Property
Class Notes
Concurrent ownership
A
lot of the cases on future interests involved concurrent ownership too. So far, we have seen a lot of ways of
dividing up title to land. One obvious
way is to divide it up geographically.
Another is to divide it up by time.
But now we’re going to divide it up just
in title. This isn’t the most
difficult thing we’ll do, but it is in some sense the most “metaphysical”. Two people own the same thing, and also have
the right to possess the same thing
at the same time. When we talk about
co-tenants, all of the owners have the right to possess at the same time…but
that’s physically impossible! This
“metaphysical” concept lends itself to litigation.
There
are four main forms of concurrent ownership:
1. Partnership (we can find out
about this in Business Associations) – This is the principal way that we would
have co-ownership in a business setting.
2. Tenancy in common – The
modern presumption is in favor of this form.
“To A and B” makes A and B tenants in common. This reverses an earlier presumption in favor
of the joint tenancy. The tenants own
undivided shares: none of them have the right to any particular part of the
property. All of them have the right to
possess the whole. Their shares are
freely alienable.
3. Joint tenancy – This differs
from the tenancy in common in many respects.
This is like the tenancy in common in that both parties have the right
to possess the whole thing all the time.
But it differs from a tenancy in common in that you must use specific language in order to create it
(the presumption is against it). It also
differs in that there are four “unities” that must exist in order for joint
tenancy to exist: (1) time, (2) title, (3) interest, and (4) possession. The interest must be acquired at the same
time from the same instrument, they both must have the right to possess the
whole, and in addition, the joint tenancy must be proportionate (like each of
eight people must have an eighth
interest in the tenancy). If you have
all this and use the right language, then you get the most important attribute of the joint tenancy, which is the right of survivorship. When one of the joint tenants dies, the other
becomes the owner of the entire property
by operation of law before the
decedent tenant’s will can take effect.
4. Tenancy by the entirety –
This is recognized in maybe 20-25 states.
It is no longer recognized in
Here
we have about 90 heirs who are all co-tenants of a 61 acre tract in
Why
are the 15% complaining? Maybe it’s the
price Chosar is paying (8%) versus the subleased right to mine for 14%. In any case, the 85% are free to transfer
their interests, but only their interests. Chosar is now a tenant in common, at least as
far as the mineral rights go, with the 15%.
What can Chosar do with the coal?
Not much…they can’t mine the coal without the consent of 100%. They’re just a tenant in common! They have the right to possess the whole, but
they don’t have the right to commit waste.
We have seen this before in cases where there was communally owned
property. Recall life tenants and
remaindermen. In Woodrick v. Wood, the court says
that the right to possess does not carry with it the right to commit
waste. In the present case, the court
says that removing a portion of the property without the permission of the co-tenants
constitutes waste.
We
have this law of waste for the same reason that we had it in estates and future
interests. There is an incentive to
screw over your co-tenants. The law
steps in to prevent some co-tenants from consuming as much as they can in as
short a time as possible.
The
co-tenant who is deprived of their right to possession has two possible claims:
they could ask for an accounting, or ask for damages based on their
“ouster”. In the case of an accounting,
each co-tenant would get a share of the proceeds actually received by the other
co-tenants. If they sue for damages for
ouster, they are entitled to the fair
market value of the property. For
example, maybe the fair market rental value of the coal rights was higher than
what was actually paid. This is an
important remedy for recovering for what has happened in the past. But how do you prevent this from happening in
the future?
Let’s
say a brother and sister inherit 40 acres of land jointly, but they can’t get
along. What do you do? You can get a judge to partition the
land! You can split the tenancy in
common into shares, thereby getting rid of the “common pool” problem by
converting communal property into separately owned property. That assumes that the property can be split
more or less evenly. But what if you
inherit a house instead of 40 acres? It
would be like a “War of the Roses”-type situation. You could sell the house and split the money
if you want. You have it appraised, you
establish a minimum value, you auction it off, and you divide the proceeds.
