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Concurrent Ownership and Marital Interests

By Rose Foster,2014-04-07 21:51
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Concurrent Ownership and Marital Interests

    Concurrent Ownership and Marital Interests

    ; Tenancy in common:

    o undivided but fractional interests (A owns 20% and B 80%, but A’s is not cordoned off.

    o right to occupy whole

    ; No duty to pay rent to co-tenants exists unless there is a written agreement or ouster.

    Ouster requires denial of equal use and enjoyment to co-tenant. Refusal of demand that

    co-tenant in possession vacate or pay rent is not enough.(Spiller)

    o control of where interest goes upon death.

    o Severance:

    ; Right to unilaterally sever.

    ; Severance by written agreement, conveyance, or partition.

    ; Partition in kind is preferred to partition by sale, except where

    impracticable/inequitable and interests of property owners are better served by

    sale.(Delfino)

    ; Joint Tenancy with right of survivorship:

    o historically required unity of time, title, interests, and possession.

    o Created by conveying to parties jointly, a court may require specific language to create.

    Presumption is for a tenancy in common because parties can control their interests at death.

    o Theoretically all parties have 100% interest and right to occupy whole.

    ; JT may execute lease without consent of JT, Co-tenant cannot cancel lease executed by

    co-tenant but may demand rent. (Swartzbaugh)

    o Parties do not have the right to control where interest goes at death unless they sever.

    Whoever dies last gets the whole.

    o Severance:

    ; May be unilaterally severed without use of intermediary/strawman. Party may sever by

    conveying it to to themselves. (Riddle). rd; Severance by written agreement, transfer to 3 party (can be involuntary, i.e. attachment),

    partition (sale and in-kind). Becomes tenancy in common upon severance.

    ; Presumption that when conveyed interests are 50/50.

    ; Mortgages generally do not sever.(Harms/lien theory: unity of title not destroyed)

    ; Tenancy by the entirety:

    o Same as JT/ROS but parties are married at time of conveyance.

    o No unilateral severance- estate is indivisible except by joint action of sposes, no unilateral

    severance or conveyance.

    o Primary benefit is protection from creditors of one spouse.

    ; No lien can attach to T/E property for separate debts of one spouse.(Sawada)

    ; Policy is to enable families to use T/E property for credit. If liens can attach

    this is difficult. Creditors can protect themselves by examining how property is

    held, but this is not true of tort creditors. Perhaps the better rule would be to

    allow tort creditors to reach these assets.

    ; Marital Property: Essence of property is it’s exchangeable value, thus educational degrees earned

    during marriage with financial support of spouse are not property subject to division.(Graham) However, courts have taken a more broad view of marital property considering the nature and extent

    of the contribution of the claimant spouse, such that the career/status achieved with assistance of the claimant spouse can be subject to division.(Elkus) Non-marital relationships can give rise to quasi-marital property division/“palimony” so long as the relationship is not meretricious.(Marvin) General move from status-based system of division to consideration of claimant spouse’s contribution.

    Acquiring interests in Property

    First Possession

    ; 3 ways of acquiring property rights where none previously existed:

    o Discovery(Johnson v. McIntosh): possession is proof because of ease of administration.

    Discovery goes to possession.

    o Capture: Pursuit alone is not sufficient, no rights accrue until possession results(Pierson).

    Competing theory rewards labor exerted by claimaint.

    ; Where intent to capture is clear and immediate possession is impossible/impratical,

    Pierson rule is not applicable. Common usages of area and industry custom

    prevail(Ghen).

    o Creation: Does not give owner right to bar imitation where no statutory protection

    exists.(Doris Silk)

    Drawing lines on what can be possessed, alienated, and controlled:

    o Property rights are limited to the extent that a party cannot claim ownership of property:

    ; Party must own the property in question to sustain a claim of conversion. (Moore)

    ; Party has a general right to exclude, but this right is not absolute. The bundle of

    rights does not include an absolute right to exclude. This right may not extend to barring

    of governmental services. Public policy demands that owner allow parties on the land to

    tend to the needs of those owner allows on land.(State v. Shack)

    o The courts may draw these lines by disregarding traditional property law and looking at

    relevant policy considerations instead:

    ; Do problems arise if we start to recognize amorphous types of property because of our

    system of evidencing property ownership?

