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Introduction to Property II. Co-Ownership and Marital Interests Landlord-Tenant Law Private Sector Control of Land Use through Easements and Other Servitudes Judicial Control of Land Use through Nuisance Law Legislative Control of Land Use Through Zoning and Other Mechanisms

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Introduction to property ii
Introduction to Property II

  • Co-Ownership and Marital Interests

  • Landlord-Tenant Law

  • Private Sector Control of Land Use through Easements and Other Servitudes

  • Judicial Control of Land Use through Nuisance Law

  • Legislative Control of Land Use Through Zoning and Other Mechanisms

  • Eminent Domain and the Problem of Regulatory Takings

Donald J. Weidner


Introduction to forms of concurrent ownership
Introduction to Forms of Concurrent Ownership

Concurrent ownership can be thought of in terms of the vehicles through which two or more individuals can own a property interest—any kind of property interest.

Tenants in common may, for example, own a fee, a leasehold estate or a piece of personal property.

  • We shall consider the following forms of concurrent ownership:

    • tenancy in common

    • joint tenancy

    • tenancy by the entirety

    • tenancy in partnership

Donald J. Weidner


Introduction to forms cont d
Introduction to Forms (Cont’d)

  • Forms of co-ownership we shall not consider in this course

    • limited partnership

    • corporation

    • limited liability company

    • trust

  • Each form involves two kinds of issues:

    • What are the rules that govern the relations among co-owners?

    • What are the rules that govern relations between co-owners (or the co-ownership vehicle) and third parties?

Donald J. Weidner


Tenancy in common
Tenancy In Common

  • Tenancy in Common

    • “sole and several” tenancy without the right of survivorship.

      • Have separate but undivided interests in the property.

      • The interest of each is descendible and may be conveyed by deed or will.

      • There are no survivorship rights between Ts/C.

Donald J. Weidner


Tenancy in common cont d
Tenancy in Common (cont’d)

  • Suppose my mother dies and leaves her condo to my sister and me, saying nothing about the form of co-ownership?

    • What form is created?

    • How do I tell my sister what she has?

  • Recall the text: “Each tenant in common owns an undivided share of the whole.”

  • In the case of a condo, what do you think is “the whole?”

  • What if we both want to use it on the same week?

  • Note the range of practical problems that can arise almost immediately.

Donald J. Weidner


Tenancy in common cont d1
Tenancy in Common (cont’d)

  • Suppose my sister and I are tenants in common who conclude that we cannot satisfactorily arrange our mutual undivided ownership of the whole.

    • My sister seeks your help.

      • What do you advise her are her rights?

Donald J. Weidner


Joint Tenancy

  • Form of concurrent ownership in which each joint tenant is considered to be the owner of an undivided part and of the whole estate.

    • Per my et per tout.

  • Suppose my mother dies and leaves her condo to my sister and me as joint tenants, and not as tenants in common.

    • Each of is seized per my et per tout.

    • What happens if my sister and I take the condo, own harmoniously, then I die?

      • Does my half “pass” to my sister?

      • The answer has been stated in terms of the entity theory of the joint tenancy.

        • I vacate the entity.

Donald J. Weidner


Hypothetical: My Mom

  • Assume that Mom has two children, S, age 58, and D, age 42.

    • M wants to transfer the condo so that D will own the condo outright when S dies, which is expected to be long before the death of D.

  • Is it not clear that Mom’s intent will be realized by conveying the condo “to S and D as joint tenants with right of survivorship, and not as tenants in common?”

Donald J. Weidner


My Mom (cont’d)

  • How Fragile the “Right” of Survivorship

    • What is clear is that Mom’s intent may not be carried out.

    • What are the things that might happen to defeat her intent?

      • S might file an action for partition

      • S might convey S’s interest to a third party

      • S’s creditors may pursue his interest

  • What alternatives might more clearly secure mom’s goal?

Donald J. Weidner


Possible alternatives for mom what do you advise her to do
Possible Alternatives for Mom:What do you advise her to do?)

  • Convey: “To S and D for their joint lives, remainder to the survivor.”

    --Creating a tenancy in common for their joint lives with a contingent remainder in fee to the survivor.

  • Or convey: “To S and D and their heirs, but if S predeceases D, then to D and her heirs, but if D predeceases S, then to S and his heirs.”

    --Creating a tenancy in common in fee, with an executory interest in the survivor.

Donald J. Weidner


Joint Tenancy (cont’d)

  • Problems of Creation

  • The common law required that the interests of joint tenants be equal in all respects.

  • “Four unities” were considered essential to the creation of a joint tenancy:

    • Unity of time—the interest of each joint tenant must be acquired at the same time

    • Unity of title—each joint tenant must acquire by the same instrument or adverse possession.

    • Unity of interest—each joint tenant must have an equal undivided interest, even as to duration.

    • Unity of possession—each joint tenant must have a right to possess the whole.

Donald J. Weidner


More on joint tenancies
More on Joint Tenancies

  • At common law, if the 4 unities do not exist, a joint tenancy is not created.

    • Rather, a tenancy in common is created.

  • Statutes in some states abolish the requirement of the 4 unities and provide that a joint tenancy may be created by an explicit statement of intent to do so.

  • Joint tenants can change their interests by “severing” the four unities.

    • Joint tenants can agree that they will hold as tenants in common rather than as joint tenants.

    • An individual joint tenant my unilaterally sever the interest.

  • As a general proposition: the creditor of any person can attach that person’s property rights.

Donald J. Weidner


Tenancy by the entirety
Tenancy By The Entirety

  • At common law, a tenancy by the entirety can only be created in husband and wife.

    • Rare exceptions today, see Hawaii’s “reciprocal beneficiaries” statute

      • Embraces same-sex couples

      • Also embraces parent and child

  • 5 unities are traditionally required:

    • time, title, interest, possession (as in a joint tenancy); plus

    • unity of marriage.

Donald J. Weidner


Tenancy by the entirety cont d
Tenancy by the Entirety (cont’d)

  • Tenants by the entirety are considered to hold as one person.

    • Neither has a separate undivided interest in the underlying property

    • Each is said to be seised per tout et non per my.

  • As a result, neither can unilaterally defeat the survivorship right of the other (except by divorce).

  • Divorce terminates the tenancy by the entirety

    • usually resulting in a tenancy in common.

Donald J. Weidner


Some policies external to the doctrinal logic
Some Policies External to the Doctrinal Logic

  • At common law, there was a policy against dividing land into very small parcels.

    • One consequence was presumption in favor of the creation of a joint tenancy rather than a tenancy in common.

  • Today, in most states, the presumption is reversed.

    • often by statute

      • some states expressly require mention of survivorship to create a joint tenancy

    • except, in some states, in the case of a conveyance to a husband and wife.

  • Can you see why there might be a modern presumption in favor of a tenancy in common as opposed to a joint tenancy?

Donald J. Weidner


Problems and note
Problems and Note

  • Problem 1 at p. 342:

    • O conveys Blackacre “to A, B, and C as joint tenants.”

    • A subsequently conveys his interest to D.

    • B dies intestate, leaving H as his heir.

  • Consider first the state of the title upon O’s conveyance.

  • Consider next the state of the title after, and as a result of, A’s conveyance to D.

    • What result is suggested by the logic of the 4 unities?

    • What result is suggested from the intent of the parties?

  • Consider finally the effect of B’s death intestate.

    • What result if B had died leaving a will devising B’s interest to X?

Donald J. Weidner


Problem 3 p 342
Problem 3, p. 342.

  • A and B are planning to be married. Two weeks before the ceremony, they buy a house and take title in “A and B as tenants by the entirety.”

