Concurrent Interests Unit 2: Cotenant

1
Concurrent InterestsUnit 2 Cotenant Third
Party Problems

• 2009 edition

2
Six Topics

• 1. Types Nature of Ownership Interests
• 2. Creation
• 3. Attributes
• 4. Cotenant Problems
• 5. Third Party Problems
• 6. Termination

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Types Nature of Ownership Interests

• TIC JTWROS TBE
• Nature of fractional individual unitary (held
• Interest share joint in marriage)
• Attributes 1 unity 4 unities 5 unities
• Survivorship N Y
  Y
• Severable? Y Y N
• Partitionable? Y Y
  N

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Cotenant Problems TIC JTWROS - SEVERANCE

• 1. Effect of Severance
• . TIC (cotenant substitution)
• . JTWROS (ends ROS re severed share)
• 2. Acts constituting severance
• . Both - Voluntary conveyance
• . Both - Involuntary creditor execution
• . JT - Straw-man transfer
• . JT - Self transfer - Riddle
• . JT - Acts short of conveyance Harms

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Cotenant Problems TIC JTWROS - PARTITION

• 1. Effect of Partition
• 2. Types (kind/sale/rent)
• 3. Substantive standard
• a. Default method Delfino
• b. Factors favoring sale
• 4. Evidentiary issues
• 5. Special problems Fallout from a Partition
• a. Repairs, improvements, taxes etc

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Cotenant Problems Possession Rent

• 1. Cotenant Possession Rent Spiller
• a. Possession - can be exclusive per cotenant
  agreement
• b. Rent - Not due by possessory cotenant
  unless
• 1) rent agreement or 2) ouster
  (ouster denial of use)
• c. Cotenant ouster cotenant rent fmv of the
  ousted
• 
  tenants possession
• 
  of premises

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Cotenant Problems Adverse Possession

• 2. Cotenant - Adverse Possession
• a. Possession presumed permissive til ouster
• (ouster denial of cotenants title)
• b. Only after clear ouster does adverse
  possession BEGIN

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Cotenant Third Party Problems - Rent

• 2. Third party lease Swartzbaugh
• a. Scenario 1 Cotenant A executes an exclusive
  lease on the premises
• 1. Lease is not void - Cotenant B cannot cancel
  lease (or oust the lessee)
• 2. Lease is valid only to extent of
  transferring the interest of cotenant A to the
  lessee (lease does not bind or impair the legal
  rights of the non-leasing cotenant)
• . Cotenant B has continued possessory rights
• . If ousted, Cotenant B is entitled to rent

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Cotenant Third Party Problems - Rent

• 2. Third party lease Swartzbaugh
• a. Scenario 1 Cotenant A executes an exclusive
  lease on the premises
• Mrss Ss options
• 1. partition
• 2a. co-possess the land with lessee (Samson)
• 2b. attempt to co-possess, if ousted, Mrs S is
  entitled
• to rent fmv of her interest in
  the leased land
• 3. affirm Mr Ss contract and demand ½ of the
  actual
• rent received by Mr S.
• 4. lease her interest in the cotenant
  property to
• Samson at a (considerably higher) rent

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Cotenant Third Party Problems - Rent

• 2. Third party lease Swartzbaugh
• b. Scenario 2 Cotenant A executes an
• non-exclusive lease on the premises (that
  transfers only his interest in the land
• Mrss Ss options
• 1. partition
• 2a. co-possess the land with lessee (Samson)
• 2b. attempt to co-possess, if ousted, Mrs S is
  entitled
• to rent fmv of her interest in
  the leased land
• 3. lease her interest in the cotenant
  property to
• Samson at a (considerably higher) rent

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Cotenant Problems Profits Nonrenewable
Extractions

• 3. Profits (A Prendre) Nonrenewable
  extractions
• a. Example Cotenant A mines and sells sand from
  premises extraction permanently reduces value
  of land
• b. Usual Rule Cotenant must share NET profits
  after deducting her reasonable expenses
  (including her labor).

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Cotenant Problems Profits Renewable Resources

• 4. Other uses - Renewable resources
• a. Cotenant A exclusively uses premises to grow
  corn
• b. Usual rule Cotenant A liable to fellows for
  reasonable rental value of crop land not net
  profit on the crop.