    ; Example: In Moore, if scientists down the line could be liable for conversion,

    would they have to essentially search title?

    ; Would recognizing ownership in previously unrecognized forms of property injure

    economic interests that rely on the ability to take and control forms of property without

    competing claims?

    ; To what extent might attaching traditional property rights to such things hinder research?

    ; Should the courts protect these interests because they can best realize the highest value

    for the property?

    ; To what extent should the law bar individuals from alienating such property? Is such

    prohibition paternalistic?

    ; On the other hand, shouldn’t the party with the most direct link to the property have at

    least the same rights as those who later use it? How can we restrict property for use by

    some and later remove those restrictions for subsequent owners? (Moore dissent)

    ; Pruning away some rights from the bundle does not entirely destroy title.

    Subsequent Possession

    o Acquisition by find. Presumption with possessor to avoid self-help, administrative convenience,

    facilitation of loans, and consistency with expectations. Balancing interests of rewarding honest

    finders and facilitating return of property to true owners. Finder has rights against all others

    but true owner.(Hannah v. Peel)

    o Adverse Possession: 20 year statute of limitations. Elements:

    ; Actual and exclusive

    ; Claimant must have actual possession of property and not share use with the

    owner or other. Claimant must intend to keep others out.

    ; Substantial enclosure or cultivation/improvement. Must be more than minor,

    incidental or temporary conditions.(Lutz)

    ; Claim is limited to area actually occupied

    ; Open and notorious

    ; True owner must have reasonable opportunity to know.

    ; Minor encroachments do not put owner on notice, owner cannot be expected

    to have knowledge of encroachments only discernible by survey. (Mannillo)

; Under claim of title

    ; AP claimant must be on property not under permission of true owner/hostile

    claim.

    ; Claimant is acting with intent to deprive owner of his rights. Most states do not

    require that claimaint actually believe that he holds title.

    ; Most courts recognize that if occupancy is not “hostile” but by mistake (boundary

    dispute/minor encroachment), lack of intent is not fatal.(Mannillo)

    ; “Acting like the owner” i.e. major improvements, executing instruments such as

    leases or deeds. Demonstrates intent to deprive owner of his rights

    ; Color of Title: where a written instrument appears to give title but does not, the

    grantee may claim ownership under theory of “constructive” adverse possession,

    wherein they have right to entire property described in the deed ; Continuous possession

    ; Need not be unbroken so long as it is consistent with character of the

    land.(Kunto, summer home need only be occupied in the summer)

    ; Tacking: claimant AP period added to that of previous possessor. Generally

    allowed only where there is privity between the parties, deed between AP

    claimant and previous possessors furnishes privity. Privity rule aims at barring

    AP claim arising out of a succession of trespasses.(Kunto)

    ; Policy behind AP:

    ; Certainty of title and marketability of land

    ; Rewarding productive use of land, punishing neglect

    ; No AP claims against government because benefit of lands accrues to all and

    monitoring would be too burdensome.

