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co ownership of real property 2

co ownership of real property 2 - CO-OWNERSHIP OF REAL...

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Unformatted text preview: CO-OWNERSHIP OF REAL PROPERTY Three forms of eo-ownership of real property are: l) Tenancy in Common 2) Joint Tenancy with Right of Survivorship 3) Tenancy by the Entirety CHARACTERISTICS OF TENANCY IN COMMON - T.C. has unity of possession only - T.C. is presumed when no form of ownership specified - The preferred form of eo- ownership in KY - The owners' interests may be unequal Ex: l/4 to A, 3/4 to B (but each has the right of entry and use of all the land) - Each owners' interest is freely transferable by will, sale, gift, or inheritance. Ex: If A dies without a will, A's share descends to A's heirs. - Each tenant may cause the land to be partitioned ‘ - May be a voluntary partition - May be an involuntary partition - KRS 38 l .120 allows a co-owner of real property to petition the court for a fair division of the property. - The court may physically divide the land if the division does not substantially impair the value of the property. - If such a physical division of does substantially impair the value of the property, then the court may order a sale of the property and fairly divide the proceeds among the owners. (But any owner may bid on the property at the sale.) CHARACTERISTICS OF JOINT TENANCY WITH RIGHT OF SURVIVORSHIP / - Common law required 4 unities: - time; title; interest; and possession - Meant all persons had to obtain title at the same time (time); obtain title from the same source (title); own equal fractional interests in the land (interest); and have an equal right to possess the whole (possession). - KY law recoghizes an exception to unity of time and title, but persons who are IT with a right of survivorship must still own equal interests and have equal possession. - This form of eo-ownership can only be created when such an intent is clearly expressed. in a will or deed. - Therefore, it can never arise when an owner dies without a will (i.e., dies intestate) - If words of survivorship are absent, then a Tenancy in Common is created. - When a joint tenant dies, his interest remains with the surviving tenants. (This means one's interest can't pass under a will or descend in intestacy to heirs.) -Exceptions: ' ,_. - When tenants die simultaneously, one‘s interests pass as T.C. "- When one J.T. kills another J.T., the deceased's share descends to his heirs or will takers. ' - The right of survivorship may be severed. Ex: AB, and C are J.T.'s and A conveys to X. (X is a T.C. with B & C; B & C are still J.T. w/ right of Survivorship) Ex: J.T. may compel partition under KRS 38] .120 (This is just like court partition under 'l‘.C.) CHARACTERISTICS OF TENANCY BY THE ENTIRETY - This form ofco-ownership has 5 unities: - time, title, interest, possession, plus marriage - Obviously, the eo-ownership can only exist between husband and wife. - Cannot sever the right of survivorship by the unilateral act of one party. (This is the major difference between J .T. with right of survivorship, when a husband and wife co-own realty.) — This is created by language "to H & W by the entirety" or "to H & W with right of survivorship". - KRS 381.050 states that a H & W take as T.C. unless the instrument expressly provides for a right ofsurvivorship. - T.E. can be terminated in 3 ways: 1) Voluntary partition 2) Divorce (because the unity of marriage is destroyed) 3) lfspousc kills other spouse, then KRS 381.280 controls. Since one party cannot unilaterally destroy the T.E., what happens when H transfers his interest to X, in order to defeat W's interest in their jointly-held property? - X receives a contingent interest only (with no possessory rights); H must survive W. lfH does survive W, then X has full ownership. But ifW survives H, then W owns all. - This same concept applies to creditors' liens, as well as X. NEW TERMS in the Jackson case. Quitclaim deed - Deed of conveyance intending to pass whatever interest the grantor may have, but not professing that such title is valid. (This is common in divorce settlements.) Grantor - The person by whom a grant is made. Grantee - One to whom a grant is made. In re — In the affair of; in the matter of; regarding. JACKSON V. O'CONNELL (p.61) FACTS - Nellie, Anna, and Katherine were sisters. - Bach owned 1/3 as a J .T. in property located in Cook C0,, Illinois - Nellie quitclaimed her 