Property Class Notes 4/1/04

Tenancy by the entirety

This one has a fifth unity on top of the four unities of joint tenancy: unity of marriage! How’s that a unity? (Braunstein talks about marriage, hilarity ensues again.)

The key to tenancy by the entirety is that it’s designed to protect the joint tenants (especially the wife) from having their property subject to the debts of the other spouse.

Schwab v. Krauss

The transfer to the bankruptcy trustee did not sever the joint tenancy. Then, when the wife took the property, she took it free of her husband’s debts. It’s not all that different from what we talked about as a survivorship tenancy (or joint life estates with contingent remainders). But it does differ in other respects: tenancies by the entirety predate Married Women’s Property Acts. Prior to the 1920’s, married women had very few property powers with respect to either their husband’s property or their own. Property was considered the domain of the husband! In that respect, tenancies by the entirety make sense to protect women. The Acts say that married women have the same right to manage marital property that their husbands do. But there’s nothing that coordinates the Acts with tenancies by the entirety! So what do we do? Do we say that the wife has a similar power so that she can dispose of the property as well, or will we put the husband in the position that the wife formerly had, that is, neither person can unilaterally dispose of the property? The states went all different ways!

Sawada v. Endo divided up the states into four groups that went four different ways. In four states, the common law is retained and husbands have a lot of power. Braunstein speculates that this would be unconstitutional if anyone cared to challenge it. The other main group, an attempted unilateral conveyance by either spouse is totally void. If they want to act, they must act jointly. In this most common setup, the tenancy by the entirety differs significantly from the survivorship tenancy. With the survivorship tenancy, you can’t unilaterally sever the survivorship right, but you can always transfer the possessory right. But with tenancies by the entirety, neither person has the power to transfer their possessory right. So the main significance of the tenancy by the entirety is to protect a spouse of the tort or contract debt of the other spouse.

Around 1986 or 1987, Ohio abolished the tenancy by the entirety, but it did so prospectively only. If you established a tenancy by the entirety prior to 1986, it’s still valid. It was only in existence for 35 or 40 years. Braunstein has never been able to find a case that would say how we would treat these now in Ohio.

Another Michigan bar exam problem

So what are the four possible types of tenancies that could be argued for by the parties? The couple was never really married, and they knew it. Maybe they are tenants in common. That’s the presumption of the law, and if they weren’t married, maybe you could argue that it defaulted to this. In this case, Don would own an undivided half from Joe, and Ann would own the other half. But what’s the problem with tenancy in common? It looks like we have the four unities for joint tenancy. Then it wouldn’t matter if they were married or not. In that case, Ann would get everything. But there’s also a problem with the joint tenancy. We don’t have the special language for that form of ownership! The deed doesn’t mention the right of survivorship! What about tenancy by the entirety, or a survivorship tenancy (joint life estates with alternative contingent remainders)?

· If we have a tenancy by the entirety, Ann is right and she owns the whole thing. Joe can’t deprive her of her survivorship right.

· If we have life estates with contingent remainders, Ann still owns the whole thing. This is the same thing. Joe can’t deprive Ann of her contingent remainder, and it turns out that she’s the one who “won”. Her contingent remainder becomes a vested remainder.

· If this is a true joint tenancy, Joe’s deed worked as a severance, so Don owns half and Ann owns half.

· If it’s a tenancy in common, Ann and Don each own half.

What is most likely to happen under Michigan law?

· They won’t get the tenancy by the entirety because they weren’t married.

· Michigan doesn’t recognize the true joint tenancy.

· So it’s between the survivorship tenancy and the tenancy in common. There is a presumption in favor of the tenancy in common, but the survivorship tenancy seems closest to the grantor’s intent. However, the deed says nothing about survivorship.

· There’s really no clear answer between survivorship tenancy and tenancy in common! And those answers come to different results: Ann 100% and Ann-Don 50-50!

Tenancy by the entirety requires that you’re married. For a survivorship tenancy, it can be between any two human beings. If you have a survivorship tenancy, you have both a present interest (a life estate) and a future interest. Either party can transfer that to whomever they please. With the tenancy by the entirety, the interests are not freely alienable. Neither party unilaterally can transfer the possessory estate or the future interest.