  • Several years after the marriage, A moves out of the house and conveys his interest to his brother C.

  • C brings an action to partition the property.

    • What result?

Donald J. Weidner


Problem 3 cont d
Problem 3 (cont’d)

  • What was the state of title at the time of the initial conveyance?

    • According to the logic of the four unities?

    • How do you implement the parties intent?

    • What of the presumption of tenancy in common?

      • Is it overcome by a showing of contrary intent to have a right of survivorship?

      • Statutes may play a role

  • What effect did the marriage have?

    • Is the law of equitable conversion relevant?

Donald J. Weidner


Problem 3 cont d1
Problem 3 (cont’d)

  • Equitable conversion: if there is a specifically enforceable contract for the sale of land, equity regards as done that which ought to have been done.

    • The buyer is viewed in equity as the owner from the date of the contract.

    • The seller has a claim for money secured by a vendor’s lien.

    • The seller is said to own legal title as trustee for the buyer

  • Ex ante, how would you accomplish the goal of A and B?

    • As their lawyer, ask: “How do I help them?”

Donald J. Weidner


Note 4 at 342
Note 4 at 342

  • Conveyance to grantees, “jointly, as tenants in common, with equal rights and interest in said land, and to the survivor thereof, in fee simple . . . . To Have and to Hold the same unto the said parties hereto, equally, jointly, as tenants in common, with equal rights and interest for the period or term of their lives, and to the survivor thereof at the death of the other.”

    • What has been created?

Donald J. Weidner


HYPO: A conveys Abeleacre “to A and B as joint tenants, and not as tenants in common.”

Assume A dies first and A’s heirs want to establish that they have an undivided ½ interest in Blackacre.

What are A’s heirs likely to argue in opposition to a joint tenancy?

  • Based on the 4 unities?

    • That an owner cannot transfer his ownership to himself – it was there all along.

    • Therefore, the conveyance communicated only an undivided ½ interest to B.

    • Therefore, A and B did not get their interests (1) by the same document or (2) at that same time.

    • Therefore, the unities of time and title are lacking, and no joint tenancy is created.

  • Based on intent?

  • Based on statute?

Donald J. Weidner


Ableacre hypo cont d
Ableacre Hypo (cont’d) and not as tenants in common.”

  • B’s Arguments to find a joint tenancy.

    • Clear intent of the grantor.

    • Theory: the creation of the joint tenancy is a conveyance to an entity.

      • Therefore, it is not like A conveying directly to himself but only indirectly through the entity.

    • The application of the 4 unities in this case places an excessive emphasis on formalism. It would have been entirely permissible for A to have conveyed to a Straw, who then immediately conveyed to A and B.

    • That is, no fundamental policy was being violated by the creation of a joint tenancy.

    • In general, the law should avoid imposing unnecessary transactions costs.

Donald J. Weidner


Avoidance of probate
Avoidance of Probate and not as tenants in common.”

  • Joint tenancies are particularly popular and useful to avoid probate.

  • Probate is the judicial supervision of the administration of a decedent’s property that passes to others at the decedent’s death.

  • The probate court appoints an “administrator” or “executor” who collects the decedent’s assets, determines and pays liabilities, including taxes, and distributes or changes title to the remaining property.

Donald J. Weidner


Avoidance of probate cont d
Avoidance of Probate (cont’d) and not as tenants in common.”

  • Probate can be costly and lengthy.

  • Under the theory of a joint tenancy, no interest theoretically passes on the death of a joint tenant. Therefore, there is no property that must “pass” through probate.

  • In effect, we adhere to the fiction that nothing passes

    • because it lowers transaction costs throughout our society.

Donald J. Weidner


A word on taxes
A Word on Taxes and not as tenants in common.”

  • The entity theory conclusion that nothing passes is not useful from the point of view of a government seeking to raise revenue from an estate tax.

  • For federal estate tax purposes, when a joint tenant dies, her share of the jointly held property is subject to taxation.

    • If the joint tenants are husband and wife, one-half is subject to taxation when one spouse dies

      • although no taxes are paid because the amount passing to the surviving spouse qualifies for the marital deduction and passes tax-free.

    • If the joint tenants are not husband and wife, when one dies, the portion of the value of the jointly held property attributable to the consideration furnished by the decedent is subject to federal estate taxation.

      • Under most state inheritance laws, the fractional share of a joint tenancy owned by the decedent is taxed;

        • That is, state laws do not follow the federal approach of looking at who furnished the consideration.

Donald J. Weidner


Riddle v harmon
RIDDLE v. HARMON and not as tenants in common.”

Wife, in the process of planning her estate, discovers that her husband takes all as surviving joint tenant if she dies first.

  • Her intent: Terminate the joint tenancy so she can dispose of her interest by will (so she can “devise” it).

  • Her means:

    • a) prepare a grant deed from herself as joint tenant to herself as tenant in common, reciting in the deed its purpose to terminate (“sever”) the joint tenancy; and

    • b) prepare a will disposing of her interest.

Donald J. Weidner


Riddle v harmon cont d
Riddle v. Harmon and not as tenants in common.” (cont’d)

  • ISSUE: Is a conveyance to a straw person required to sever a joint tenancy?

  • W was advised by counsel. In light of

    • what you know, or

    • in light of the earlier case of Clark v. Carter (saying the straw person was indispensable [because one can not convey property to oneself]),

  • was her counsel negligent?

    • Recall, the trial court held: NO SEVERANCE

  • What might the 1955 California statute (fn. 5, p. 346) have said about this case? (13 yrs. before Clark v. Carter).

Donald J. Weidner


Riddle v harmon cont
RIDDLE v. HARMON (cont.) and not as tenants in common.”

  • Cal. Civil Code Sec. 683(1955) provides:

    “A joint interest is one owned by two or more persons in equal shares, by a title created by a single will or transfer, when expressly declared in the will or transfer to be a joint tenancy, or by transfer [a] from a sole owner to himself and others, or [b] from tenants in common or joint tenants to themselves or some of them, or [c] to themselves or any of them and others, or [d] from a husband and wife, when holding title as community property or otherwise to themselves and others or to one of them and to another or others, when expressly declared in the transfer to be a joint tenancy, or [e] when granted or devised to executors or trustees as joint tenants.”

Donald J. Weidner


Riddle v harmon cont d1
Riddle v. Harmon and not as tenants in common.”(cont’d)

  • What did Riddle v. Harmon say about the requirement that there be “two to transfer?”

  • Is Riddle v. Harmon, then, an enlightened opinion?

    • Setting aside formalities from the time of livery of seisin

  • “Common sense as well as legal efficiency dictate that a joint tenant should be able to accomplish directly what he or she could otherwise achieve indirectly by the use of elaborate legal fictions.”

Donald J. Weidner


Riddle v harmon cont d2
Riddle v. Harmon and not as tenants in common.” (cont’d)

  • Stated differently, does Riddle’s “enlightened” approach reach the wrong result?

  • Burke said the wife was “subject to ethical criticism” and that her approach was “stealthy”

    • Is it enlightened to facilitate behavior like hers?

  • Should a single-party severance instrument be effective:

    • without notifying the other joint tenant;

    • without notifying any third party; and

    • without recordation?

  • Are H and W in a fiduciary relationship?

Donald J. Weidner


Notice and commitment
Notice And Commitment and not as tenants in common.”

  • Riddle v. Harmon allows severance by conveyance to one’s self (without a conveyance to a straw) to permit a J/T to become a T/C who may then devise her interest

  • Why not simply permit a J/T to directly devise her interest (eliminate the unnecessary paperwork entailed in the formality of the conveyance to one’s self, arguably reducing transaction costs even further)?