1/3 to Anna. - Anna died and by her will devised her interest in the Cook Co. property to her 4 nieces. - The nieces (Pfs) claim they own 2/3 of said property. - Katherine's heirs (Dfs) claim they own 2/3 of said property. LEGAL ISSUES - The court ruled that Katherine's heirs won because: -When A, B, and C are joint tenants with a right of survivorship and A sells to B; then B and C are still joint tenants with respect to the remaining 2/3 interest. - B holds the 1/3 purchased interest as a tenant in common with C; so B can will that 1/3 interest to his will beneficiaries. - B's remaining 1/3 interest will pass to C at B's death, because the survivorship right to the 2/3 interest owned with C has not been severed. In re Estate of Ledwidge (p. 62) In re - In the affair of; in the matter of; regarding. - The usual manner of entitling a judicial proceeding in which there are not adversary parties, but merely some property concerning which judicial action is to taken. FACTS -Two siblings deeded property to themselves as follows: "... as joint tenants with full rights of survivorship and not as tenants in common; an undivided 1/4 interest in Veronica M. Ledwidge and an undivided 3/4 interest in John C. Ledwidge..." -John C. Ledwidge died. -John's will beneficiaries argue that the unequal ownership interests defeated Veronica's survivorship rights. (Because j oint tenancy with a right of survivorship generally requires equal fractional interests.) LEGAL ISSUES - The court ruled that the deed was intended to create full rights of survivorship; and just because the unity interest wasn't present, the deed was still a survivorship deed. - In other words, Veronica took the entirety of the land at John's death, and John's will beneficiaries took nothing. COMMUNITY PROPERTY - Spouses are co-owners of all property acquired during the marriage by either spouse. (Underlying principle is that husbands and wives should share equally in all property accumulated during their marriage.) Exceptions: property acquired by will, gift, or by inheritance. (Also includes income from such property as well.) - Kentucky recognizes "community property" when a spouse dies in KY with property acquired in a community property state. - KRS 391210-260 controls Nelson v. Hotchkiss (p. 65) FACTS — Dorothy Hotchkiss and Inna Nelson were sisters. - The sisters and their husbands purchased a farm together. - The farm was deeded as follows: . r3??— "Robert A. Nelson and Irma E. Nelson, husband and wife; and Herbert H. Hotchkiss and Dorothy A. Hotchkiss, husband and wife; all as joint tenants with right of survivorship in all four, and not as tenants in common." - The Nelsons later divorced. - Robert Nelson conveyed his interest to Herbert & Dorothy. - Herbert then died. - Irma then sued to have the court partition and sell the prOperty, with the proceeds divided according to their interests. - Trial court divided 3/8 to Inna and 5/8 to Hotchlcisses. LEGAL ISSUES - Appellate court interpreted the property to be held, as two tenancies by the entirety, with each couple holding 1/2 interest as joint tenants with the other couple. - The Appellate court held that the divorce severed Nelsons' TE. and also severed the joint tenancy with the other couple because the unity of interest was destroyed. - So originally each couple owned l/2 each; then Robert Nelson sold to Hotchkisses his 1/4. So Irma Nelson then owned l/4 and Herbert & Dorothy owned 3/4; meaning that Dorothy owned 3/4 at death of her husband, Herbert. METHODS OF SELLING FARMLAND 1) Private agreement 2) Through broker 3) Auction 4) Sealed bid REQUIREMENTS OF A BROKER 1) Broker and agent must be licensed 2) Must represent seller 3) Comply with standards of profession a) Good faith dealing b) Act with reasonable care c) Full disclosure TYPES OF LISTING AGREEMENTS 1) Open listing - Seller may use other brokers 2) Exclusive-agency listing - Only one broker authorized to sell the property - Owner retains right to sell the property ( with no commission owed) 3) Exelusive-right-to-sell listing - Only one broker authorized to sell the property - Commission owed if property sold by anyone, including owner 4) Multiple listing - Pooling of 2) or 3) above - Commission divided between listing broker and broker who sells the property — Generally operated by real estate boards .F‘x - Mrs. Garvin entered into a contract for sale with Schuler in October, during the lease duration. . - Buyer and seller "closed" in spring before wheat was harvested, and