - periodic tenancy (notice to terminate)
• b. Notice: notice to terminate is required (and probably must be in writing); unless otherwise agreed by the parties, the notice period must be equal to at least one rent “period” (e.g., one month for a month-to-month), except for year-to-year tenancies, which require only six months’ notice; the tenancy must end at the conclusion of a rent period
– L and T enter into a month-to-month tenancy on March 1. On May 15, T notifies L that she (T) wishes to terminate the lease as soon as possible. What is the earliest date T can legally terminate the lease?
• June 30
– Failure to provide proper notice constitutes an automatic renewal
leaseholds - tenancy at will (duration; notice; automatic termination)
– a. duration: there is no fixed duration; with some minor exceptions, a tenancy at will may be created only by an EXPRESS AGREEMENT of the parties
• If the agreement is silent as to duration and periodic rent payments are made and accepted by the landlord, this will create an
»> Implied periodic tenancy
• “To T as long as L and T desire” creates a
»> Tenancy at will
• “To T until L sells the premises” creates a
»> Tenancy at will
– b. notice: either party may terminate upon “reasonable” notice (under common law, no advance notice was required)
• to qualify as a tenancy at will, both parties must have right to terminate at will
• if the lease gives only the landlord the power to terminate, the tenant will have (as a matter of law) an “implied” power of termination
– c. tenancies at will terminate automatically if either party dies or the tenant attempts to assign her interest in the lease (in most states, a sublease by the tenant will not terminate a tenancy at will)