    • To preserve a device to avoid probate?

    • To avoid questions about the intent of a will?

      • a general devise of all real property?

      • a residuary clause?

Donald J. Weidner


Was it ethical to help the unethical stealthy client
Was it ethical to help the “unethical,” “stealthy” client?

  • Model Rule of Professional Conduct 1.2(d): “A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.”

  • The Model Rules also provide: “’Knowingly,’ ‘Known,’ or ‘Knows’ denotes actual knowledge of the fact in question. A person’s knowledge may be inferred from circumstances.”

Donald J. Weidner


Recording
RECORDING client?

  • Should a deed such as the wife used in Riddle v. Harmon be effective without recordation?

  • California statute provides that a severance of a joint tenancy of record is effective against the right of survivorship of the non-severing joint tenant only if either:

    • an instrument severing the joint tenancy is recorded prior to the death of the severing joint tenant; or

    • the severing instrument is executed and acknowledged before a notary public within 3 days before the death and recorded within 7 days after the death of the severing joint tenant.

Donald J. Weidner


Indestructible right of survivorship
Indestructible Right of Survivorship client?

  • Riddle v. Harmon concludes by emphasizing that it does not eliminate the three basic ways to create an indestructible right of survivorship:

    • by a joint life estate with contingent remainder in fee to the survivor;

    • by a tenancy in common in fee simple with an executory interest in the survivor; or

    • by a fee simple to take possession in the future.

Donald J. Weidner


Evolution of protection of mortgagors

Deed client?

Fee Simple Subject to Condition Subsequent

Borrower

Lender

Lender’s fee ends ONLY if borrower pays everything off exactly on time

EVOLUTION OF PROTECTION OF MORTGAGORS

  • Stages to Present

    • Defeasible fee enforced according to its terms

Donald J. Weidner


Evolution of mortgage law cont d
Evolution of Mortgage Law (cont’d) client?

  • Equity relieved a borrower in special circumstances (part of an equity court’s general jurisdiction to grant relief from a forfeiture).

  • Special circumstances were always found:

    • Equity of Redemption became an estate in land.

    • Rule developed: a contemporaneous waiver of the equity of redemption is unenforceable.

  • The procedure of strict foreclosure was created to preserve for the lender the value of the conveyance as a security.

    • The strict foreclosure decree said simply: pay late or take nothing.

Donald J. Weidner


Evolution of mortgage law cont d1
Evolution of Mortgage Law (cont’d) client?

  • The procedure of foreclosure by judicial sale was created to add some protection for the borrower. The resulting decree can say:

    • The borrower has a right to redeem from the mortgage (pay it late).

    • If the borrower can not pay up, the property will be sold to pay the lender the lender’s due and give the borrower any surplus.

    • If the sale proceeds are insufficient to pay the lender the lender’s due, the lender is entitled to a deficiency judgment.

  • Many states have added a statutory right to redeem from the foreclosure sale.

  • Maitland states that the history of the mortgage deed “is one long suppresio veri et suggestio falsi.”

  • Donald J. Weidner


    SELLS for $100,000 DEED client?

    $10,000 cash

    Bob & Betty Byar

    Seller

    $75,000 Note

    1st Mortgage to secure $75,000 note

    $75,000

    BANK

    2nd Mortgage to secure $15,000 forbearance

    BANK

    Byars default on bank loan. Bank forecloses. The property is sold for $60,000. How is this $60,000 distributed?

    Suppose Byars keep paying on the Bank loan but default on the 2nd mortgage to seller. What are the rights of the 2d mortgagee?

    Donald J. Weidner


    3 basic theories of mortgages
    3 BASIC THEORIES OF MORTGAGES client?

    • Title Theory: The mortgage conveys title (in accordance with the traditional language in the mortgage instrument).

    • Intermediate Theory: No matter what the mortgage states, title does not pass at the execution of a mortgage

      • However, title does pass automatically on default.

    • Lien Theory: No matter what the mortgage states, a mortgage is nothing but a lien.

      • What is a lien?

    • The theory of a mortgage came to have little predictive value.

      • For example: Assume there is a casualty insurance policy that states that it ends if the insured transfers the title. The insured executes a mortgage. There is a casualty. In a title theory jurisdiction, has there been a transfer of title that ends the insurance policy?

    Donald J. Weidner


    Harms v sprague
    Harms v. Sprague client?

    • In 1973, William and brother John bought land as joint tenants.

    • Without William knowing, brother John executed a mortgage on John’s interest in the joint tenancy

      • The mortgage was to secure the payment of a note to purchase the Simmons property with his friend Sprague

      • The mortgage was executed to the Simmons

      • John and Sprague purchased the Simmons property and moved into it.

    • December 10, 1981, John died, devising Sprague his entire estate.

    • December 29, 1981, the mortgage to the Simmons was recorded.

    • Sprague claims the mortgage severed the joint tenancy and he takes John’s half subject to the mortgage.

    Donald J. Weidner


    Harms v sprague cont d
    HARMS v. SPRAGUE client?(cont’d)

    Surviving J/T William and his brother John were J/Ts. Sprague was the devisee of brother John.

    K to buy

    Buyer

    Sprague

    Joint Tenants

    William Harms

    John Harms

    Seller

    Simmons

    K to sell

    RO

    $18,000 cash

    $7,000 note (w/John Harms)

    W/out Wm.knowing

    John Harms

    Executes $7,000 note with Sprague to Simmons

    6/12/81

    M

    on his ½ interest

    Note: “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, but in any event, no later than 6 months from the date the note was signed.”

    Donald J. Weidner


    5 ½ months after execution client?

    M is recorded

    12/29/81

    John Harms moved on to the Simmons property with Sprague

    John Harms died, devising Sprague his entire estate (all real and personal property)

    Sprague

    12/10/81

    1. Did the mortgage by one joint tenant sever the joint tenancy?

    2. If not, did the mortgage nevertheless survive the death of the mortgagor?

    Donald J. Weidner


    Harms v sprague cont d1
    Harms v. Sprague client? (cont’d)

    • Who is suing whom and for what?

      • William seeks to quiet title, naming as defendants:

        • His deceased cotenant’s devisee; and

        • His deceased cotenant’s alleged mortgagee.

    • As to the severance issue:

      • In what direction are you taken my an application of the logic of the 4 unities?

      • In what direction are you taken by an examination of the intent of the parties?

    • Court says that an “involuntary” severance of any of the 4 unities will sever the joint tenancy.

    • How do you mesh the logic of the 4 unities with the theory of a mortgage?

    Donald J. Weidner


    Harms v sprague cont d2
    Harms v. Sprague client? (cont’d)

    • What happens if there is execution under a judgment lien and a judicial sale of the interest of a joint tenant?

      • Is it not clear that the sale severs the joint tenancy?

      • No, it is not clear.

      • Indeed, it is not so: for this purpose, “there would be no conveyance until the redemption period had expired without a redemption.”

        • “A lien on a joint tenant’s interest in property will not effectuate a severance of the joint tenancy, absent the conveyance by a deed following the expiration of a redemption period.”

    Donald J. Weidner


    Harms v sprague cont d3
    Harms v. Sprague client?(cont’d)

    • Is “no severance” the right result? Hasn’t much more happened here than in the first case of a more secret severance? What did the parties intend?

    • Given no severance, such that surviving joint tenant takes pursuant to the “right of survivorship,” does he take the deceased joint tenant’s ½ interest subject to the mortgage?

      • What is the answer of the court and why?

    Donald J. Weidner


    Harms v sprague cont d4
    Harms v. Sprague client? (cont’d)

    • The court responds with what sounds like the entity theory of the joint tenancy:

      • “A surviving joint tenant succeeds to the share of the deceased joint tenant by virtue of the conveyance which created the joint tenancy, not as the successor of the deceased. The property right of the mortgaging joint tenant is extinguished at the moment of his death.”