Why
can’t we partition in this case? There
is a statute that is interpreted to say that property located where this
property is cannot be partitioned. This
isn’t a positive mandate of a statute; it’s a “negative implication”. What we’re left with is a situation where the
mineral rights to this land will simply not
be developed. The parties are in
deadlock, and there is no escape. This
is a very unusual situation. If we agree
that mining coal or majority rule is a good thing, you’ll never be able to
accomplish those purposes as long as there is one holdout. And there is always an incentive to be the holdout. If 89 tenants agree and one holds out, that
last one is in an excellent bargaining position.
Braunstein
agrees that mining the coal is waste.
But the main problem he sees here is that you can’t partition.
What
about the trespass claim? Did the
majority or the dissent have the better argument here? The majority simply states that this is a
trespass because it’s an exclusion of the non-consenting owners. But the dissent argues that every co-tenant
has the right to travel on its own property.
As a matter of law, no co-tenant may exclude another: that would constitute
ouster. And we all agree that mining
will constitute waste without the consent of all the co-tenants (the usual
solution here being partition). But this
goes further: the use of the subterranean tunnel is said to constitute
ouster. All the co-tenants have the
right to possess, and this right is transferable! So as long as the non-consenting co-tenants
aren’t excluded, the consenting co-tenants are simply exercising the right to
possession that all co-tenants have!
The horse farm problem
Ms.
Lupton wants to provide for her nieces and nephews, but she also wants to keep
horses on the farm. Could she retain the
possibility of reverter in the case that the property is no longer used as a
horse farm? Can the property be held in
trust? Can she prohibit the partition of
the land? You can limit the right to partition for some reasonable time for some reasonable
purpose, but you can’t create an absolute ban on partition for all
time. We want property used in its most
productive form.
What
about the trust? How long can you have a
trust set up for? You’re limited by the
Rule Against Perpetuities. The property
must go somewhere after the nieces and nephews die. You can’t tie it up as a horse farm
forever! At some point, someone will get
the fee simple and the trust will end, or else the trust will violate the Rule
Against Perpetuities.
What
about in
O.R.C.
§ 2131.09 says if you create a trust with a trustee who can create a fee simple
absolute in Ohio, then the Rule Against Perpetuities doesn’t apply. Now
it’s possible if you just create equitable interests and if the trustee or
trust property is domiciled in
How
does this old lady know what a productive use of the land will be in 90
years? Maybe she could give the
possibility of reverter to some kind of charitable organization that shares her
goals.
But
most co-tenancies can be partitioned easily and are not a good way to make sure
land is used a certain way into the future.
Let’s
say a wife acquired interest in some property before she got married. Can she transfer that interest to herself and
her husband? No! There is no unity of time or title! She acquired the property at a different time
and with a different instrument. But all
she needs to do is convey the interest to a “straw”, like your attorney or
something, and then have them transfer it back to you. The need for this has been eliminated by
statute in some states, but this is still the safest way to create joint
tenancy.
The
main attribute of joint tenancy is the right
of survivorship. What does severance mean in this context? What do we mean by severing the joint
tenancy? We’re talking about “cutting
off” the right of survivorship, which converts the joint tenancy into a tenancy
in common. How do you sever a joint
tenancy? You can sell your interest.
For
example, start with this gift: “To A and B as joint tenants with right of
survivorship.” A conveys her interest to
C. B dies, leaving all his property to
D. Who owns what interests? When A conveys her interest to C, the right
of survivorship is severed, and this becomes a tenancy in common between B and
C. They are not joint tenants because unities of time and tenant are missing. Now B dies and leaves everything to his wife,
D. Now there is a tenancy in common
between C and D. However, what if we got
rid of the sale from A to C? Who would
own what? A would have everything and D
would have nothing. The right of
survivorship becomes effective before
the will of B becomes effective. When B
dies, A becomes the sole owner of the
property.
Here’s
another example: “To A, B, and C as joint tenants with right of
survivorship.” A conveys her interest to
D. What is the status of the title? D is a tenant in common with B and C, but as between B and C, they are still joint tenants. So if B dies, D and C are tenants in common,
with D holding 1/3 of the interest and C holding 2/3 of the interest (the part
that was originally C’s plus the part that belonged to B).