Lecture 13 - Ny & Multistate Real Property Part 1 - Concurrent Estates And Real Property Contracts

Front 1

When do concurrent estates exist?

Back 1

A concurrent estate exists when 2 or more persons hold a simultaneous present or future interest in the same piece of property. No co-tenant owns any particular portion of the property.

Front 2

What are the 3 types of plural interest?

Back 2

1. tenancy in common (t/c)
2. joint tenancy (j/t) and
3. tenancy by the entirety (t/e)

Front 3

Each co-tenant has an indivisible right to possess the entire parcel even though each owns only a fractional interest. What may a j/t or t/c be able to do?

Back 3

A j/t or a t/c may sell, mortgage, or lease his undivided right of possession, but may not sell, mortgage, or lease the entire parcel or any specific portion of it to the exclusion of the other co-tenants.

Front 4

What is a fiduciaries and what can they do?

Back 4

Co-tenants who obtain their interests from the same document (will, deed, etc.) are fiduciaries of one another. Thus, a co-tenant who acquires an outstanding superior title at a tax or mortgage foreclosure sale holds title for the benefit of the other co-tenants provided the other co-tenants contribute their pro-rata share of the purchase price.

Front 5

What can fiduciaries sue for?

Back 5

As fiduciaries, co-tenants generally sue each other for an accounting, constructive trust, or the tort of waste.

Front 6

When does a tenants in common arise?

Back 6

A t/c arises where 2 parties concurrently own realty with no right of survivorship. When one t/c dies, her interest in the property passes through her estate and not to the surviving t/c's.

Front 7

What are joint tenancies?

Back 7

Like t/c's, j/t's each old undivided possessory interests, but they also enjoy a right of survivorship. Upon the death of one j/t, that decedent's interest in the property passes to the surviving j/t's rather than passing into the decedent's estate.

Front 8

At common law, there was a presumption that if property passed to 2 or more persons who were not spouses, it passed to them as j/t's. What is presumed today?

Back 8

Today, in every state, there is a presumption that absent specific survivorship language, property passing to 2 or more persons by sale, gift, intestacy, or under a will passes to t/c's. To create a j/t today, the survivorship intent must be clearly spelled out in the conveying instrument.

Front 9

To create a j/t (or a t/e), "4 unities" must exist PITT. What does PITT stand for?

Back 9

P - the unity of possession (i.e. each co-tenant has an undivided right to possess the entire property)
I - the unity of interest (i.e. each must have the same identical % of interest in terms of quality and quantity of title)
T - the unity of time (i.e. each must have acquired her interest at the same time)
T - the unity of title (i.e. the rights of each must have been created from the same deed or will)

Front 10

During her lifetime, a j/t may convey her interest without the consent or even the knowledge of the other j/ts. What will this effect have on others?

Back 10

The effect of such a conveyance will change the new co-tenant's interest into a t/c with respect to the remaining j/ts.

Front 11

May a j/t or a t/e devise her interest?

Back 11

Neither a j/t nor a t/e may devise her interest in the realty by will because the interest automatically extinguishes upon death and passes by operation of law to the survivor.

Front 12

Can j/t’s interest be attached by a judgment creditor? What all does this involve and affect?

Back 12

A j/t's interest may be attached by a judgment creditor. However, by filing a judgment against one j/t, thus creating a lien on that j/t's interest, the judgment creditor does not affect a severance of the realty and the lien may be defeated if the judgment debtor j/t is the first j/t to die. The interest passes to the surviving j/t free of the judgment lien. Likewise, when one j/t mortgages her interest in the property and that j/t dies first, the property vests in the other j/ts free from the encumbrance.

Front 13

A t/e is similar to a j/t except for 3 things, what are these 3 things?

Back 13

1. a t/e requires an existing valid marriage (includes same sex marriage for people married after 2011)
2. neither spouse may destroy a t/e without the consent of the other. Thus, a court may not entertain an ex parte partition cause of action by 1 t/e and
3. a j/t's judgment creditor may bring a partition action and have the j/t's interest sold whereas one t/e spouse's judgment creditor cannot. A judgment lien foreclosed against one spouse is enforceable by a partition only if the t/e is terminated and the debtor spouse survives. If the debtor spouse is the first to die, the judgment creditor's lien is extinguished.