      • Nothing passes from one cotenant to another

        • The deceased simply vacates the entity

      • This is the same reasoning that prevents a joint tenancy from being viewed as an invalid testamentary transfer.

    Donald J. Weidner


    Harms v sprague cont d5
    Harms v. Sprague client? (cont’d)

    • The joint tenancy defeated Sprague, even though Sprague was the devisee of the deceased joint tenant’s entire estate.

      • Is this the right result?

        • From the point of view of the estate of the deceased joint tenant?

        • From the point of view of that joint tenant’s mortgagee?

    • Should the lender take the risk of losing security if one of the joint tenant’s does not agree to the mortgage?

      • Some cases hold that the surviving joint tenant takes the decedent’s ½ subject to the mortgage.

    Donald J. Weidner


    Statute in harms v sprague
    Statute in client?Harms v. Sprague

    • What is the effect of the statute at p. 355?

      • “When any real estate . . . subject to an encumbrance . . . is specifically bequeathed or passes by joint tenancy with right of survivorship . . . the legatee [or] surviving tenant . . . takes it subject to the encumbranceandis not entitled to have the indebtedness paid from other real or personal estate of the decedent.”

    Donald J. Weidner


    Heydon s case 1584 on statutory construction
    Heydon’s Case (1584) on client?statutory construction

    • What was the common law before the making of the Act?

    • What was the mischief and defect for which the common law did not provide?

    • What remedy the Parliament hath resolved and appointed to cure the disease of the commonwealth?

    • The true reason for the remedy; and then the office of all the Judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions to continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico.

    Donald J. Weidner


    More on the harms statute
    More on the client?Harms Statute

    • The common law before the making of the Act:

      • A specific devisee of mortgaged property is entitled to have the mortgage paid off (“exonerated”) out of the residuary estate.

    • The mischief and defect:

      • the maker of the will probably only intended to leave the specific devisee the net equity in the property.

    • The remedy:

      • Provide that the right to exoneration does not exist

    • The construction that will advance the remedy

      • Hold that, in either situation, the specific beneficiary is only entitled to the net equity in the property, not to its value?

      • But this only applies if the mortgage survives?

      • That is, if the real estate was subject to the encumbrance [as opposed to the interest of a deceased joint tenant]

    Donald J. Weidner


    Yet more on the harms statute
    Yet More on the client?Harms Statute

    • The authors say: “the common law rule of exoneration did not apply to a surviving joint tenant, who took the whole by virtue of the joint tenancy and not by will, and had no claim on the residuary estate of the deceased tenant.”

    • They say the statute “says expressly that the surviving joint tenant ‘takes it [the real property] subject to the encumbrance,’ which means to us that the lien continues against the surviving joint tenant.”

      • They conclude William should have taken John’s one-half share subject to a mortgage upon it.

      • Do you agree?

      • Is there a difference between a mortgage on one joint tenant’s interest versus one on all the joint tenancy property?

    • The court concludes: “because . . . the lien of the mortgage no longer exist against the property, [the statute] is inapplicable, since . . . the surviving joint tenant, did not take the property subject to the encumbrance.”

    Donald J. Weidner


    Problem 1 p 355
    Problem 1, p. 355 client?

    Logical Possibilities in Harms

    1. Severance

    A 4 unities, or

    B Intent to sever

    2. Temporary Severance

    3. No severance

    A No relief for lender

    B Relief for lender

    JTn

    JT1

    JT2

    N & M

    Satisfies the M, then Dies

    JT2

    Suppose that a court had held that a mortgage severs a joint tenancy. What result if: a) the note had been paid and the mortgage released during John Harm’s life; and

    b) John died first?

    Donald J. Weidner


    Problem 1 p 355 cont d
    Problem 1, p. 355 (cont’d) client?

    • Suppose, instead, that William (the non-mortgaging joint tenant) had died first, the note had not been paid, and the Mortgagee foreclosed.

      • That is, assume that the mortgaging cotenant is the surviving joint tenant.

    • Is the entire parcel subject to the mortgage or only a ½ interest in it?

    Donald J. Weidner


    Problem 2 p 356
    Problem 2, p. 356 client?

    • A and B own Blackacre in joint tenancy.

      • A conveys a 10-year term of years in Blackacre to C.

      • After 5 years, A dies, devising all of his property to D.

      • What are B’s rights?

    • See the memo I have posted on Temporary Severances.

    Donald J. Weidner


    Joint bank accounts
    Joint Bank Accounts client?

    Hypo: Mom opens an account with her money but with my name is on it as joint tenant and survivor

    Three Basic Possibilities

    • True joint tenancy

      • Present gift of ½ of the deposit.

    • “Payable on death” account.

      • Present gift of survivorship rights only.

    • Convenience account.

      • No gift.

        Note: The bank card Mom and I sign states that either one of us has the right to withdraw all the money on deposit during our joint lives, with the balance going to the survivor.

    Donald J. Weidner


    Joint bank accounts cont d
    Joint Bank Accounts (cont’d) client?

    • In some jurisdictions, a “payable on death” account is not permitted because it is viewed as a testamentary transfer that is not signed and witnessed in accordance with the Statute of Wills (compare p. 637)

      • However, thanks to the Uniform Probate Code, these are now widely recognized.

    • A convenience account is a substitute for a power of attorney, which expires on the death of the principal.

    Donald J. Weidner


    Sums remaining on deposit
    Sums Remaining on Deposit client?

    • While Both Are Still Alive

      • Majority rule: during the lifetime of the parties, the presumption is that a joint account belongs to the parties in proportion to the net contributions of each party.

        • In our hypo, the presumption is that mom did not make a present gift of half her deposit.

        • The presumption that a depositor did not intend to make a gift to the other person(s) listed on the account can be overcome by clear and convincing evidence of a different intent.

      • Minority rule: equal fractional shares (as in a true joint tenancy) are presumed.

    Donald J. Weidner


    Sums remaining on deposit cont d
    Sums Remaining on Deposit (cont’d) client?

    • On Death

      • Majority holds that the surviving joint tenant takes sums remaining on deposit in a joint account unless there is clear and convincing evidence that a convenience account was intended.

      • Minority holds that there is a conclusive presumption that survivorship rights were intended.

    Donald J. Weidner


    Text Problems on Sums Withdrawn client?

    1. O, a widower, opens a joint bank account with his niece, A. O tells A: “I’ll want your name on this account so that in case I am sick you can go and get money for me.” O dies. Is A entitled to the money in the bank account?

    2. H and W and their son, S, open a joint savings account. H and W are in their sixties. The money deposited comes from savings from H’s salary that H formerly had in a separate savings account. H dies. W, claiming that the entire amount in the account is hers, withdraws the balance. Does S have any rights in the money?

    Donald J. Weidner


    A word on tenancies by the entirety
    A Word on Tenancies by the Entirety client?

    • Traditionally, in Florida, there are different rules for the creation of a tenancy by the entirety depending on whether real or personal property is involved.

      • With respect to real property, a tenancy by the entirety has been presumed from a conveyance that creates the five unities.

      • With respect to personal property (such as a bank account), in addition to the five unities, there must be an expression of intent to create a tenancy by the entirety.

    Donald J. Weidner


    Delfino v vealencis
    DELFINO v. VEALENCIS client?

    • Fee is 20.5 acre parcel with ’s dwelling unit and garbage removal business on 1 acre.

    • s own undivided 2/3 interest as T/C with , who owns undivided 1/3 interest.

