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29 Cards in this Set

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Co-Ownership Probates
What does Co-Ownership deal with?
Co-ownership → Be Good or Be Gone! • Law of two folks who want to own a piece of property together. - E.g. Partners, Spouses, Siblings, etc. • Whereas Future Interests was the study of consecutive ownership, co-ownership deals with concurrent, existing at the same time, ownership of present and future estates - Co-ownership of the same piece of the timeline.
What are the 3 Common Law Concurrent Estates?
1. Tenancy in common (TIC) 2. Joint tenancy with right of survivorship (JTWROS) 3. Tenancy by the entirety (TBE)
What is special about? |||| right of survivorship, default rule, what kind of fractions of the land can each side have?
• No right of survivorship. Each co-tenants’ interest passes at death by will or by intestacy. • Fractions need not be equal, e.g. A = 1/10 and B = 9/10. • Today’s default rule.
What is special about Joint tenancy with right of survivorship (JTWROS)? |||| Perfect expression, key features, severance?
• Perfect Expression: O → A + B as joint tenants with rights of survivorship and not as tenants in common. • Key feature → Right of survivorship! - When A dies, B gets A’s share. Historically, A and B’s shares have been equal. • Severance: A JTWROS can always sever the JT as to him/herself; that severance can be express (clearly stated or demonstrated) or implied (not clear but its so close that we will say that it is a severance). Severance only applies to the severing parties. • Some Jxs have abandoned JTWROS - If it is severed, the JTWROS is ended as to the severing tenant.
What are the Four unities of JTWROS?
Four unities of JTWROS: Time, Title, Interest, and Possession (TTIP) • Time: Interests arise at same time. • Title: Interest arise under same instrument • Interest: Identical Interests; equal percentages. • Possession: Common right of Poss’n and Ownership If a unity is missing the co-tenants have a TIC.
What is special about Tenancy by the entirety (TBE)? |||| Perfect expression? can exist between? Severance? community property? Default rule?
• Perfect expression: To H and W, husband and wife, as TBE and not as JTWROS nor as TIC. - “To H+W as husband and wife” presumed to be a TBE in many states which recognize the TBE. - Generally OK (but you never know): To A+B as JTWRoS --- To A+B as JT & not as TIC - Questionable: To A+B as JT - Probably No Good: To A+B jointly • Can only exist b/w husband and wife. Basically, it’s a JTWRoS b/w H + W. • No severance allowed! • Doesn’t exist in a community property state (like CA), exists in some C/L states, but not in others. • C/L Default Rule. At C/L, a grantor created a JTWRoS if there was a concurrent estate, and you didn’t know what it was, it was presumed to be a JTWRoS.
What are the Presumptions of co-ownership? ||||| at common law? Summary? Perfect? Generally OK? Questionable? Weird JTWROS things.
• At common law, the presumption was that the grantor had created a JTWROS. • If there was a concurrent estate, and you didn’t know what it was, it was presumed to be a JTWROS. That was the default rule. In default of full expression, you got a JTWROS. • Summary o C/L—JTWROS o Today—TIC o It can be hard to achieve JTWROS status • Perfect: o To A + B as JTWROS + not as TIC • Generally OK (?) o To A+B as A’s JTWROS o To A + B as JT & not as TIC • Questionable o To A + B as JT. • Probably no good to create a JTWROS o To A + B Jointly o Would likely create a tenancy in common. This was a JTWROS. • Some jurisdictions have abolished JTWROS. They are against the law. • “To H + W as H + W” presumed to be a TBE in many states which recognize the TBE.
Describe: Probates
Probate is the process whereby title to property held in the decedent’s name alone is cleared and transferred to the decedent’s successor(s). • Complicated, time consuming and therefore, expensive. • People don’t like probate so they try to avoid it. - It’s why people use JTWROS in the real world. Main legal purpose of the JTWROS → transfer property at death w/o probate. At death, the chosen survivor gets w/o probate. Main non-legal purpose of JTWROS → sentimental, allows couples to express the solidarity of their relationship.
What is special about Unity of Interest? \\\\ What has equal shares? How does one get around this?
Unity of Interest • JTWROS have equal shares - TTIP - TTIP, it’s the I. E.g. 2 JTs → ½, ½; 3 JTs → 1/3, 1/3, 1/3; and so on. • Bold courts have exotic ways of getting around that rule when the property is sold as part of a judicial proceeding by using their enormous equitable power to assign the JTWROS proceeds in an accounting b/w joint tenants or when there is a sale of the premises. - Co-owners can demand an accounting of receipts and expenditures during the period of co-ownership or at the end of the period of co-ownership.
