Real Estate Law Section 2 CH 8 Co ownership of Real Estate Co ownership Co ownership 2 owners of a single property o o Direct co ownership 2 owners on recorded title Indirect co ownership 1 record owner in the form of some legal entity 2 owners at the entity level Questions Issues How can multiple owners hold title o o What are the owner s rights o What are each owner s responsibilities o What remedies are available when co ownership disputes arise know difference between direct in direct interests separate titles divided interests Direct co ownership o Tenants in Common TIC Default form of co ownership deed silent ambiguous Undivided interests in the possession exclusion use benefit no division physical or by time pie chart w o lines Separate titles pie chart w lines separate bundles of pencils Financial ownership interests per respective shares rents sale Relative shares may be any combination Presumed 50 50 if absent specific language in deed May acquire transfer individual interests independently w o disturbing TIC Different sources times and relative shares all okay Full right power of disposition both inter vivos during life and upon death testamentary Grantees heirs hold title as TIC w other TIC co owners o Joint Tenants with right of survivorship Undivided interests in the possession use benefit like TIC Shared title pie chart w out lines one shared bundle of pencils Right of survivorship Joint tenant s interest ends instantly automatically upon death surviving joint tenants continue as JTs in same relative shares Can a JT murder her fellow JT and get the property Financial interests rights per respective shares rents sales Traditionally required equal respective shares unity of interest CO allows different relative interests Transfers during life inter vivos destroy joint tenancy to some extent a k a severing joint tenancy Cf surviving JTs continue as JTs Because of unnatural consequences creaton and maintenance of joint tenancy requires strict compliance with requirements traditionally the 4 unities becoming less strict Requirements for Joint Tenancy Intent must be apparent in the grant as joint tenants and or with right of survivorship Four unities of joint tenancy Time same time and instrument o o Strawman conveying through 3rd party legal fiction Cf 8 1 CO direct transfers to oneself okay to create destroy JT Title same grantor bundle Interest same relative ownership interests Cf CO Possession no division physically or by time Once formed easily severed by breaking any unity Severance of Joint Tenancy of a JT does not sever JT of surviving joint tenants of JTs severs JT becomes TIC Death Divorce Lifetime transfers inter vivos severs grantor s JT but may or may not sever other joint tenants In strict unity states inter vivos transfers severe all JTs In partial severance states CO it only severs grantor s interests Tenancy by the Entirety Four unities of JT plus a 5th unity unity of person spouses one person not 50 50 one Legally married per state law Right of survivorship in spouse Presumed form of co ownership for spouses in some states absent expressed alternative form of ownership CO No tenancy by the entirety treated as JT Cant be severed unilaterally by spouse b c spouses are considered to be one Severed only by mutual consent or divorce dissolution Countrywide Home Loans v Reed What would the tenancy by entirety circle look like What would the bundle of pencils hands on the pencils look like Deed to 3 joint tenants only 1 signed Deed of Trust leader claims intent was for all interests Facts encumbered by DOT and seeks reformation of DOT TC dismissed leader s claim on SJ however deceased JTs interest subject to DOT Issues Did DOT sever JT and what if any interests subject to the DOT o What happens to lienholder interest in one JT s share when he she dies Lien Theory state lien lost b c mortgage lien did not sever JT Title Theory state CO JT severed by unilateral DOT and lien survives Holding DOT severed JT and interest of obligor subject to DOT o Who owns the deceased JT s interest Rational DOT executed by one JT severed JT title theory state husband wife owned as Tenants by entirety So 50 50 TIC interests and so lien survives but limited to interest of the signor on the note DOT Rule of Law Executing a DOT by joint tenancy in title theory state severs JT so lien survives death Cf only foreclosure of lien prior to death severs JT in lien theory state lien ends upon death If lien severed the joint tenancy then the lien stays with property Creditors rights and co ownership o o o Creditors of all co owners not affected by form of co ownership Creditors of a tenant in common separate titles lien on the debtor s TIC interest and survives death Creditors of a joint tenant shared title Lien theory states Lien does not sever JT upon death lien ends just as interest ends Foreclosure prior to death of debtor JT severs JT Title theory states Granting DOT by less than all JTs severs JT partially fully Creditors of one spouse in tenancy by the entirety Creditor of one spouse cant attach a lien only marital debts Key for creditors get all co owners signatures or risk losing collateral rights remedies Even spouses not in title more on community property later JTs husband quit claim deed to wife judgment against husband husband dies Facts judgment recorded wife sues to quiet title and remove cloud on title Issue Common had to be both for creditor to win Did quit claim deed fail to convey to wife fraudulent but still sever JT and create Tenancy in Uniform Fraudulent Transfer Act UFTA Not a good faith purchaser w out notice fair value Holding rationale No Wife owned the property either 1 solely prior to her husband s death quit claim deed or 2 solely upon his death as surviving JT both prior to attachment of judgment lien Rule of Law JT can be severed when a JT voluntarily involuntarily destroys any of the four unities however a fraudulent transfer sets aside the transfer altogether so it does not sever any unity JT quiet title action way to clean up title could on title someone who appears to have interests but in reality they do not Gayton v Kovanda o o o o Rights obligations of co owners Always undivided right to possession regardless of form o Co owner in possession doesn t owe others unless excluded Profits proceeds rent sale based on relative ownership o o Provided interest conveyed includes all co owner s interests Relative amounts paid upon purchase is evidence of