    • s seek partition by sale (anticipating subdivision into 45 residential building lots).

      • They believe they will be the highest bidders at the sale.

    •  wants partition in kind.

    Donald J. Weidner


    Delfino client? (cont’d)

    • What does the statute say?

      • a court may order sale when it “will better promote the interests of the owners.”

    • What does the court say?

      • a court may not order sale unless two conditions are met:

      • 1) the physical attributes of the land are such that physical partition is “impracticable” or “inequitable;” and

      • 2) the interests of the owners would be better promoted by a sale.

    Donald J. Weidner


    Delfino cont d
    Delfino client?(cont’d)

    • Court further states that the burden is on the party seeking sale to prove that such a sale will better promote the owners’ interests.

      • Reason: because the law has presumed that in-kind partition is best

        Is this an interpretation of the statute that will “suppress the mischief and advance the remedy?”

        1720 statute provided an absolute right to partition by physical division.

    Donald J. Weidner


    Delfino cont d1
    Delfino client? (cont’d)

    • Supreme Court gives a very narrow construction to the statute, stating that its intent is to authorize a sale “for an emergency, when a division cannot well be made in any other way.”

      • The statute announces “no new principles.”

    • If physical partition results in unequal shares, a money award (“owelty”) can be made from one tenant to another to equalize the shares.

      • Here, the defendant was required to pay $26,000 in owelty to the plaintiffs to compensate them for the adverse impact of her garbage operation on their proposed subdivision.

    Donald J. Weidner


    Delfino cont d2
    Delfino client?(cont’d)

    “It is the interests of all of the tenants in common that the court must consider; and not merely the economic gain of one tenant, or a group of tenants.”

    • Economic interests and non-economic interests?

  • Recall, the trial court said there could be no partition in kind without “material injury” to the majority cotenants.

  • How do you argue that partition in-kind is “impracticable.”

    • Webster’s says, “infeasible; also, not usable.”

  • Donald J. Weidner


    Delfino cont d3
    Delfino client?(cont’d)

    • Supreme Court says that it “may have some validity,” but is “not dispositive” that:

      • FMV of the remaining land will decline;

      • Some potential building lots will be lost to accommodate the trash business; and

      • A proposed subdivision road must be relocated.

    Donald J. Weidner


    Delfino factors cont d
    Delfino client? Factors (cont’d)

    • Supreme Court gave more weight to:

      • shape of the land

      • presence of access roads

      • limited number of cotenants

      • her “actual and exclusive possession” for many years;

      • the fact she had made her home on the property; and

      • the fact that she has made her livelihood on the property for years.

    • What would you decide and why?

    Donald J. Weidner


    Johnson v hendrickson
    JOHNSON v. HENDRICKSON client?

    They all live on the homestead in the corner of the farm. C1, C2, C3 grew up and left home.

    Dies intestate with 160 acre farm

    1904

    H

    Widow 3/9

    C1 2/9

    C2 2/9

    C3 2/9

    marries

    1908

    W

    Karl

    W, K and KS1 and KS2 move in together on the homestead in the corner of the farm.

    K and his sons buy an adjacent farm across the road from the family homestead.

    KS1

    KS2

    • W dies, devising her 3/9 interest to Karl and his two sons

    Donald J. Weidner


    Johnson v hendrickson cont d
    Johnson v. Hendrickson client?(cont’d)

    • Johnson statute authorized partition by sale [only] if physical partition “cannot be made without great prejudice to the owners.”

    • Recall the Delfino statute

      • a court may order sale when it “will better promote the interests of the owners.”

    • Does the Johnson v. Hendrickson statute restrict partition by sale more than the Delfino statute?

    Donald J. Weidner


    Johnson v hendrickson cont d1
    Johnson v. Hendrickson client?(cont’d)

    • What does the court say the statute means?

      • Stated differently, when would physical partition result in “great prejudice?”

    • “A sale is justified if . . . the value of the land when divided into parcels is substantially less than its value when owned by one person.”

      • Intent of the legislature?

    • What of the subjective interest in the homestead?

    Donald J. Weidner


    Johnson v hendrickson cont d2
    Johnson v. Hendrickson client?(cont’d)

    • What if there were a partition in kind?

      • Would Karl and sons get the portion closest to the adjoining land they bought?

    • Karl and sons asserted two interests:

      • Subjective interest in remaining on the homestead.

      • Economic interest in receiving the portion next to their adjoining land.

    • Court gave the subjective interest “no weight”

    • Court said the economic interest was “immaterial.”

      • Why do courts refuse to take into consideration the advantage to one cotenant of acquiring the portion of the tract adjacent to that cotenant’s other land?

      • See Gray v. Crotts. Even thought the court did partition in kind (into four lots), it made the four cotenants draw straws for the lot next to the adjoining lot owned by one of them.

    Donald J. Weidner


    Delfino versus johnson
    Delfino client? versus Johnson

    • If there is partition in kind, the partition must be done according to the values set by appraisers

      • Note that sec. 52-495 authorizes the court to appoint a “committee” to effect the partition

      • Which would rather have your committee do, plan a sale or work with appraisers to physically partition?

    • Note: the sale will not capture subjective value, ex., of living in a home.

    • Delfino is exceptional—most courts are more influenced by the reduction in value.

      • Perhaps the homestead is special

    Donald J. Weidner


    Delfino versus johnson cont d
    Delfino client?versus Johnson (cont’d)

    • Cotenants are generally treated proportionately with reference to the co-owned property, not with reference to a larger framework.

    • Nonetheless, ownership of an adjacent tract by one cotenant may mean that the tract to be sold will be more valuable to this cotenant than to others

      • Thus, the cotenant who owns an adjoining tract may have a comparative advantage in bidding at a public sale

    Donald J. Weidner


    Agreement against partition
    Agreement Against Partition client?

    • A and B own Blackacre as Tenants in Common. Each agrees in writing with the other never to bring an action to partition the land.

    • What result if A subsequently brings an action to partition?

      • What is the doctrine likely to be invoked?

        • No unreasonable restraints on alienation.

        • The time stated must be reasonable in terms of the purposes of the agreement.

      • What are the policies that are implicated?

        • What does Demsetz say?

    Donald J. Weidner


    Demsetz toward a theory of property rights
    DEMSETZ – TOWARD A THEORY OF PROPERTY RIGHTS client?

    • Property Rights

      • some: property rights are one’s relation to an asset (rather than the asset itself).

      • others: property rights are one’s relation to other persons, rather than one’s relations to the asset.

    • Property rights “derive their significance from the fact that they help a man form those expectations which he can reasonably hold in his dealings with others.”

      • The owner has the consent of others to act in particular ways.

      • The owner expects the community to prevent others from interfering with the owner’s actions.

    Donald J. Weidner


    Demsetz cont d
    Demsetz (cont’d) client?

    • Property rights convey the right to benefit or to harm oneself or others.

      • Property rights specify how persons may be benefited and harmed and, therefore, who must pay whom to modify actions taken by the parties.

    • Externalities

      • “externalities exist whenever some person, say X, makes a decision about how to use resources without taking full account of the effects of the decision. X ignores some of the effects – some of the costsorbenefits that would result from a particular activity, for example – because they fall on others. They are ‘external’ to X, hence the label externalities.

      • As a consequence of externalities, resources tend to be misused or ‘misallocated’: used in one way when another would make society as a whole better off.”

    Donald J. Weidner


    Demsetz cont d1
    Demsetz (cont’d) client?

    • Externalities (effects that are not considered by the actor because they fall on others)

      • are both pecuniary and non-pecuniary

      • include both costs and benefits

    • Internalizing these effects “refers to a process, usually a change in property rights, that enables these effects to bear (in greater degree) on all interacting persons.”

