Concurrent Estates

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Fiduciary Rule

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Cotenants who retain their title from the same document are fiduciaries of one another. Thus, a cotenant who acquires an outstanding superior title by making the highest bid at atax or matgage foreclosure sale takes that title for the benefit of the other cotenant provided each contributes their pro-rate share to the purchase.

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Fiduciary Rule Example

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Where A, B, and C are cotenants and the property goes up for foreclosure sale, A purchase it for 600,000, he does so on behalf of the other two so long as they put up their share (200k)

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Three types of Cotenancy:

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Joint Tenancy, Tenancy in Common, Tenancy by the entireties.

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Tenancy in Common

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A TC arises where multiple parties have an undivided interest in a single property. The interest is freely assignable and upon death passes through to each individuals estate. That is, there is no right of survivorship

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Joint Tenancy

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JT – Joint Tenancy Creates a right of survivorship in the surviving joint tenant if the other JT dies. Upon the death of one JT, that decedent’s interest in the property passes to the surviving JTs, and not into the decedent’s estate.

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Common Law Default Rule for passage of property to two or more people

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AT CL, there was presumption that when property passed (intestate or by will) to two or more persons who were not husband and wife it passed as a joint tenancy with a right of survivorship. Today, in every state, the statutory presumption is that such a conveyance creates a TC. TO create a JT today, the survivorship intent must be clearly spelled out in the conveying instrument. A deed to “A and his son S together” does not create a joint tenancy beacuse the deed does not evidence an intent to create a survirship interest.

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Rules for creating a Joint Tenancy - PITT

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P- Unity of an undivided right to POSSESS
-O Unity of INTEREST, each JT must have an identical percentage of interest as to the quality and quantity of title.
-T- Unity of TIME, both must have acquired their interest at the same time.
-T – Unity of Title. All the rights of the JTs must have been created from the same deed or will.

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Destruction of the JT by conveyance

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During her lifetime, but not in her will, a joint tenant may convey her interest without the consent or even the knowledge of the other JTs. The effect of such a conveyance will destroy the PITT unities and change that cotenant’s interest into a TC with respect to the other JT interests. So if you don’t like your siblings and you know your gonna die, you can transfer you JT share and create a TC to whomever you pass it, included yourself (don’t need the straw man anymore.)

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Conveyance Problems

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A,B,C,D, own redacre as JT. Each has a one quarter fractional interest, and the last to die will become the sole owner. However, if A sells or conveys his interest to X, X will be a TC with B, C, and D who are JTs with respect to their three fourth.

If A,B,C are JT, C conveys to A, A and B are JTs as to their own thirds, and A has a TC as an extra third.

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Liens on a Joint Tenant's Interest

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LIENS ON JTs a JT’s interest may be attached by a judgment creditor. However a JT creditor who files a judgment against one JT creates a lien on that JT’s interest, but does not affect a severance of the realty, thus the lien may be defeated if the JT who is the judgment debtor is the first to die. That interst would pass to the survivor without the judgment lien.

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JT Creditor Problem

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C and D own property as JTs. D mortgages his half interest. Thereafter C dies, so D owns 100%. D now defaults on the mortgage. Can the bank foreclose on D’s 100% interest? No, only on half. The mortagee’s interest is limited to the extent of the mortgagors interest when the mortgage was executed. The mortgagee’s rights may not be reduced or enlarged by the subsequent acts of the mortgagor. Banks won’t be so foolish as to accept share of JT as collateral, but questions might refer to an uncle or friend giving a loan.

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Tenancy by the Entirety

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At CL, a husband and wife were merged by marriage, and it was the marriage entity that held title to the entire property. Neither spouse had a separate interest in the property. Spouses were incapable of holding property as JTs or TCs because they held it in the marriage entity.

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Transfer of property to three people, two of whom are H and W

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The transfer of property to three persons, two of whom are husband and wife creates a one half interest in H and W as TE, and a half interest in the third person (default CL rule, New York follows this rule.)

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TE as to personal property?

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In MBE a TE may exist in personal or real property, but in NY, only in real estate or shares of a coop issued on or after January 1, 1996.