    ; Generally personal property/chattels is not subject to claim by adverse possession

    because it cannot be held open and notoriously. True owners in actions for replevin of

    personal property using due-diligence in efforts to retrieve property where possessor

    remains unknown preserves tolling of statute of limitations under the discovery rule,

    wherein the cause of action accrues and SOL runs at discovery rather than when loss

    becomes apparent.(O’Keefe)

    Gifts

    ; Elements:

    o Intent

    ; Must be a present intent to gift

    o Delivery

    ; 3 modes of delivery:

    ; manual/physical

    ; constructive (key to safe deposit box)

    ; symbolic (gift of some item symbolizing some other item)

    ; Delivery evidences intent

    ; Delivery must be as perfect as the nature of the gift allows. If it can be

    physically delivered, lack of physical delivery may operate against

    donee.(Newman)

    ; Policy behind delivery requirement is prevention of fraud. Therefore if

    constructive or symbolic delivery is better evidence of intent the exception may

    swallow the rule because symbolic/constructive delivery by letter may be

    better evidence of donor intent than possession of property.(Gruen)

    ; Non-perfected delivery not fatal if it is consistent with nature of gift, e.g.

    where father gifts son remainder interest in painting reserving life estate for

    himself, physical delivery is not needed.(Gruen)

    o Acceptance

    ; Presumption for donee

    ; Types of gifts:

    o Donation Causa Mortis: made in contemplation of death. Problem is that it looks like

    an invalid will substitute.

    o Inter-vivos: made during lifetime.

    Estates: Present and Future Interests

Present Interest Future Interest

    Fee Simple “I give my house to X” None

    Fee Tail “I give to X and heirs of his Reversion to grantor

    body”

    Life Estate “I give to X for his life Reversion to grantor or remainder to third

    party. Remainder may be vested or

    contingent.

    Fee simple determinable “I give to X so Possibility of reverter: automatic reversion

    long as he does Y” or “I give to X for use to grantor upon rdonly as Y” noncompliance.(Mahrenholz) 3 party

    executory interest.(Woburn) rdRight of re-entry. 3 party executory Fee simple subject to condition

    subsequent “I give to X upon condition interest.

    that he does Y” or “I give to X provided

    that Y” or “I give to X but if Y, the land

    shall subject to right of re-entry”

    May refer to covenant or agreement: “in

    case of breach” or “if this agreement is

    broken

Fee Simple Absolute granting the whole bundle of sticks.

    ; Absolute ownership

    ; Potentially infinite duration

    ; No restrictions

    ; Full right to alienate sell it, convey it during life or at death, if owner of fee simple absolute dies

    without a will, it passes according to state’s intestacy laws.

    ; Presumption of passage in fee unless there is clear intent to do otherwise.(White) Policy behind

    this is administrative convenience, certainty of title, and marketablility. Life Estates:

    ; Conveyance of Life Estate one who holds a life estate can sell it to another party, but the grantee

    only has what the life tenant originally had. EXAMPLE: A has a life estate in Z. A sells to B his

    interest in Z. B only has a life estate interest in Z as measured by A’s life. So, when A dies, B no

    longer has an interest in Z.

    ; Where magic words are lacking, despite intent otherwise, there is a presumption for passage in fee

    rather than as a life estate

    o Presumption against intestacy-remainder passes back to grantor’s estate and the courts have

    to administer

    ; Problems of life estates: tensions between life-tenant and remaindermen. Life tenant has duty to

    protect against waste. Court can force sale of land where it is necessary to prevent waste, income

    from land is insufficient to pay taxes and maintain, devaluation of future interests. This rule is

    countered by the rule that the best interests of all parties must be served by sale.(Baker)

    o Because of problems with life estates, trusts are preferable

Defeasible Fees:

; FSD used where grantor intends grantee to have property only so long as grantee needs it. It is a

    limited grant.

    o Some courts even require express reservation of right to re-entry.

    ; FSSCS used where grantor intends to compel compliance with condition under penalty of

    forfeiture. It is an absolute grant to which a condition is appended.

    ; Generally future interests are alienable and devisable.

    ; Where there is question of whether the grantor intended a FSD or FSSCS, there is a presumption for

    the FSSCS because of the harshness of an automatic forfeiture affected by reverter. (Mahrenholz) ; Fee simple subject to executory interest:

    o Executory interests are created In FSD and FSSCS when possibility of reverter or right of re-rdentry are designated to 3 parties instead of being kept by the grantor.

