THE LAW OF PROPERTY SUPPLEMENTAL READINGS Class 12 Professor Robert T. Farley, JD/LLM 81 CHAPTER 4 CONCURRENT OWNERSHIP AND MARITAL INTERESTS ChapterScope -------------------­ This chapter examines various forms of concurrent ownership of property, marital property interests, and the rights and obligations of co-owners. Here are the most important points in this chapter. ■ All types of property may be owned simultaneously by multiple people, a condition that invites conflict among co-owners. While co-owners are generally free to specify the terms of their relationship, law must provide some default rules that mediate conflict. ■ The principal forms of concurrent ownership are tenancy in common, joint tenancy, and tenancy by the entirety. ■ Tenancy in common is the modern default position. Unless a grant indicates a contrary inten­ tion, tenancy in common results froma grant to two or more persons. Tenants in common own separate but undivided interests in the whole of the property. ■ Joint tenancy differsfrom tenancy in common in that each joint tenant has an undivided interest in a single unit. The consequence is that each joint tenant has a right of survivorship - when a joint tenant dies his or her interest dies with him and the remaining joint tenant or tenants own it all. When there are two joint tenants this is an effective way to avoid probate. ■ At common law a joint tenancy was possible only if the joint tenants had unity of interest, time, title, and possession. These requirements have been relaxed by statute. A corollary to the fourunities was that the destructionof any unity severed the joint tenancy, producing a tenancy in common instead. Today, a conveyance by one joint tenant will sever the joint tenancy. ■ Tenancy by the entirety is a form of joint tenancy limited to married couples, but unlike the joint tenancy the survivorship right is indestructible - it may not be destroyed by the uni­ lateral act of a single owner. ■ Two different forms of marital property exist: Community property or separate property. ■ Community property, a civil law institution recognized in nine states, treats all property acquired during marriage(except gifts and inheritances) as owned by the marital community. Each marital partner has an equal interest in the property of the marital community. ■ Separate property, the form of marital property recognized by the common law, holds that property acquired during marriage is owned by the marital partner who acquired it. This "his­ is-his" and "hers-is-hers" rule is tempered at divorce by equitable distribution laws that require courts to ignore title to achieve equity in property division, and at death by spousal elective share statutes that permit a surviving spouse to take some portion of the deceased spouse's property, even if the deceased spouse's will is to the contrary. 82 Chapter 4 CONCURRENT OWNERSHIP AND MARITAL INTERESTS ■ Unmarried cohabitants may agree to share property but cannot by agreement acquire any of the status benefits of marriage. In Vermont and Hawaii, same-sex partners may obtain the status benefitsof marriage by civil ceremony. ■ Every co-owner except tenants by the entirety have the right at any time to demand partition of the property. Divorce is the effective method of partition for tenants by the entirety. ■ Partition is in-kind (physical division) unless that is impracticable or would not be in the best interests of all co-owners, in which case partition is by sale and division of the sale proceeds. ■ Each co-owner is entitled to possession of the whole, but when one co-owner actually possesses the entire propertycourts disagree over whether the tenant-in-possession must pay fairrent to the tenants not in possession. ■ Most courts hold that unless the tenant-in-possession has ousted the other tenants there is no duty to pay rent. Ouster consists of either refusinga co-owner's demand to share possession or unequivocally denying that one's co-owner is really an owner. ■ Some courts hold that a co-owner in sole possession has an obligation to pay fair rent to the other co-owners regardless of whether there has been ouster. ■ Co-owners must account to each other for the rents they have received from third parties. Co­ owners are liable to each other for their proportionate share of the costs of ownership, but not for improvements. An improving co-owner can recover the value added by the improvement only upon partition or sale. ■ Condominiums and cooperative apartment corporations are unique forms of co-ownership. Con­ dominium owners have title to their unit and own the common areas of the development as tenants in common. Cooperative apartment owners actually own shares in the corporation that owns the building and lease their apartments from the corporation, thus making the shareholder-tenants extremely financially interdependent. I. FORMS OF CONCURRENT OWNERSHIP