Front 14

At common law H and W were merged by marriage and it was the marriage entity that held title to their property. Are spouses capable of holding property as j/t’s or t/c’s?

Back 14

Spouses were incapable of holding property as j/ts or t/cs because the marriage entity held the property.

Front 15

No words of survivorship need be expressed to create a t/e. So then what is required?

Back 15

All that is required is that the deed name 2 parties who are spouses. The deed does not have to contain the word "survivorship" or "H and W".

Front 16

The transfer of property to H, W, and X creates what?

Back 16

A 1/2 interest in H and W as t/es and a 1/2 interest in X.

Front 17

What is the difference in MBE and NY as it pertains to a t/e existing?

Back 17

In MBE, a t/e may exist in personal or real property, but in NY, only in real property or shares of a co-op.

Front 18

Does an MBE have the capacity to unilaterally transfer title or mortgage the contingent interest in a t/e?

Back 18

An MBE spouse lacks the capacity to unilaterally transfer title or mortgage the contingent interest in a t/e.

Front 19

What does NY allow which can totally wipe out the transferred interest?

Back 19

NY allows either spouse to unilaterally mortgage, convey, or encumber his or her own survivorship interest subject to the other spouse's right of survivorship, which can totally wipe out the transferred interest.

Front 20

If a j/t or t/e improperly conveys more than his 1/2 interest, then that grantor is estopped from denying the effectiveness of his earlier deed if ultimately he is the sole survivor. What happens to full title?

Back 20

Full title vests immediately in the grantee under the doctrine of estoppel by deed (aka the after acquired title theory).

Front 21

When does t/e never exist? How do properties get determined?

Back 21

If it is later discovered that the parties were not fact married or the marriage was void when the couple took the property, then no t/e ever existed. To determine how the parties then hold the property, look to the intent expressed in the deed and apply the general rules concerning j/ts and t/cs.

Front 22

According to NY what dates constitute that a j/t was intended?

Back 22

On NY deeds executed on or after 9/1/75 that purport to convey to H and W who are not in fact married, NY presumes that a j/t was intended.

Front 23

A t/e is defeated by the 4 D's. What are these 4D’s?

Back 23

D - the death of one spouse whereby 100% passes to the surviving spouse. Simultaneous death of both H and W defeats the survivorship element and property held as a j/t or t/e will be distributed as if it were held as a t/c.
D - when one spouse becomes a debtor in bankruptcy. (bankruptcy trustee doesn’t have to abide by state property rules)
D - dual transfer in which both H and W take part.
D - an MBE divorce or annulment or a NY DAD'S (divorce, annulment, dissolution, or separation judgment) decree.
A valid NY or bilateral sister-state DAD's decree converts a NY t/e into a t/c because a valid marriage is a continuing condition for the existence of a t/e. Either former spouse may then bring an action for partition. However, a divorce judgment giving one spouse exclusive possession precludes a partition action. The remedy is to move to modify the divorce decree.

Front 24

What are the rights and liabilities of concurrent tenants?

Back 24

Concurrent tenants are jointly and severally liable for persons injured on the realty by latent dangerous conditions that they knew existed or by reasonable inspection should have known existed.
When a specific bequest of real property is made in a will or where a decedent dies intestate, title to the realty vests by operation of law in the specific legatee named in the will or in the decedent's intestate distributes if there is no will. Thus, any tort claims arising out of the property should be asserted against the individual beneficiaries and not the estate.
Ordinarily, co-tenants are jointly and severally liable for injuries that occur on the realty, but where one co-tenant has exclusive possession or control, the other co-tenant like a landlord out of possession is not personally liable to P.

Front 25

A concurrent tenant voluntarily out of possession has no right to demand rent from a tenant in possession unless the tenant in possession unless the latter of 3 things occur, what are these 3 things?

Back 25

1. agreed to pay rent or
2. wrongfully ousted the other co-tenant or
3. denied the co-tenant access to the property.