How does Riddle v. Harmon illustrate Express Secret Severance (how does she get her way?) \\\\ Facts: Old fashioned formalism (FIs “think”) vs. Modern, intent effectuation. Facts Recap: Mr. and Mrs. R were married and they had JTWROS. Mrs. R was getting sick and was going to die soon. Visited her lawyer and discovered that when she dies her husband gets all the property, her ½ of the property, but she wants to devise her ½ to X.
• But, JT can’t successfully devise her JT interest. - At death, her JT interest disappears and goes to the other JT, her husband. To be able to devise her share to X, Mrs. R must sever the JTWROS and turn it into a TIC.
What is the Super safe, traditional, old fashioned way to expressly sever a JTWROS in Riddle v. Harmon : JT conveys to the “straw.” For a moment in time, the straw owns it. Then, the straw conveys it to the original conveyor. Former JT becomes a TIC. \\\\ Facts: Old fashioned formalism (FIs “think”) vs. Modern, intent effectuation. Facts Recap: Mr. and Mrs. R were married and they had JTWROS. Mrs. R was getting sick and was going to die soon. Visited her lawyer and discovered that when she dies her husband gets all the property, her ½ of the property, but she wants to devise her ½ to X.
Super safe, traditional, old fashioned way to expressly sever a JTWROS: JT conveys to the “straw.” For a moment in time, the straw owns it. Then, the straw conveys it to the original conveyor. Former JT becomes a TIC.
How did the lawyer not need to do the Super safe, traditional, old fashioned way to expressly sever a JTWROS in Riddle v. Harmon : JT conveys to the “straw.” For a moment in time, the straw owns it. Then, the straw conveys it to the original conveyor. Former JT becomes a TIC. \\\\ Facts: Old fashioned formalism (FIs “think”) vs. Modern, intent effectuation.
• But, Mrs. R’s lawyer had her convey it to herself instead of to a straw. • When given the choice b/w old fashioned formalism and modern, intent effectuation, they chose the latter. - Thankfully for the lawyer, courts found it to be a good conveyance, a valid express severance. - Court’s Logic: She could have created a JTWROS w/o a straw, so she should be able to sever one w/o a straw. • Husband didn’t find out about it until she died. It’s an express secret severance. If her husband died first, wife could have essentially torn up her secret express severance so she could get all the property! • Note: Cal. Civ. Code §683.2 severely restricts secret express severances.
Was the JTWROS severed by mortgage? \\\\ Implied Secret Severance → Harms v. Sprague Facts Recap: Simmons owned lot which CS wanted to buy. CS wanted to buy a house and wanted to pay all cash for it. Price was $25K, he had $18K and was short $7K. • CS signed a promissory note for $7K, JH signed as guarantor to the note, and JH put up his interest in his JTWROS w/ his brother as mortgage. • S’ then sold property to CS and gave him 6 months to pay them back w/ interest. • JH owned a place w/ his brother WH as JTWROS. JH lives on the property alone, then CS moved in on the JTWROS property, then they moved into what used to be the S’ property. • Then JH died testate leaving his interest to CS.
Was the JTWROS severed by mortgage? → No. • CS: An implied secret severance of the JTWROS occurred when JH put the mortgage lien on the property, not when JH signed the promissory note. Therefore, the TIC interest passed by will to CS. - Implied as opposed to express since an express severance is when a property interest is conveyed. Secret b/c WH didn’t know. • If there was a severance, then the JTWROS became a TIC and CS would own JH’s ½ of what the brothers had together. • Court found no severance, therefore, WH owns the entire property through the magic of JTWROS.
Did the mortgage lien survive the death? \\\\ Implied Secret Severance → Harms v. Sprague Facts Recap: Simmons owned lot which CS wanted to buy. CS wanted to buy a house and wanted to pay all cash for it. Price was $25K, he had $18K and was short $7K. • CS signed a promissory note for $7K, JH signed as guarantor to the note, and JH put up his interest in his JTWROS w/ his brother as mortgage. • S’ then sold property to CS and gave him 6 months to pay them back w/ interest. • JH owned a place w/ his brother WH as JTWROS. JH lives on the property alone, then CS moved in on the JTWROS property, then they moved into what used to be the S’ property. • Then JH died testate leaving his interest to CS.
