Chapter 8 Co ownership of Real Estate Co ownership Co ownership 2 owners of a single property Direct co ownership 2 owners on record 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 What are each owner s rights What are each owner s responsibilities What remedies are available when co ownership disputes arise Slide 2 Ch 8 Slide 2 Indirect co ownership General Partnership Limited Partnership Limited Liability Co Corporation Co op Trust What is a legal entity how are these entities persons Who owns the property Who possesses the rights of possession exclusion use enjoyment and disposition What do the individual partners members etc Slide 3 own Ch 8 Slide 3 Forms of direct co ownership Tenants in common Joint tenants with right of survivorship Tenants by the entirety Slide 4 Ch 8 Slide 4 Tenants in common Default form of co ownership deed silent ambiguous Undivided interests in the possession exclusion use benefit no division physically or by time pie chart w out 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 absent specific language in deed May acquire transfer individual interests independently without 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 with other TIC co owners Slide 5 Ch 8 Slide 5 Separate titles divided interests Divided Interest Undivided Interest Slide 6 Ch 8 Slide 6 Joint tenants with right of survivorship Undivided interest in the possession use and benefit like TIC Shared title pie chart w out lines one shared bundle of pencils Right of survivorship JT s interest ends instantly automatically upon death surviving JTs 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 sale Traditionally req d equal respective shares unity of interest CO allows different relative interests Transfers during life inter vivos destroy JT to some extent a k a severing joint tenancy Cf surviving JTs continue as JTs Because of unnatural consequences creation and maintenance of joint tenancy requires strict compliance with requirements traditionally the 4 unities becoming less strict Slide 7 Ch 8 Slide 7 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 Strawman conveying through third party legal fiction Cf Consider 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 Slide 8 Ch 8 Slide 8 Severance of joint tenancy Death of a JT does not sever JT of surviving JTs Divorce of JTs severs JT becomes TIC Lifetime transfers inter vivos severs grantor s JT but may or may not sever other JTs In strict unity states inter vivos transfers sever all JTs In partial severance states CO it only severs grantor s interest Slide 9 Ch 8 Slide 9 Countrywide Home Loans v Reed Facts Deed to 3 JTs only 1 signed DOT lender claims intent was for all interests encumbered by DOT and seeks reformation of DOT TC dismissed lender s claim on SJ however deceased JT s interest subject to DOT Issue Did DOT sever JT and what if any interests subject to the DOT What happens to lienholder interest in one JT s share when he she dies Lien theory state lien lost because 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 Who owns the deceased JT s interest Rationale 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 JT in title theory state severs JT so lien survives death cf only foreclosure of lien prior to death severs JT in lien theory state Slide 10 Ch 8 Slide 10 Tenancy by the entirety Four unities of JT plus a fifth 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 express alternative form of ownership CO No tenancy by the entirety treated as JT Can t be severed unilaterally by spouse because spouses are considered to be one Severed only by mutual consent or divorce dissolution What would the tenancy by entirety circle look like Slide 11 What would the bundle of pencils hands on the pencils look like Ch 8 Slide 11 Creditors rights and co ownership 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 but 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 can t attach a lien only joint 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 Slide 12 Ch 8 Slide 12 Gayton v Kovanda Facts JTs husband QCD to wife judgment against husband husband dies judgment recorded wife sues to quiet title and remove cloud on title Issue Did QCD fail to convey to wife fraudulent but still sever JT and create TIC had to be both for creditor to win 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 QCD 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 Slide 13 Ch 8 Slide 13 Rights obligations of co owners Always