    ; In FSD, general rule that eminent domain taking destroys grantor’s reversionary interest. Where

    condition under FSD is violated by eminent domain taking and grant was donative, reversionary

    interest of grantor survives, grantor is entitled to the difference between the unrestricted value of the

    taken land and the value of the land under the condition. The court is concerned with preventing a

    windfall here.(Ink)

    ; Trusts: In a trust, a party may place legal title with trustee while placing equitable/beneficial title

    with beneficiary. A party may restrict the anticipatory alienation and attachment of the trust

    property, in what is known as a “spendthrift trust.”(Broadway)

; Rule Against Perpetuities:

    o Do not apply to vested remainders or future interests in the grantor

    o Only applies to contingent remainders (arise in life estates-Example: remainder goes to

    children of life tenant or grantors heirs if she doesn’t have any children Weedon) and rdexecutory interests (3 party holds grantor’s right of reverter.) Does not apply to future

    interests in grantor or vested interests in third party.

    o Common law rule: interest must vest or fail within a life in being plus 21 years.

    Interests are invalidated at time of writing if vesting/failure cannot be proven at time of

    writing.

    o Property interests flowing from residuary clauses, as future interests in the grantor, are not

    violative of the rule against perpetuities.(Brown) This is an example of a “saving clause.”

    o USRAP: Imposes 90 year waiting period, “wait and see” approach under which a devise in

    violation of common law rule does not invalidate interest at time of writing.

    o Policy is to encourage security of title and marketability, prevent preservation of dynastic

    wealth

    Landlord Tenant Law

    ; Leases:

    o Term of years: Fixed period. “From 9/1/02 to 8/31/03” or “for one year.” Notice of

    termination by either party is not necessary

    o Periodic tenancy: Stipulated month to month or with fixed amount due every month.

    Payment extends agreement for period that payment is to cover. Either party may terminate; if

    lease is month to month, typically one month’s notice is sufficient.

    o Tenancy at will: No fixed period. “For as long as X shall please.” In general such leases are

    terminable by landlord or tenant.

    ; If a lease “for so long as the lessee pleases does not stipulate that it is terminable upon

    the lessor’s death, may create determinable life estate in lessee.(Garner) However, life

    estates do not typically spring from commercial relationships between landlord and

    tenant, and the law disfavors indefinite leases for policy reasons of respecting lessor

    intent and marketability.

    o Tenancy at sufferance/holdover: Interim period between end of term of years and removal

    from premises.

    ; Landlord may elect to hold tenant for another term or evict, and is bound by this choice.

    Where landlord elects to treat holdover as trespasser by rejecting lessees offer of periodic

    tenancy but does not pursue eviction and accepts tendered rent, he agrees to periodic

    tenancy, and cannot then hold tenants to new lease at original terms of expired lease,

    as it would be unduly burdensome on tenants.(Crechale)

    ; Rights and duties of landlords and tenants:

    o Tenant has duty against waste

    o A landlord has duty to mitigate losses resulting from a tenant’s default; landlord must make

    reasonable efforts to re-let premises by treating apartment as part of his vacant stock. Landlord

    carries burden of showing that he made reasonable efforts, including showing apartment,

    placing advertisements and “for rent” signs, hiring a realtor, but is not required to lease to

    unsuitable tenants, accept less than fair market value, or alter his obligations under pre-existing

    lease.(Sommer)

    ; Landlord is cheaper cost avoider here, and the duty to mitigate works to encourage

    keeping property in good condition, increases housing availability o Tenant right of quiet enjoyment is the right to be left free from competing claims for the

    property, free in his possession and use of property from the disturbance and interference by

    landlord’s acts or omissions.