Did the mortgage lien survive the death? → No. • S wanted to enforce the security interest, the mortgage lien against the property, so they could get the $7K. - S figured they were unlikely to collect on the dead man’s guarantor promise and the deadbeat, CS’ promise. So, their best chance for recovering the $7K mortgage was from JH’s share of property owned w/ WH b/c then they can partition the property and force a sale and get their $7K if the property is worth at least $14K. Basically like holding a gun to WH’s head and asking, “Wouldn’t you rather pay, then go through a partition?” • Court: A lien placed by one joint tenant does not survive that tenant’s death.
Who Benefits from Courts’ Unwillingness to Imply Severances? Government: You didn’t mean to sever, but we’re going to imply a severance anyway. • Granting of a lease by one JT a severance? → ???? • Granting of a life estate by one JT a severance? →????. • Exception: ?????
Who Benefits from Courts’ Unwillingness to Imply Severances? Government: You didn’t mean to sever, but we’re going to imply a severance anyway. • Granting of a lease by one JT a severance? → “Probably not” is our answer • Granting of a life estate by one JT a severance? → Probably not. • Exception: We do seem willing to imply severances when people get divorced.
What is the modern trend to treat conveyances of interests?
The modern trend is to treat conveyance of interests less than the JT’s full interest as not severing the joint tenancy.
What’s the policy behind those rule that mortgages aren’t implied severances?
• Who are our likely JTs in the real world? - Family members - Husband and wife - Non-marital partners; Domestic Partners - Parents and children - Siblings • Statistically, the husband is going to die first. When courts refuse to imply severances, they are most likely protecting widows, surviving partners, spouses – innocent folks. • As between the surviving JH and WH, WH wins. - Consider WH as a stand-in for widows. Remember the husband dies first. So, maybe it’s ok to have a rule, an outcome that protects widows, where WH is a widow substitute.
But what happens for gay people and other different peoples--What’s the policy behind those rule that mortgages aren’t implied severances?
• We have an outcome and rule that protects innocent siblings, partners, widows, etc. • But, the dead brother (JH) intended a severance as inferred by his leaving everything in a will to CS and the promissory note [“The note states that the principal sum of $7,000 was to be paid from the proceeds of the sale of John Harms’ interest in the joint tenancy property . . .”] • The dead JH and CS were gay lovers. Arguably, CS was the real “widow” to be protected. Same situation where the trial court came out for the “widow” CS, like the trial court came out for little Julia in Newman v. Bost, but the appellate court didn’t. - Trial court knows the facts best. Wish the trial judge had done a better job. Wish CS’ lawyer had done a better job. Wish the judge had said something like: Normally, there is no severance when a JT mortgages B/A, but there is, in this case, based on the unique facts and/or on the expressed intent to sever in the note signed by the deceased JT, good reason not to follow the black letter law. If the trial judge had said that, he probably wouldn’t have been overruled.
Little Lenders v. Wives \\\ Balancing the interests between wives and little lenders, courts choose to protect ____ by not implying severances.
Balancing the interests between wives and little lenders, courts choose to protect wives by not implying severances.
Black letter law: In some JXs, a ____ placed by one ____ does not survive that ____ prior death. \\\ what will the creditor know it to be?
Black letter law: In some JXs, a lien placed by one JT does not survive that JT’s prior death. • The creditor that will know this is the commercial lender • The creditor that won’t is the unsaavy one, the unwary one, the unsophisticated, the individual lender, the casual lender. This rule has the potential to hurt little vendors.
Bank Policy: Both spouses must ____ a _____ • If a bank was lending $7K to CS on JH’s interest on the property, bank’s solution to the rule of not implying severances, ___ __ to _____ ____, get the other tenant, the ______ the one w/o the security interest to ____ ___. • Who gets protected by this rule? →
Bank Policy: Both spouses must sign a loan. • If a bank was lending $7K to CS on JH’s interest on the property, bank’s solution to the rule of not implying severances, get CS to sign too, get the other tenant, the spouse, the one w/o the security interest to sign too. • Who gets protected by this rule? → The wife who has a husband who is foolish in business. - If a husband has a stupid business idea and he goes to the bank for a loan, the bank will require him to bring his wife.