    • A primary function of property rights is to guide incentives to achieve a greater internalization of externalities.

    • What makes a harmful or beneficial effect an externality is that the cost of bringing the effect to bear on the decisions of one or more of the interacting parties is too high to make it worthwhile.

    • Allowing transactions increases the degree to which internalization takes place.

      • How would you describe the function of partition?

    Donald J. Weidner


    Demsetz cont d2
    Demsetz (cont’d) client?

    • His thesis: Property rights develop to internalize externalities when the gains of internalization become larger than the cost of internalization

      • To adjust to new cost-benefit possibilities

      • The adjustments are “largely as a result of gradual changes in social mores and in common law precedents.”

    • Economists have long cited the over-hunting of game as an example of an externality.

      • Because of the lack of control over the hunting of others, it is in no person’s interest to invest in maintaining or increasing the stock of game.

      • Over-intensive hunting of game takes place.

      • Thus, a successful hunt is viewed as imposing external costs on subsequent hunters—costs that are not taken into account fully in determining the extent of hunting or of animal husbandry.

    Donald J. Weidner


    Demsetz cont d3
    Demsetz (cont’d) client?

    • Labrador Indians offer an example. Prior to the fur trade, hunting was carried on primarily for food, and relatively few furs were required by the hunters for their family use.

    • The advent of the fur trade

      • increased the value of the furs to the Indians; and

      • hence, the level of fur trade increased.

    • The fur trade made it economic to encourage the husbanding of animals.

      • Husbanding requires the ability to prevent poaching.

      • The property rights system changed toward private property to allow actors to internalize the benefits of their actions.

    • This was a move away from communal ownership, which he defines as a right that can be exercised by all members of the community.

    Donald J. Weidner


    Demsetz cont d4
    Demsetz (cont’d) client?

    • Communal ownership means that the community denies to the state or to individual citizens the right to interfere with any person’s exercise of community owned rights

      • sound like concurrent ownership?

    • Private ownership implies that the community recognizes the right of the owner to exclude others from exercising the owner’s private rights.

    • State ownership implies that the state may exclude anyone from the use of a right

      • as long as the state follows accepted political procedures for determining who may not use state-owned property.

    Donald J. Weidner


    Demsetz cont d5
    Demsetz (cont’d) client?

    • Suppose that land is communally owned: every person has the right to hunt, till, or mine the land.

    • Communal (concurrent?) ownership fails to concentrate the cost associated with any person’s exercise of his communal rights on that person.

      • If a person seeks to maximize the value of the person’s communal rights, the person will tend to overhunt and overwork the land because some of the costs of doing so are borne by others.

      • The stock of game and the richness of the soil will be depleted too quickly.

      • Sound like Delfino?

    Donald J. Weidner


    Demsetz cont d6
    Demsetz (cont’d) client?

    • In the case of communal ownership, each person could agree to abridge the person’s rights to hunt

      • However, the costs of reaching agreement may be very high.

      • Negotiating costs may be very large

        • It is difficult for many persons to reach agreement,

        • Especially when each holdout has the right to consume as fast as the holdout pleases.

        • It is also hard to bring the full expected costs and benefits of future generations to bear on current users.

      • Policing costs may be high, even if an agreement can be reached.

    Donald J. Weidner


    Demsetz cont d7
    Demsetz (cont’d) client?

    • Contrast private property, in which a single owner will attempt to maximize its present value by taking into account alternative future streams of benefits and costs and selecting the one the owner believes will maximize the present value of the owner’s rights.

      • this means the owner will attempt to take into account the supply and demand conditions that the owner thinks will exist after the owner’s death.

      • In effect, an owner of a private right to use land acts as a broker whose wealth depends upon how well the owner takes into account the competing claims of the present and the future.

    Donald J. Weidner


    Demsetz cont d8
    Demsetz (cont’d) client?

    • Consider the value of an office building.

      • Project net cash flows (by looking at both receipts and expenses) some years into the future.

      • Discount them to present value.

  • With communal claims, there is no broker.

    • The claims of the present generation will be given an uneconomically large weight in determining the intensity with which land is worked.

  • Donald J. Weidner


    Demsetz cont d9
    Demsetz (cont’d) client?

    Advantages of private property:

    • effects a partial concentration of benefits and costs

      • an owner may economize on the use of those resources from which the owner has a right to exclude others.

      • However, because the owner cannot exclude others from their private rights to land, the owner has no direct incentive to economize in the use of the owner’s land in a way that takes into account the effects the owner produces on the land rights of others (same problem as in communal ownership).

    Donald J. Weidner


    Demsetz cont d10
    Demsetz (cont’d) client?

    Advantages of private property (cont’d)

    • greatly reduces the costs of negotiating over the remaining externalities (his point: often overlooked)

      • The externalities that accompany private ownership of property do not affect all owners, and, in general, only a few need reach an agreement that takes the effects into account: negotiating costs are lower than if all members of the community had to be brought to agreement.

        . The reduction in negotiating cost that accompanies the private right to exclude others allows most externalities to be internalized at rather low cost.

        . Exception: externalities that are associated with activities that generate external effects impinging on many people (pollution from a factory).

        • Especially if there are many generators of the external effects (the smoke comes from many factories), it may be too costly to internalize effects through the marketplace.

    Donald J. Weidner


    Authors timber example
    Authors’ Timber Example client?

    • Assume a communal forest of 1,000 trees.

    • Owned in common by members of a primitive tribe.

      • Each had an undivided 1/100 interest in 1,000 trees

    • If X chops a tree and puts it to his own use, he

      • Gains the full 1 tree

      • Loses only 1/100 of an interest in a tree

        • BEFORE 1/100 interest in 1,000 trees: 10

        • AFTER 1 tree plus 1/100 interest in 999 trees, or 9.99=10.99

    • The other neighbors pay most of the COST

      • BEFORE they had 99/100 of 1,000 trees or 990

      • AFTER they have 99/100 of 999 trees or 989.01 trees

  • He GAINS .99 and they LOSE .99

    • His imposition of a cost on them is an externality under a system that says he has a right to do this

      • it is an external cost that he need not take into account

  • Donald J. Weidner


    Authors timber example cont d
    Authors’ Timber Example (cont’d) client?

    • Assume, now, a trader will pay $2 per tree

    • Each time X sells a tree for $2

      • X GAINS $2

      • X’s COST is only 1/100 X $2.00 = $ 0.02

    • If X stops chopping to conserve, he has no assurance any of the other 99 members of the tribe will stop chopping

    • If X stops, X bears the full cost of stopping, the other 99 get the benefit

      • it would be an external benefit

    • In short, it is to the benefit of each member of the tribe to chop away

    Donald J. Weidner


    Authors timber example cont d1
    Authors’Timber Example (cont’d) client?

    • Tragedy of the Commons—If each individual acts in accordance with the individual’s own best interests, society as a whole will lose because of the over-consumption of resources in the commons.

    • How will society lose?

      • One of its members gains a tree, although society loses a tree

    • Assume that the tree might be more much more valuable in the future, so that a discounted present value of a tree chopped 10 years from now is $3.

      • The tribe is selling trees worth $3 for $2—it is LOSING money

      • Yet, no one will stop chopping under a communal ownership system.

    • I won’t wait to chop until the future value is greater, because someone will chop the trees out from under me—my incentive is to chop (consume) too soon.

    Donald J. Weidner


    Authors tree example cont d
    Authors’ Tree Example (cont’d) client?