    ; Tenant remedies:

    ; Constructive eviction is an affirmative defense for a tenant who defaults by

    reason of landlord’s impairment of his possession and use. Generally a tenant is

    required to abandon the property within a reasonable time after the right comes

    into existence. However, because vacation of the premises is a drastic measure

    and may be impossible or difficult for the tenant, delay in and of itself is not

    unreasonable.(Reste)

    o Commercial leases may contain an implied warranty against latent defects or an implied

    warranty of fitness for agreed upon use. A landlord’s failure to address material defects in

    property brought to his attention by the tenant may constitute a constructive

    eviction.(Reste) Note: because inequality of bargaining power in commercial leases is

    theoretically less than in residential leases, these warranties are less than the implied

    warranty of habitability that is found in residential leases.

    o Implied Warranty of Habitability:

    ; In residential leases there is an implied warranty of habitability, wherein the landlord

    has a duty to maintain the premises in a safe and sanitary condition, such that he must

    remedy defects impacting the health and safety of the tenant.

    ; Tenant cannot waive

    ; Tenant remedies for breach of IWH:

    o A tenant must (1)give notice of defect and allow landlord a reasonable

    amount of time to remedy the defect

    o and (2) show that the defect affected habitability and existed at the time

    that rent was withheld.

    o In such cases a tenant need not abandon the premises:

    ; may withhold payment of future rent, seek damages in the amount

    of rent already paid, and deduct expenses for repairs from future

    rent.(Hilder)

    ; Policy Reasons/Rationale for modern rule of IWH:

    There are several reasons why an IWH makes sense: 1) A modern, urban resident does not have the time to

    inspect the premises and put them in habitable conditions. 2) LL knows more about the defects of his

    premises and is in a better position to remedy them. 3) Tenants have much less bargaining power than LLs.

    4) Habitable living conditions are more likely to ensure good health than uninhabitable conditions. Thus, what’s beneficial to the health one individual is beneficial to the health of society as a whole.

Criticisms to the IWH:

    Landlords might argue that this duty will inevitable drive up rents on property and, thus, make the cost of

    renting too expensive for many individuals and families. Also, could discourage investment in realty property, as well as drive existing landlords out of business. As a consequence, there would actually be a shortage of

    suitable housing to go around.

Evolution of Property Law to explain LL/T relationship changes:

    The LL/T relationship is now viewed more as a contractual agreement, governed by contracts law, as opposed

    to a traditional conveyance of property interest agreement.

    Today, tenancy agreements are viewed as being founded on mutual/dependent obligations of LL and T. The

    landlord’s obligations are dependant on the tenant’s. Most of this change stems from the evolution of what it

    is we are actually leasing. It’s not just a piece of land, used for farming, where its value lies in what’s underneath. In modern times, the value is in what’s above the “land,” the house in which we live. As our purposes for leasing changed, so did the notions of duty and obligation of both parties. A lease is essentially a contract wherein the landlord promises to deliver and maintain the demised premises in habitable condition and the tenant promises to pay rent for such habitable premises.

    Transferring interests in property

    ; The land transaction:

    o Process

    ; Buyer sees real estate agent

    ; Lawyer drafts sales K

    ; Contingencies such as mortgage, appraisal, latent defects, inspection

    ; Buyers sign

    ; Mortgage/Financing

    ; Verification of Title

    ; Closing-Transfer of title

    ; Recording

o It is unauthorized practice of law for non-lawyers to draft deeds, mortgages, notes, prepare title

    abstracts, perform closings, and record instruments (SC v. Buyer’s Service)

    o Policy: Protection of public from potentially severe economic consequences flowing from

    erroneous advice.

    ; Counter: decreasing transactional costs

    o Contracts for Sale of Land

    ; Buyer entitled to specific performance

    ; Statute of Frauds: K for sale of land must generally be commemorated sufficiently by

    an adequate memorandum of terms, reduced to a writing, in order to protect against

    fraud.