Social Reliance • Not much social or economic reliance on the kind of _____ _____ like the Simmons. But, there’s a lot of _____ ______ on the ______ - The Simmons, the _____ _____, must die. The devil gets the hindmost. - There’s no reason to _____. But, the little lender can protect him/herself by _____. If little lenders don’t hire lawyers, then they’ll be hurt in court. • In Harms v. Sprague, the court deals not only w/ ____.... Rather, the court focuses on what policies are best for the ____ ____. - Sometimes the whole society is the focus, other times the individual’s intent is the focus. - Troubling that CS, __...
Social Reliance • Not much social or economic reliance on the kind of little lenders like the Simmons. But, there’s a lot of social reliance on the JTWROS. - The Simmons, the little lenders, must die. The devil gets the hindmost. - There’s no reason to protect them. But, the little lender can protect him/herself by hiring a lawyer. If little lenders don’t hire lawyers, then they’ll be hurt in court. • In Harms v. Sprague, the court deals not only w/ formal rules, black letter law, i.e. in some Jxs, a lien placed by one JT does not survive that JT’s prior death. Rather, the court focuses on what policies are best for the whole society. - Sometimes the whole society is the focus, other times the individual’s intent is the focus. - Troubling that CS, the actual surviving spouse loses b/c of a rule that is meant to protect surviving spouses and the intent of JH wasn’t carried out.
Basic Mortgage Law Background • Assume I’m single, when I want to borrow $$$ to buy a house, B/A, the bank asks for 2 things: (1) ______ (2) _______ an ownership interest (speaking very loosely) in _____. • Speaking casually, I put a mortgage on my house, I give the bank a mortgage on my house. I’m the mortgagor, and the bank’s the mortgagee.
Basic Mortgage Law Background • Assume I’m single, when I want to borrow $$$ to buy a house, B/A, the bank asks for 2 things: (1) Binding Promise (K) to Pay Back the Money and (2) Security, in the form of a real property interest in B/A, the real estate I am buying, an ownership interest (speaking very loosely) in what I’m buying. • The bank gives me $$$ and I give them my promise to pay the money and assuming B/A is what we think of as my house, I give them a security interest of some sort in B/A. Speaking casually, I put a mortgage on my house, I give the bank a mortgage on my house. I’m the mortgagor, and the bank’s the mortgagee.
Lien • FR Dictionary: ________________ • Legal dictionary: _______________ • “Interest in another’s property” refers to B/A
Lien • FR Dictionary: 2ndary meaning is tie, bond, etc. • Legal dictionary: - A legal right or interest in another’s property that exists until a debt is satisfied. “Legal” as in lawful or recognized in court. • “Interest in another’s property” refers to B/A
To own B/A free and clear, you’d have to buy both the _____ and ______ title.
To own B/A free and clear, you’d have to buy both the legal and equitable title.
What is the---Majority: Lien Theory of Mortgages
• Under the lien theory of mortgages, when I put a mortgage on my house: - I own the legal title. I have legal title in B/A. - Bank has a lien on it, a security interest, an interest that secures the loan, an interest in real property. Bank has an equitable title in B/A. It’s a fungus on the fee simple; it’s a string attached to my title; it’s engraving on my silver bowl, if my fee simple is a silver bowl, the bank’s crest is engraved on my bowl until I pay the mortgage. • No technical argument for severance in a lien theory state. When I give the bank a mortgage on B/A, there’s no implied or express severance, no transfer of my legal interest to the bank; there’s only a transfer of equity, the creation of a modest equitable interest in B/A in the bank.
What is the---Minority: Title Theory of Mortgages
• Under a title theory of mortgages, the lender, the bank, gets legal title to my house, so the Bank owns the FSA and I have an equitable title. - The bank gets the FSA from me, the borrower. I own it for a moment. I buy it from the homeowners and I give the legal title to the bank in exchange for the money, retaining equitable title in me. • In a title theory state, there’s at least room to argue that when I make the conveyance of title to the lender, there was an implied severance in a JTWROS context. It’s even possible to argue it’s an express severance since an express severance is a transfer of the interest.
What the Rule Should Be . . .for Morgages?
• The rule should be that a mortgage is NEVER a severance in any state b/c it’s unlikely that there will be any intent to sever. → Intent effectuation. • There’s a split b/w formalism (& literalism) in the small # of title theory states, where there is room to argue a mortgage by a JT of a JTWROS is an implied severance. But, in most states it’s not.