Front 26

What are the rights and liabilities if the co-tenant wrongfully ousts or denies access?

Back 26

Where the co-tenant in possession wrongfully ousts or denies access, she must account to the other co-tenant for 50% of the market value of the rent from the time of denial.

Front 27

A co-tenant in possession who made the tax and mortgage payments as well as necessary repairs on the premises may recover from the other co-tenants their share of these payments. What happens then if the market value exceeds the payments?

Back 27

If the market rental value exceeded the payments, the tenant in possession has no right to contribution and the others may use their share to offset the payments to the possessing co-tenant.

Front 28

When is a co-tenant accountable?

Back 28

A co-tenant is accountable to other co-tenants for rents collected from a 3rd party in possession.

Front 29

Can each co-tenant share the income produced by the property?

Back 29

Yes, each co-tenant has a right to share in income produced by the property.

Front 30

A co-tenant in possession who makes nice, but not necessary improvements without the consent of the other co-tenants is deemed a mere volunteer. There is no immediate right to seek contribution for such improvements until the final accounting when the property is ultimately partitioned or sold and then only to the extent of what 2 items?

Back 30

1. that the improvements increased the selling price or
2. the actual cost of the improvements, whichever is less.

Front 31

Are t/cs and j/ts free to partition?

Back 31

T/cs and j/ts are free to partition the property at any time by a COW.

Front 32

What does COW stand for?

Back 32

C - a court decree
O - an oral agreement between all the co-tenants.
Oral partition agreements are enforced either on a part performance or estoppel theory (i.e. where the co-tenants orally agree, take possession, and make improvements or materially change their position in reliance on the oral partition agreement).
W - a signed writing voluntarily partitioning the property through an exchange of deeds signed by the co-tenants.

Front 33

Think the C in COW. When co-tenants cannot voluntarily agree on a division, the court will render a final accounting after weighing the equities. Equity favors dividing the property in kind (partition in kind) if it is capable of physical division. If partition in kind is not practical, the court will order the property sold and equitably divide the proceeds. What 3 things will the court consider?

Back 33

1. the separate contributions of each co-tenant toward the purchase price
2. who made mortgage, tax, and other payments and
3. each co-tenant's contribution in improving the property.

Front 34

Define the O in COW.

Back 34

O - an oral agreement between all the co-tenants.
Oral partition agreements are enforced either on a part performance or estoppel theory (i.e. where the co-tenants orally agree, take possession, and make improvements or materially change their position in reliance on the oral partition agreement).

Front 35

In NY, in order to sue for a real estate broker's commission, the plaintiff must plead and prove what 2 exact things?

Back 35

1. she was a duly licensed NY broker when the cause of action arose and the services were performed by a licensed real estate broker or a licensed real estate salesperson (NY excludes attorneys from this licensing requirement) and
2. the broker was the procuring cause of the sale (she must participate in negotiating the sale).
Simply introducing B and S is not enough to earn a broker's commission.

Front 36

Absent a statute, a real estate broker's contract for a commission need not be in a signed writing because the agreement does not create or effect an interest in real property. What does it point to?

Back 36

It merely appoints an agent to find a buyer for the property. In NY, licensed real estate brokers and sales persons as well as attorneys do not need to have their agreements in writing (expressly exempted by NY statute).

Front 37

What happens in cases where a broker’s agreement makes no mention of commission and timeframe for earnings?

Back 37

Where a broker's agreement makes no mention as to when a broker earns a commission, then it is earned when she produces a RAW buyer, who is Ready to buy, financially Able, and Willing to agree to the seller's terms.

Front 38

Does the broker assume the risk of full performance? When is commission earned?

Back 38

The broker does not impliedly assume the risk of the parties' full performance. Once he produces a RAW buyer who has a meeting of the minds with the seller, he has earned his commission. The commission is earned even if title never passes. Title is unmarketable or the property is destroyed prior to closing.

Front 39

What should the brokers contract include in order to protect the seller?

Back 39

To protect the seller, the broker's contract should provide that the commission is not earned "unless or until title passes". Even with this language, a seller who willfully defaults after signing a contract with the buyer will owe a broker's commission even though title never passed.