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Cotenant Problems Mortgage Foreclosure

• 5. Mortgage Foreclosure. Scenario A, B C
  jointly mortgage land and later default on loan.
  Bank forecloses on mortgage and sells property at
  a foreclosure sale.
• At the sale, cotenant A buys premises.
• Rule Cotenant purchases property for benefit of
  all cotenants so cotenant A can demand
  contribution from B C.
• Only if B and/or C refuse to contribute, then A
  can eject non-contributing fellow (subject to
  other rights of redemption).

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Cotenant Problems Mortgage/Tax Payments

• 6. Mortgage Interest/Taxes Payments
• a. General Rule each cotenant must pay
  proportionate share
• 1. Cotenant who may pays more entitled to
  reimbursement from fellows

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Cotenant Problems Mortgage/Tax Payments

• 6. Mortgage Interest/Taxes Payments
• a. General Rule each cotenant must pay
  proportionate share
• b. Special Rule for Cotenant in sole possession
• 1. That cotenant responsible for carrying
  charges necessary to keep up property up to
  rental value of property after this level
  reimbursement
• 2. Carrying charges include a) taxes, b)
  mortgage interest c) and some jurs - repairs

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Repairs to Cotenant Property

• Context
• Contribution Demand
• Rule No reimbursement
• allowed
• Logic Repairs voluntary
• (business judgment)

• Contexts
• Accounting Action
• Partition Action
• Rule Reimbursement
• allowed
• Logic Equitable

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Improvements to Cotenant Property

• General Rules
• Context
• Contribution
• Accounting
• Partition
• Rule - No reimbursement allowed
• Logic Improvements voluntary

• Three Special Contexts
• 1. Rent accounting - Improver may get extra
  amount to extent improvement increases rental
  value of property
• 2. Partition in kind Improver may get improved
  parcel
• 3. Partition by sale - improver may get extra
  value attributable to improvement
• Logic avoid unjust enrichment

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A Small Cotenant Problem

• A, B C own a house as JTWROS and the house
  has a bad
• bathroom. Before they sell it, the house
  appraises at 150K.
• Then cotenant A refurbishes the bathroom for 15K.
  The
• house is then reappraised at 160K.
• Q1 If A sues for a contribution from B and C
  how much will A recover?
• Q2 If the house is sold in a partition by sale
  at the reappraisal
• price how should the proceeds be divided?
• A
• B
• C

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A Small Cotenant Problem

• A, B C own a house as JTWROS and the house
  has a bad
• bathroom. Before they sell it, the house
  appraises at 150K.
• Then cotenant A refurbishes the bathroom for 15K.
  The
• house is then reappraised at 160K.
• Q1 If A sues for a contribution from B and C
  how much will A recover? nothing
• Q2 If the house is sold in a partition by sale
  at the reappraisal
• price how should the proceeds be divided?
• A 50K 10K (value - not cost)
• B 50K
• C 50K

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A Larger Cotenant Problem

• A, B and C own Blackacre as JTWROS and they
  jointly
• mortgage the property to M Bank to build a house
  on the
• premises. Initially all reside in the house but
  after recurring
• fights, B and C leave. A is in sole possession
  for a year.
• During this time A 1) cuts down 80 year old
  walnut trees and
• sells the wood (net profit 4.5K), 2 ) plants and
  harvests a crop
• of winter wheat on the back 40 (costs land
  3K, weed seed
• 1K, labor 7K net profits 5K) and 3) adds a sauna
  at his own
• expense (9K). During this time, A pays the
  mortgage (12K)
• and taxes (3K). The annual value of As
  possession is 9K.
• Before the sauna, the house appraises at 270K
  after 275K.
• If A, sues for an accounting and partition by
  sale. What sums
• are A, B and C are entitled to?

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Cotenant Problems

• A B C
• Re As benefits A pays B C
• . Rent for As Possession
• . Tree Harvest
• . Wheat Harvest
  
• Re As burdens - B C each pay A
• . Mortgage Payment
• .Tax Payments
• .Sauna (Improvement)
• Partition

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Cotenant Problems

• A B C
• Re As benefits A pays B C
• . Rent for As Possession
  0 0
• . Tree Harvest
  1.5 1.5 1.5
• . Wheat Harvest
  1 1 1
• Re As burdens - B C each pay A
• . Mortgage Payment
  2 2 2
  
• .Tax Payments (12K 3K 15K carrying
  charges 9K 6K)
• .Sauna (Improvement)
  9 0 0
• Partition
  95 90 90
  

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• End