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Requirements for creating a TE

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No words of survivorship need to be expressed to create a TE. All that is required is that the deed name two parties who are husband and wife. The deed need not contain the word “survivorship”, or the words “husband” or “wife”

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TE features

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A tenancy by the entirety is similar to a JT in that both require the PITT unities and both have the element of survivorship. Neither a JT nor s TE may divise by will her interest in the realty because the interest automatically extinguishes on death and passes by operation of law to the survivor. Basically, survivorship interest trumps the will.

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Differences in features between JT and CE

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1. – A TE requires an existing, valid marriage.
2. Neither spouse can destroy a TE without the consent of the other. Thus, a court may not entertain an ex-parte petition for partition by one TE.
3.A JT’s judgment creditor may bring a petition action to have the JT’s interest sold, whereas one TE’ spouses judgment creditor cannot. A judgment against one spouse's property held in TE is enforceable only if the indebted spouse is the last surviving spouse or the marriage is terminated by divorce.

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Transfer or encumbrance of property held in TE by one party

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An MBA spouse lacks the capacity to unilaterally transfer title or encumber the contingent interest in a TE. In NY, either spouse may unilaterally mortgage, convey, or encumber the survivorship interest subject to the other spouses right of , which can totally wipe out the transferred interest, thus the mortgagee’s or judgment creditors interest is alien against that transferor’s spouses survivorship interest. – CLARIFY THIS

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Conveyance by TE example

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In NY, if H mortgages or sells his interest in blackacre, the buyer or morgagee received only a contingent on H surviving W. If H dies first, W gets 100% percent of blackacre. If W and H get a divorce, then H’s grantee or mortgagee becomes a TC with W and has a right to share in rents or profits or can petition for the sale of the TC property.

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Passage of property when couple is not indeed married.

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If it is later discovered that the parties were never in fact married, or that the marriage was in fact void, then no TE ever existed, we then look to the intent expressed in the deed and apply the general rule concerning JTs and TCs. On New York deeds executed on or after 1975 that purport to convey to “husband and wife” who were not in fact married, NY presumes that a JT survivorship interest was intended.

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Effect of divorce on TE

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When a valid NY or bilatereal sister state divorce decree is obtained, a NY TE converts to a TC, because a valid marriage is a continuing condition for the existence of a TE.

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TE defeeated by THE FOUR DS:

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-Death of one spouse (survivorship)

-Debtor in bankruptcy (unlike judgment creditor or mortagagee, US bankruptcy court can get int)

-Dual transfer in which H and W take part

-Divorce or annulment (or a NY dissolution or separation judgment)

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SCOTUS Rule on the effect of ex parte divorce decrees.

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EX parte in rem divorce decrees (ex parte meaning only one party, In Rem meaning jurisdiction over the property possessed by the TE) must be given full faith and credit. But only to the extent that both parties have MOP. This can effect other things.

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Ex Parte In Rem Decree Example

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Ex parte in rem means that only one party to the divorce is there, and the court lacks personal jurisdiciton over the other, so the court has jurisdiction only "in rem", as to the example.

H gets an ex-parte in rem divorce decree, H dies, W still gets survivorship because no in personum jurisdiction. AND if W dies, H can’t argue that he gets a Survivorship because he is estopped.

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Effect of decree of exclusive possession

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A divorce judgment giving one spouse exclusive possession precludes a partition action. The remedy is to move to modify the divorce decree.

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Insurance Proceeds in a Marraige

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-In NY, because Fire insurance proceeds are derived for the insurance contract, the proceeds on a TE are treated as personal property, thus, if after the TE fire H dies, W’s estate would get one H would get one half of the insurance payment (because tenancy in common, would get 100% if included in TE, I think??)

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What is a concurrent estate?

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A concurrent estate exists when Two or more persons hold a simultaneous present or future interest in the same piece of property.

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What must exist for an estate to be concurrent?

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There are three types of these plural interests:
1. Tenancy in common
2. Joint tenancy
3. 3. A tenancy by the entirety
The key ingredient of a concurrent estate is the indivisible right of each cotenant to possess the entire parcel and not just a fractional part, even though each owns only a fractional interest (no one owns any particular potion of the property,) a joint tenant, or tenant in common, may sell or lease his undivided right of possession, but he cannot sell, lease, or encumber (easement) the entire parcel, or a specific porition of it, to the exclusion of the other cotenants.