A. Introduction: When the same interest in propertyis owned by more than one person at the same time there is concurrentownership. There are at least five forms of concurrent ownership recog­ nized by the common law, only three of which arestudied in the typical Propertycourse: tenancy in common, joint tenancy, and tenancy by the entirety. Of the remaining two, co-parceny is extinct in the United States and tenancy in partnership is usually covered in courses on Business Associations. This chapter also covers marital interests, only some of which are forms of con­ current ownership. B. Tenancy in common: 1. Nature of tenancy in common: Tenants in common own separate but undivided interests in the same interest in property. Conceptually, each tenant in common owns the entire property,but must necessarilyshare that ownership with the other tenants in common. Two people who own a sailboat as tenants in common each own a fraction of the entireboat, and they are each entitled to sail it, but they cannot prevent the other from doing so. Much of the law of concurrent FORMS OF CONCURRENT OWNERSHIP 83 ownership is designed to mediate the friction that can arise fromco-ownership of the same arti­ cle. A tenancy in common interest may be alienated, devised, or inherited separately from the other tenancy in common interests. Unlike the joint tenancy, there are no survivorship rights among tenants in common. Example: Tim conveys Roundhouse to Ezra and Geraldo, as tenants in common. If Ezra conveys his interest in Roundhouse to Newt, Geraldo and Newt are tenants in common. If Geraldo dies, devising his interest in Roundhouse to Maxine, Newt and Maxine are tenants in common. 2. Presumption of tenancy in common: By statute or judicial decision, a conveyance of real property to two or more persons who are not married to each other is presumed to convey a tenancy in common. 11lat presumption is rebuttable. The best evidence rebutting it is a clear statement in the conveyance of the alternative form of co-ownership (e.g., joint tenancy). Property that passes by intestate succession to two or more heirs is always taken as tenants in common. 3. Rights to possession: Each tenant in common is entitled to possess the entire property. In practice, this means that a tenant in common can possess the entire property if no other cotenant objects. Tenants in common may, and often do, regulate their rights to the property by agreement among themselves. But if they do not, and disagreement erupts, their rights and obligations are governed by "default" rules of law. See section II, below. 4. Uneven shares and different estates: Tenants in common may own unequal shares and differentestates. Example: Able, Baker, and Cassie own Blackacre, in equal shares, as tenants in common. Able conveys his interest to Baker. Baker and Cassie are still tenants in common, but Baker has a two-thirds share and Cassie a one-third share. Cassie conveys her interest in Blackacre to Sophie forlife, then to Andrea and her heirs. Baker is now a tenant in common with Sophie (as to possession) and with Andrea (as to her remainder). There is a rebuttable presumption that tenants in commonhave equal shares in the property. The best evidence rebutting this presumption is a clear statement in the conveyance creating the tenancy in common (e.g., "O conveys a two-thirds share to A, and one-third share to B, as tenants in common"), but evidence extrinsicto the conveyance (e.g., relative contributions of purchase cost or carrying costs) is germane to this issue. C. Joint tenancy: 1. Nature of joint tenancy: Joint tenants own an undivided share in the same interest in either real or personal property, but the surviving joint tenant owns the entire estate. This right of survivorship is the hallmark of joint tenancy, setting it apart from tenancy in common. Any number of people may be joint tenants. Upon the death of one joint tenant, the share held by the remaining joint tenants increases proportionately. Example: Alan, Betty, and Charlesown equal undivided interests in Blackacre as joint tenants. Alan dies, leaving all his property by will to David. Betty and Charles now own equal undivided interests in Blackacre. Alan's will is ineffectiveto transferhis interest in Blackacre because the nature of joint tenancy is that his interest expires at his death. Charles then dies intestate, leaving Emmy as his heir. Betty now owns the entirety ofBlackacre by herself. Charles's estate has no interest in Blackacre. When a joint tenant dies, his entire interest dies with him. 84 Chapter 4 CONCURRENT OWNERSHIP AND MARITAL INTERESTS A joint tenancy may only be created by an inter vivos conveyance or a will. Property acquired by multiple heirs through intestate succession is taken as tenants in common. a. The theory of joint tenancy: Common law conceived of joint tenants as bound together as a single owner.