Seller delivered a warranty deed with the covenant: "Grantor is lawfully seised of said premises; and they are free from encumbrances (no exceptions)." - When new owner began harvesting the wheat, tenant's wife blocked combines. - Agreement was reached allowing the wheat to be harvested, but allowed for 2/3 (tenant‘s share) to be stored. - New owner (Schuler) sued Sell (Mrs. Garvin) and Tenant (Nelson), declaring Schuler was sole owner of the wheat. LEGAL ISSUES ' - Appellate court ruled that the growing wheat passed with the real estate, since there was no reservation in the deed. . - Court said that the leasehold interest was encumbrance; so the covenant in the deed was breached. - Therefore the buyer had a right of action against the seller - So the wheat was the tenant's; and Mrs. Garvin (the seller) had to pay damages to the buyer equaling the tenant's 2/3 interest in the wheat. McMEEN v. WHIPPLE (p. 82) FACTS - The owner (Whipple) told the buyer (McMeen) there was a highway on the south boundary of the farm. - The buyers inspected the premises only briefly due to nightfall approaching. - The buyers purchased the farm based upon the owner’s representations. - There was no highway on the south side for access. - The buyers sought recission of the deed. LEGAL ISSUES - Did the misrepresentation by the owner constitute fraud; and was the reliance by the buyers reasonable? - The elements of fraud are: l. a false representation of a material fact (knowing it to false) 2. a representation made with intent to deceive 3. reliance by a party to his detriment 4. reliance must be reasonable - The court held: - the owner‘s misrepresentation constituted fraud - the buyer's reliance was reasonable under the facts: a) Darkness was fast approaching b) Buyers lived a long distance from the farm c) Buyers had dealt with seller before d) Seller pushed for early closing _ - The trial court's recission of the deed was affirmed. [GENERALLY, a buyer is held to the standard of "an ordinary prudent purchaser", for which a buyer is considered negligent if_he fails to inspect the premises] 46 - Generally, the first document entered into between parties to a real estate transfer is the "contract of sale" (also refefied to as a "purchase contract"). This document is usually complefe=d=fiy We r=l=ea esiaie agent (or BrolEerl, so the parties often do not realize the significance of the contract. - The "contract of sale" is a binding, legal document. So have a lawyer review the contract before signing such a contract. ~ A contract of sale contains the following: I. Minimum required 1) Buyer's name 2) Seller's name (Make sure all owners sign) 3) Property description (Make sure it's adequate; best to include deed book and page no.) 4) Price/ Consideration (Specify whether sale is "in gross" or "by the acre") 5) Signed by party against whom is charged (Best to get a_ll parties to sign.) 11. Recommended 6) Conditional on financing and kind 7) Conditional on buyer receiving marketable title 8) If title is defective, who pays to correct 9) Risk of loss provision/ who carries insurance 10) Closing date / Date of possession / Division of closing costs 11) Fixtures included - The "mer er doctrine" in real property law states that all prior statements and agreements, both written and oral merge into the deed and the parties are bound by that instrument (and not the contract of sale). - So if you desire that certain agreements made in the contract of sale remain binding upon the parties, include a paragraph in the "contract of sale" stating that "all warranties, representations, and conditions contained in the contract of sale (or purchase contract) shall survive the closing and shall not merge into the subsequent deed“. NEW TERMS ln gross - In a large quantity or sum; without deduction, division, or particulars. (When land is sold "in gross", there will generally be no adjustment for a shortage of acreage. When land is sold "by the acre", the purchaser is usually entitled to an abatement in the purchase price for a deficiency in the quantity intended to be sold.) Stigmatized properties - Properties where unsavory events have occurred. These events include murders, suicides, heinous crimes, etc. (A KY statute prohibits "...failing to disclose a defect which substantially affects the value of the property." However, another KY statute specifically prohibits disclosure that an occupant of real property is infected with HIV.) ...
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