    • All members theoretically could agree not to chop, but

      • the negotiating costs to get 100 people to agree may be high

      • Moreover, there is the problem of the holdout—those members who would insist on very high payments to stop chopping

      • There is also the problem of the freerider—those members who would let others make all the payments to others to stop chopping

      • the costs to police the agreement may be high

    Donald J. Weidner


    Spiller v mackereth
    SPILLER v. MACKERETH client?

    • 2 tenants in common owned a downtown building. A lessee vacated. One cotenant entered and began using the structure as a warehouse. The cotenant out of possession wrote a letter demanding that the cotenant in possession “either vacate half of the building or pay half of the rental value.” The cotenant in possession did neither.

    • Trial court awarded $2,100 rent to the cotenant out of possession.

    • Appellate court applies majority rule:

      • In absence of (a) an agreement to pay rent or (b) an ouster of a cotenant out of possession, a cotenant in possession is NOT liable to the cotenant out of possession for the value of the use of the property

        • Delfino type of situation

      • There was no agreement to pay rent

      • Was there an ouster of the cotenant out of possession that would trigger a liability to pay rent by the cotenant in possession?

    Donald J. Weidner


    Spiller v mackereth cont d
    Spiller v. Mackereth client? (cont’d)

    • How do you decide when there is an “ouster?”

      • It depends upon why you are asking.

    • For Purposes of Determining Whether An Occupying Tenant Has Acquired Title By Adverse Possession

      • Cotenant in possession claims to have established full ownership by adverse possession.

      • The question is: when is there a sufficient ouster to begin the running of the statute of limitations on an action to recover the possession of land?

      • Court says the essence of a finding of an ouster in the adverse possession cases “is a claim of absolute ownershipand a denial of the cotenancy relationship by the occupying cotenant.”

        • Two different things?

    Donald J. Weidner


    Spiller v mackereth cont d1
    Spiller v. Mackereth client? (cont’d)

    • Some cases have said the assertion of complete ownership can be found in a composite of activities such as

      • Renting part of the land without accounting

      • Hunting the land

      • Cutting timber

      • Assessing and paying taxes

      • Generally treating the land as if it were owned in fee for the statutory period.

        • Delfino?

    • Other cases find the assertion of complete ownership only from more overt activities such as

      • a sale of the property under a deed purporting to convey the entire fee.

    Donald J. Weidner


    Spiller v mackereth cont d2
    Spiller v. Mackereth client?(cont’d)

    2. For Purposes of Determining the Liability of An Occupying Cotenant for Rent

    • Cotenant out of possession wants rent from cotenant in possession

    • A claim of absolute ownership by the occupying cotenant is not essential.

    • “The normal fact situation which will render an occupying cotenant liable to out of possession cotenants is one in which the occupying cotenant refuses a demand of the other cotenants to be allowed into use and enjoyment of the land, regardless of a claim of absolute ownership.”

    • There must be some evidence that the cotenant seeking rent actually sought to occupy the bldg. but was prevented from moving in by the cotenant in possession.

    Donald J. Weidner


    Spiller v mackereth cont d3
    Spiller v. Mackereth client?(cont’d)

    • Courts are split

      • Majority: occupying cotenant is not liable for a proportionate share of the rental value to the cotenants out of possession notwithstanding a demand to either vacate or pay rent (unless there is an ouster).

      • Minority: occupying cotenant is liable for rent if the occupancy continues after a demand to vacate or pay rent.

    • Are these mandatory rules or default rules?

      • Should there be a mandatory rule here?

      • If not, what is the proper default rule?

        • What rule would be efficient?

        • What rule would be fair?

    Donald J. Weidner


    Spiller v mackereth cont d4
    Spiller v. Mackereth client?(cont’d)

    • IWhat are the pluses and minuses of each rule?

      1. Efficiency Considerations?

      • Is the majority rule efficient to the extent it encourages a cotenant out of possession of vacant property to take possession and put it to good use?

      • Is the majority rule inefficient to the extent it entails litigation costs over what constitutes an ouster?

      • Is the minority rule efficient because it avoids litigation costs over what constitutes an ouster?

      • Is the minority rule efficient because it places the burden on getting an agreement that no rent shall be paid on the acting party, the one moving in to take possession?

      • Is the minority rule inefficient because it takes away the incentive to convert out of communal ownership?

        • If you can get rental income, you are less likely to file a partition action.

    Donald J. Weidner


    Spiller v mackereth cont d5
    Spiller v. Mackereth client?(cont’d)

    2. Fairness Considerations?

    • What is “fair?”

    • What are the reasonable expectations of the parties?

  • Are the reasonable expectation of the parties also an efficiency consideration?

  • What if my sister moves into my mom’s condo, takes care of her until her death, and keeps living there?

  • What if she moves into property my mom held as rental property?

  • Donald J. Weidner


    The partnership analogy
    The Partnership Analogy client?

    • Existence

      • RUPA 202(a): “the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.”

      • RUPA 202(c)(1): “Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property or part ownership does not of itself establish a partnership, even if the co-owners share profits made by the use of property.”

      • Principal factors indicating co-ownership of a business include the sharing of profits, losses and control

    Donald J. Weidner


    The partnership analogy cont d
    The Partnership Analogy (cont’d) client?

    • Rights and Duties Among Themselves

      • Equality model is the default rule as to:

        • profits

        • losses

        • management rights.

      • The partnership agreement may not be amended without unanimous consent.

      • Each partner owes the partnership and the other partners the fiduciary duty of loyalty.

    Donald J. Weidner


    The partnership analogy cont d1
    The Partnership Analogy (cont’d) client?

    • Partnership Property

      • RUPA 501: “A partner is not a co-owner of partnership property and has no interest in partnership property which can be transferred, either voluntarily or involuntarily.”

      • RUPA 401(g): “A partner may use or possess partnership property only on behalf of the partnership.”

      • Compare Spiller v. Mackereth, saying each cotenant has the right to occupy the whole, absent ouster.

    Donald J. Weidner


    The partnership analogy cont d2
    The Partnership Analogy (cont’d) client?

    • Authority to bind the partnership

      • RUPA 301(1): “Each partner is an agent of the partnership for the purpose of its business. An act of a partner . . . for apparently carrying on in the ordinary course the partnership business . . . binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew . . . that the partner lacked authority.”

      • Compare Swartzbaugh: “the act of one joint tenant without express or implied authority from or consent of his cotenant cannot bind or prejudicially affect the rights of the latter . . . .”

    Donald J. Weidner


    Swartzbaugh v sampson
    Swartzbaugh v. Sampson client?

    • W and H were joint tenants in FSA of 60 acres planted with walnut trees.

    • Against W’s objections, H and T negotiated for a lease of a small portion of the land from H to T for a site for a boxing pavillion.

      • T knew that W would not join in a lease to T.

    • Two leases for two adjoining parcels were executed and dated 2/2/34, at low rent, for a 5-yr. base term plus 5-year renewal.

    • T removed walnut trees and erected a boxing pavillion.

    • W received no rental.

    • W, who was bedridden at the time of the lease execution, filed suit 5 months later. W sues to cancel two leases entered into between her defendant H and the defendant lessee.

    • Can one joint tenant, who has not joined in the leases, cancel them if the lessee is in exclusive possession of the leased property?

    Donald J. Weidner


    Swartzbaugh v sampson cont d
    Swartzbaugh v. Sampson client?(cont’d)

    • Did the leases sever the joint tenancy?

      • At common law, yes, “at least during the term of the lease.”

      • Logic of the unities?

      • Logic of intent?

      • Analogy of the mortgage?

    • Why did the court discuss severance?

    • During the lives of the cotenants, the rules regulating the transfer of their interests are substantially the same, whether they are joint tenants or tenants in common.

