Concurrent Ownership Flashcards
Joint Tenancy (JT)
Characteristics
- Each joint tenant has an equal interest in the whole property.
- Right of Survivorship:
- This is one of the main distinguishing features of the joint tenancy. When one joint tenant dies, the decedent’s interest is extinguished, and the surviving joint tenant(s) split the decedent’s share in the property. Thus, if the decedent tries to devise their portion of the joint tenancy in a will, it will fail.
- Example: A, B and C are joint tenants. C devises her portion of the property to her daughter, D. C dies. D does NOT have an interest in the property. At the moment C died, her 1/3 share was split between A and B, who now own the property 50/50.
- This is one of the main distinguishing features of the joint tenancy. When one joint tenant dies, the decedent’s interest is extinguished, and the surviving joint tenant(s) split the decedent’s share in the property. Thus, if the decedent tries to devise their portion of the joint tenancy in a will, it will fail.
- A deceased joint tenant’s creditor cannot reach the surviving joint tenant’s interest.
Joint Tenancy (JT)
Four Unities
(The Pig is Tenant)
- At common law, a joint tenancy had to have the four unities in order to be valid. The mnemonic is “The Pig Is Tenant.” The four unities are as follows:
- Time: The interests of each joint tenant must be acquired at the same time.
- Possession: Each joint tenant must have an equal right to possess the whole property.
- Interest: All the joint tenants must have identical interests in the property, both as to duration and fractional share.
- Title: All joint tenants must acquire title by the same instrument.
Joint Tenancy (JT)
Creation
- At common law, a tenancy with two or more people was presumed to be a joint tenancy. However, modernly, joint tenancies are disfavored. Today, when two or more tenants take property by conveyance, the court assumes it’s a tenancy in common (see below).
- In order to create a joint tenancy, one must use express language, e.g., “O to A and B as joint tenants with right of survivorship.”
Joint Tenancy (JT)
Severance
A Joint Tenancy can be severed by:
- Partition
- Mutual Agreement
- Inter Vivos Conveyance
- Leases
- Mortgage
- Judicial Sale
- Intentional Killings
Joint Tenancy (JT)
Inter Vivos Conveyance
An inter vivos conveyance by a joint tenant to a third party destroys the joint tenancy as to that tenant ONLY.
Example: A, B, and C are joint tenants. C conveys his interest in the property to D. A and B are still joint tenants, but they are tenants in common with D, who holds an undivided 1/3 interest in the property.
Note that an inter vivos conveyance can be kept secret, i.e., the other joint tenants may not find out about the transfer until after the transferor’s death. The conveyance is still valid and acts as a severance.
Joint Tenancy (JT)
Leases
Theoretically, when one joint tenant leases his interest in the jointly held property, it destroys the unities of interest and possession, and should thereby act as a severance. However, some states choose to find a severance while others hold that the joint tenancy isn’t severed but instead suspended until the lease is over.
Joint Tenancy (JT)
Mortgage
- Whether a mortgage by one joint tenant on their interest effectuates a severance depends on whether the state is a lien theory state or a title theory state.
- Lien Theory (Majority Rule): These states view a mortgage as a lien on title, i.e., to secure payment. They do not consider the execution of a mortgage as a transfer of title to the mortgagee. Therefore, the tenant’s execution of a mortgage does not itself cause a severance.
- Title Theory (Minority Rule): Title theory states view the execution of a mortgage as a transfer of title from the mortgagor to the mortgagee. Thus, since the unity of title is destroyed, the mortgage severs the joint tenancy.
Joint Tenancy (JT)
Judicial Sale
A creditor (including a mortgagee) of a joint tenant can levy execution during the lifetime of the debtor and terminate the joint tenancy. If the debtor joint tenant dies before the creditor is able to secure a judicial sale, the surviving joint tenant is entitled to the property free from the claims of the creditor.
Joint Tenancy (JT)
Intentional Killings
When one co-tenant intentionally kills the other co-tenant, some states allow the felonious joint tenant to hold the property in constructive trust for the deceased joint tenant’s estate. This effectively means that the surviving joint tenant does not profit from the felony but can keep his interest in the property.
Tenancy in Common (TIC)
(Preferred in Modern Law)
Characteristics
- Tenants in common have separate but undivided, interests in the property.
- The interest of each tenant in common is freely alienable by inter vivos and testamentary transfer.
- There is NO right of survivorship in a tenancy in common. A deceased tenant’s interest will pass to their heirs or devisees.
One Unity Required
- A tenancy in common must have only unity of possession, i.e., each tenant is entitled to possess the whole property. Tenants in common can obtain unequal interests by different deeds at different times.
Example: A, B and C are tenants in common. C wills her interest to her friend, D. When C dies, A, B and D will be tenants in common.
Creation of Tenancies in Common
- As stated above, today, by statute, multiple grantees are presumed to take as tenants in common, as are multiple transferees taking by descent.
Language (Modern Law)
Presumed: O “to A, B, and C”
CL specific language required: O “to A, B, and C as tenants in common”
Tenancy by the Entirety (TBE)
Characteristics
- A tenancy by the entirety is a marital estate akin to a joint tenancy between husband and wife. It is not recognized in community property states, but in some common law jurisdictions, it arises presumptively in any conveyance made to a husband and wife.
- Right of Survivorship: There is a right of survivorship, which is the same as the one in a joint tenancy.
Tenancy by the Entirety (TBE)
Severance
- The major distinctions between a joint tenancy and a tenancy by the entirety are that a tenancy by the entirety can ONLY be created between a husband and a wife, and opportunities for severance are limited. A tenancy by the entirety cannot be terminated by involuntary partition. It can only be terminated as follows:
- The death of either spouse;
- Divorce (in most states, this leaves the husband and wife as tenants in common with no right of survivorship);
- Mutual agreement; or
- Execution by a joint creditor of BOTH the husband and the wife. A creditor of one spouse or the other cannot execute, i.e., touch the property.
Tenancy by the Entirety (TBE)
Management
- Most states hold that neither husband nor wife may sell or burden the property without the consent of the other spouse.
- Creditors in most states cannot encumber a debtor spouse’s property while the other spouse is still living. If the debtor spouse dies first, the surviving spouse’s interest supersedes the creditor’s interest. Only if the debtor survives his spouse may the creditor’s claim be satisfied.
Rights and Obligations in Tenancies
Possession
The Unities
- Unity of Time: All JT must acquire their interest at the same time. - JTWROS & TBE
- Unity of Title: All JT must title by the same instrument. - JTWROS & TBE
- Unity of Interest: All JT must have the same quality (trust/legal) and quantum (all share FSD, etc.) - JTWROS & TBE
- Unity of Possession: All JT must have an equal right to possess, use, and enjoy the whole property. - JTWROS & TBE & TIC
- Unity of Person: All JT must be treated as single/same entity (i.e. marriage) - TBE