You can have a survivorship tenancy even in a state that recognizes joint tenancy. Survivorship tenancy is basically a wad of regular old alienable estates and future interests stuck together.

The landlord-tenant relationship – non-freehold estates

For a long time, these estates were looked down on as not of the same “dignity” as the estates in land that we’ve been studying so far (life estate, fees simple, and so on). This used to be more or less like a sharecropping arrangement or a feudal setup. These could also be disguised lending transactions. In Medieval England, it was illegal to charge interest, and a lease was one way around the usury laws. You could use the lease to borrow money but make it look like something else. So the lease was looked down on.

But the way we look at the lease has changed for a variety of reasons in the United States. Not in the least is the urbanization of the United States: a higher and higher percentage of people live in apartments that they lease rather than homes that they own. This includes all socio-economic strata. More middle- and upper-class people are living in apartments than ever before. Also, the civil rights movement has enfranchised a lot of people in terms of voting who were previously disenfranchised. A lot of people who were relatively poor and living in apartments all of the sudden had more political power. One way this power has been exercised is to change the law of landlord and tenant significantly.

Another aspect is the consumer protection movement. Even though this is a property transaction, it has many elements of the sale of goods. It’s a sort of well-defined package of goods and services that the parties bargained for and looks like any other transaction. There has been a trend to try to apply warranties to leases just like sales of goods.

Non-freehold estates are a present possessory interest followed by a reversion. It’s no different than a life estate or anything like that, except instead of being measured by someone’s life, it has a built-in durational requirement.

The estate for years (which is really a misleading term) is characterized as ending at a certain time which is either specified in the lease or calculable with reference to something else, and it ends without notice. Let’s say I’m leasing this apartment for eight years. Then I have an estate that lasts for eight years, and no notice is required. It will be called an estate for years even if it lasts only part of a year.

If you have a lease, review it closely! Many leases around here say that if you’re going to terminate the lease, you must give a certain amount of notice. Landlords use this as a way of not giving you your security deposit back. Be careful! If you need to give notice, make sure that you give it!

The periodic tenancy can arise in a number of ways. You can bargain for it, for example. The essence of the deal might be that you’ll rent the property for some fixed period, and then the lease will automatically renew if neither the landlord nor the tenant take steps to end the lease. A month-to-month lease is a common one (that’s what I got!). If neither party gives notice, the lease automatically renews. It’s the same lease, but it renews and the term is extended for so long as neither party gives notice. You can bargain for that lease, but most often the parties bargain for a term certain, but then the tenant stays on and keeps paying and the landlord accepts it. Then the estate for years is converted into a periodic tenancy. At common law, the periodic tenancy is limited to whatever the original lease was. But statutes in every state have limited the periodic tenancy such that the period is the term of the lease or six months, whichever is shorter. Typically, what you do is enter into subsequent new leases for a term certain each month.

The tenancy at will is not used much. It arises sometimes because the parties meant to do something else, but what they meant to do was illegal. It may arise consensually, though. Say you want to store your car in my garage, and I say that you can do that and you do it. At common law, these could be at the will of either party and no notice is required. Either party can say “get out” or “I’m leaving” and the tenancy is over. If the landlord terminates, the tenant has a right in the nature of an easement to go on the land to recover her property. The tenancy at will terminates upon the death of either party or upon the sale of the property or the reversion of the landlord. Many states, including Ohio, require notice to terminate a tenancy at will. For all practical purposes, the tenancy at will is very much like the periodic tenancy.

The tenancy at sufferance is not really a tenancy at all. This simply describes the situation where the tenant came into possession lawfully but no longer has a right to be there. The most common example is where the tenant comes in lawfully and then remains after the expiration of the term of the lease. We call that person a tenant at sufferance. At that point, two things can happen: (1) the landlord can bring suit to evict the tenant, or (2) the tenant can tender the month’s rent, the landlord can cash the check, and then the tenancy at sufferance turns into a periodic tenancy.

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