    Donald J. Weidner


    Swartzbaugh v sampson cont d1
    Swartzbaugh v. Sampson client?(cont’d)

    • “Neither a joint tenant nor a tenant in common can do any act to the prejudice of his cotenants in their estate.”

      • A “conveyance by one tenant of a parcel of a general tract, owned by several, is inoperative to impair any of the rights of his cotenants.”

      • The “conveyance must be subject to the ultimate determination of their rights.”

      • One cotenant may not appropriate a particular parcel, which may be awarded to another cotenant on partition.

      • The grantee only acquires such rights as the grantor had.

      • The grantee must take subject to the contingency of the loss of the premises, if, upon the partition, they should not be allotted to the grantor.

    Donald J. Weidner


    Swartzbaugh v sampson cont d2
    Swartzbaugh v. Sampson client?(cont’d)

    • “The conveyance . . . is ineffectual against the assertion of [the interest of the cotenant who did not join in the conveyance] in a suit for partition of the general tract, but it is good against all others.”

    • “Until such partition, the grantee will be entitled to the use and possession as cotenant, in the parcel conveyed, with the other owners . . . .”

    • “It is a general rule that the act of one joint tenantwithout express or implied authority from . . . his cotenant cannot bind or prejudicially affect the rights of the other.”

      • However, a limitation is that “a lease to all of the joint property by one joint tenant . . . is a valid . . . contract insofar as the interest of the lessor in the joint property is concerned.”

    Donald J. Weidner


    Schwartzbaugh v sampson cont d
    SCHWARTZBAUGH v. SAMPSON client? (cont’d)

    • Other possible options available to Mrs. Schwartzbaugh?

      • Sue H for W’s share of rent collected from a third party?(Statute of Anne—1704)(“Accounting” action)

        • What if the rent is low?

      • Sue H for the fair market value of the tenant’s occupancy? (sometimes called an action for “mesne profits”)(“Accounting” action)

        • Majority requires ouster (Spiller v. Mackereth)

        • Was there an ouster here?

      • Sue H to partition the entire parcel?

        • By sale or in kind?

        • What of the improvement (the boxing pavillion)?

    Donald J. Weidner


    Mrs schwartzbaugh s other options cont d
    Mrs. Schwartzbaugh’s Other Options (cont’d) client?

    4. Sue to evict T on the theory that there was an unauthorized lease of partnership property?

    • Was this a partnership?

    • Was this partnership property?

    • Does a partner have a separate interest in partnership property that can be conveyed?

    • Did a partner have authority to execute this lease on behalf of the partnership?

      5. Sue T to partition the tract leased to T for a 10 year term?

      • In kind or by sale?

      • Will T argue Delfino?

    Donald J. Weidner


    Kean v dench
    Kean v. Dench client?

    • A, a cotenant with B, conveyed his undivided interest by metes and bounds to C

      • More specifically, A conveyed Lots 1 and 2. C moved to partition, requesting Lot 2, and was awarded Lot 2.

    • Upon partition suit by C, the court awarded to C the land conveyed to C on the theory that this remedy did not prejudice or injure B.

    Donald J. Weidner


    Swartzbaugh v sampson cont d3
    Swartzbaugh v. Sampson client?(cont’d)

    Partitioning the 10-year term by sale

    • Assume rent paid in a lump at end of each of 10 years.

    • Further assume a 10% Discount Rate

      Yr. 10 rent X .385 = PV of Yr. 10 rent

      Yr. 9 rent X .424 = PV of Yr. 9 rent

      .

      .

      Yr. 1 rent X .909 = PV of Yr. 1 rent

      Total = Value of Lease

    Donald J. Weidner


    Swartzbaugh v sampson cont d4
    Swartzbaugh v. Sampson client?(cont’d)

    • If you partition by sale of the leasehold, how do you take into account the tenant-constructed pavillion?

      • If physical partition is impossible or would result in an injustice to one of the cotenants, the property is sold and the proceeds distributed in such a way as to award the improver the added value (if any) resulting from the improvements.

        • Who is likely to bid at the sale?

    Donald J. Weidner


    Fiduciary Duties client? (n. 3, p. 372)

    • Are cotenants fiduciaries with respect to each other?

    • A fiduciary is one who occupies a position of trust and confidence as, or analogous to, a trustee.

      • A trustee is one who holds something subject to an obligation to another.

    • The most important fiduciary duty owed by a trustee is the duty of loyalty.

      • A fiduciary can not appropriate an opportunity from a beneficiary of the fiduciary duty without at least notifying the beneficiary that the appropriation is about to take place.

      • If the fiduciary takes an opportunity without notice, the fiduciary must share it.

    Donald J. Weidner


    Fiduciary duties cont d
    Fiduciary Duties (cont’d) client?

    • In general, tenants in common are not considered fiduciaries to one another.

    • Two situations in which a fiduciary duty is most commonly found between tenants in common:

      • When one cotenant buys in at a mortgage foreclosure or tax sale and then asserts a superior claim to the other cotenant[s].

        • The purchasing cotenant must hold the title for the other[s], provided they pay their share of the price.

      • When a cotenant in exclusive possession claims to have acquired title by adverse possession.

        • The claim of sole ownership must be unequivocal and notorious.

    • Cotenants who acquire title by the same instrument are more likely to be considered fiduciaries of one another.

    Donald J. Weidner


    California statute spouses as fiduciaries
    California Statute: Spouses as Fiduciaries client?

    § 721. Contracts with each other and third parties; fiduciary relationship

    (a) Subject to subdivision (b), either husband or wife may enter into any transaction with the other, or with any other person, respecting property, which either might if unmarried.(b) Except as provided in Sections 143, 144, 146, 16040, and 16047 of the Probate Code, in transactions between themselves, a husband and wife are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other. This confidential relationship is a fiduciary relationship subject to the same rights and duties of nonmarital business partners, as provided in Sections 16403, 16404, and 16503 of the Corporations Code, including, but not limited to, the following:

    Donald J. Weidner


    California statute cont d
    California Statute (cont’d) client?

    (1) Providing each spouse access at all times to any books kept regarding a transaction for the purposes of inspection and copying.(2) Rendering upon request, true and full information of all things affecting any transaction which concerns the community property. Nothing in this section is intended to impose a duty for either spouse to keep detailed books and records of community property transactions.(3) Accounting to the spouse, and holding as a trustee, any benefit or profit derived from any transaction by one spouse without the consent of the other spouse which concerns the community property.

    Donald J. Weidner


    Further aspects of relations among themselves
    Further Aspects of Relations Among Themselves client?

    • In general, a cotenant paying more than the cotenant’s share of taxes, mortgage payments and necessary carrying chargeshas a right to contribution

      • “At least up to the amount of the value of their share in the property”

      • Credit for excess payments can also be awarded in an accounting action or in a partition action.

      • The theory: “The protection of the interest of each cotenant from extinction by a tax or foreclosure sale imposes on each the duty to contribute, to the extent of his proportionate share, the money required to make such payments.”

    Donald J. Weidner


    Further aspects of relations among themselves cont d
    Further Aspects of Relations Among Themselves (cont’d) client?

    • Perhaps: At least in the case of a compulsory payment to defend one’s property, the law implies a lien on the property that is defended to prevent unjust enrichment of the noncontributing party.

    • Major qualification: Some hold that, if the tenant who has paid taxes or interest has been in exclusive possession of the property, and the value of the use of the property equals or exceeds the excess payments, no action in any form will lie against the cotenants out of possession.

      • Is this consistent with the principle behind the general rule about contribution for taxes and interest?

      • Is this consistent with the majority rule about the right of a cotenant to occupy without obligation to pay absent ouster?

    Donald J. Weidner


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