Front 40

What is it called and what can happen if the broker’s contract doesn’t have a fixed definite term?

Back 40

If the broker contract does not have a fixed definite term, it is at will and may be terminated at any time.

Front 41

In NY, there are 3 types of broker contracts. What are they?

Back 41

1. Exclusive right to sell, which requires all sales negotiations to pass through the broker. Here, the seller is liable for a commission if the property is sold, even if it is the seller who found the buyer and brought about the sale.
2. An exclusive agency, which deters the seller from using the services of another broker. If another broker brings about the sale, then the broker, with the exclusive agency may also seek a commission. If the seller sells the property herself however, she will not be liable for a commission.
3. Non-exclusive agency, where the broker earns a commission only when she produces a buyer Ready, Willing, and Able to buy.

Front 42

In a real estate brokerage contract wth the seller, what is a broker entitled to?

Back 42

A broker is entitled to the agreed upon commission as a matter of law notwithstanding the broker showed other properties to the eventual purchasers prior to the sale.

Front 43

Describe the visual associated with caveat emptor.

Back 43

4/1 E 7/1
K ----------------------------- C

Front 44

What is the doctrine of caveat emptor?

Back 44

The doctrine of caveat emptor (buyer beware) requires a buyer to take care and diligently inquire into the structural and environmental condition of the property and neighborhood before entering the real property contract. Leaking roofs, seeping cesspools, ferocious fleas, water and fire damage, as well as prior crimes on the property have been the subject of caveat emptor and thus were not required to be disclosed by the seller.

Front 45

What is the broker’s disclosure duty?

Back 45

A broker has a duty to disclose known facts materially affecting the value of the property.

Front 46

Caveat emptor precludes a claim for rescission by the purchaser for structural or other defects that are what 3 things?

Back 46

1. open and obvious
2. discoverable by reasonable inspection of either the premises and the purchaser had an unimpeded opportunity to inspect the public records and/or
3. not concealed or hidden by the silent seller.

Front 47

May a seller who makes misrepresentations or fraudulently conceals rely on caveat emptor?

Back 47

A seller who makes misrepresentations or fraudulently conceals defects may not rely on caveat emptor. A misrepresentation is defined as conduct or a statement that is not in accord with the facts.

Front 48

What does an “as is” clause state?

Back 48

An "as is" clause expressly states that the buyer inspected the quality, fitness, and value of the property before signing the contract and that B has not relied on any representations by S. An "as is" clause will not however shield S from fraudulent concealment.

Front 49

What needs to exist in order for the statute of frauds to be enforceable?

Back 49

To be enforceable, any contract affecting an interest in real property (except for an oral lease of 1 year or less), must be in writing signed by the party to be charged with its breach or by an authorized agent of that party whose authority is expressed in a signed writing.

Front 50

Part performance of an oral real property contract is an exception to the S/F. To excuse the writing, courts will consider 3 types of PIP, which must unequivocally refer to an agreement for a transfer of realty. What does PIP stand for?

Back 50

P - payment of the purchase price in whole or in part
I - making valuable improvements
P - taking possession

Front 51

Is it possible to achieve PIP in NY? Why or why not?

Back 51

In NY, it is almost impossible to achieve PIP part performance sufficient to take the oral real property contract out of the statute of frauds. The buyer's performance alone must unequivocally refer to the sale of realty without resort to oral testimony. (this looks a lot like tenants).

Front 52

What must a signed real property contract contain?

Back 52

The signed real property contract must contain all of the material terms (i.e. it must name B and S, sufficiently describe the property, and state the purchase price). A missing purchase price will nullify the contract even though it was signed by the party to be charged.

Front 53

A contract may consist of several memoranda, what are they?

Back 53

Which may not all be signed, and which separately do not contain all of the essential terms, but when taken together comprise an enforceable contract.

Front 54

A real property contract may be recorded in the seller's chain of title provided the signatures are acknowledged by a notary like a deed. What is the purpose of the recording?

Back 54

This recording serves as constructive notice of the buyer's interest until the 30th day after the date fixed in the contract for closing.