    ; Exception: Party seeking enforcement has relied on K and substantially changed

    position such that injustice may only be avoided by enforcement

    o Examples:

    ; Estoppel: Buyer has oral K for sale of land. Sells his home in

    reliance on K and seller repudiates. Buyer entitled to specific

    performance. (Hickey v. Green)

    ; Partial Performance: Property changes possession, part of price

    paid, buyer makes improvements on land

    ; Marketable Title:

    o MT is free from reasonable doubt-party holding it is not exposed to litigation o Unless specified otherwise, Warranty of MT is implied in K for sale of land

    o Buyer may rescind where seller promises MT and does not deliver

    o Defects in title making it unmarketable (encumbrances) must be of substantial character

    ; Existence of zoning regs is not encumbrance, violation is

    ; Violations of covenants are encumbrances (Lohmeyer)

     rd Encumbrances: Every right or interest in a land which may subsist in 3o persons to the

    diminution of value, but consistent with the passage of the fee. Classes:

    ; Pecuniary charge against land: mortgages, liens, assessments

    ; Estates or interests less than fee: life estate

    ; Easements and restrictive covenants

    ; Not statutory/public land use control violations

    o Seller is not obligated to pass perfect title of record

    ; Where seller claims title by valid adverse possession claim but has not quieted title he

    delivers marketable title and buyer cannot rescind. Buyer may recover if AP claim

    fails.(Conklin v. Davi)

    o It is the status of title at the close of litigation that is determinative. What kind of title will

    buyer get if court forces title on him.

    ; Seller duty to disclose defects:

    o Varies by state

    ; Narrow Duty: Caveat emptor/buyer beware

    ; Broad Duty: Seller must disclose all defects

    o General Rule: Seller has duty to disclose all material defects not readily discoverable by

    buyer using due diligence.

    o Materiality of defect: Does defect affect fair market value of property?

    ; Termites, nuisance neighbors, violation of environmental regs, mold o Seller is usually in best position to know of defect, but not always. Seller may not want home

    inspection because they assume knowledge and liability with it. Buyer aware of defect can

    bargain for lower price.

    o Caveat emptor: exceptions where there is a special relationship or seller is actively concealing

    defect

    o Where material defect is not discoverable by title search, home inspection, etc., and buyer has

    knowledge, seller must reveal. (Stambovsky)

    ; Deeds

    o Required Elements

    ; Grantor’s signature

    ; ID of grantor and grantee

    ; Description of property

    ; Words indicating intent to transfer

    o Consideration and witnesses not needed

    o Promises/Representations in deeds are Warranties/Covenants, they are implied in General

    Warranty Deed:

    ; Personal Covenants/Warranties: Valid only between grantor and grantee, Do not run

    with the land:

    ; Covenant of Seisin-promise that what you are conveying is what you own. This

    does not run with the land.

    o Remote grantees may claim chose in action against original grantor passes

    to them. (Rockafellor)

    ; Covenant of right to convey-no restriction on grantor against alienation.

    Example: Grantor has life estate, he cannot convey in fee. Grantor is minor or

    incompetent.

    ; Covenant against encumbrances-no liens or restrictive covenants

    o Latent violation of land use statute present at time of conveyance does not

    violate because it does not affect marketability. (Frimberger) rdo Test is for 3 party claims

    o Policy: ease of conveyancing without liability. Seller may be in no better

    position to know of violation. Title searches and physical examinations

    generally do not disclose. Plus buyer can protect himself by K.

    ; Real/Future Covenants-Run with the land, remote buyers may bring action to enforce

    ; Covenant of quiet enjoyment-right to be left alone on property, no claims for rdejectment by 3 parties

    ; Covenant of general warranty-no claims of better title

    ; Covenant of further assurances-grantor will cooperate with any further actions

    needed to perfect title

    o Three Kinds of Deed think sliding scale of buyer protections

    ; General Warranty Highest level of protection -- conveys all six of the “usual”

    covenants (listed above). Warrants title against defects arising before as well as

    during the time the grantor had title.

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