Concurrent Ownership & Mortgages Review Brought to you by: Yvette and Courtenay (THE BEST TUTORS . . . . EVER)!!!!!!!!!!!!!!!!
1. Obi-Wan is the owner of Empire Estates, a rolling estate with a beautiful home on it. In 1985, Obi-Wan properly executes and delivers a deed which conveys Empire Estates "to Leia and Luke Skywalker and their heirs as joint tenants and not as tenants in common.� On January 1,1989, Luke Skywalker announces his marriage to Mara Jade. As a wedding gift, Luke Skywalker properly executes and gives Mara Jade a deed at their rehearsal dinner conveying his interest in Empire Estates "to Luke Skywalker and Mara Jade as tenants by the entirety." On January I, 1990, Luke Skywalker leases Empire Estates to Chewbaca, his cousin, for 5 years at $8,000 a month, even though the fair market value is $10,000 a month. The lease provides that (I) "Chewbaca has the duty to repair the premises;" (2) "that Luke Skywalker may use self-help eviction as long as the means of re-entry are peaceable;" and (3) "that Chewbaca may not assign without Luke Skywalker's consent." State the title to Empire Estates applying the minority approach, not common law: A.
Leia and Luke Skywalker hold as joint tenants, and because Leia did not agree to any of the subsequent transfers, Mara Jade has no interest and Chewbaca is an adverse possessor.
B.
Leia holds a half interest as a tenant in common with Luke Skywalker and Mara Jade, who hold a half interest as tenants by the entirety, and Chewabaca is an adverse possessor because Mara Jade did not agree to the lease to Chewbaca.
C.
Leia holds a half interest as a tenant in common with Luke Skywalker and Mara Jade, who hold a half interest as tenants in common, and Luke Skywalker's lease to the tenancy.
D.
Leia holds a half interest as a tenant in common with Luke Skywalker and Mara Jade, who held a half interest as joint Chewbaca, which is valid, did not break tenants, but Luke Skywalker's lease to Chewbaca, which is valid, broke the joint tenancy and turned it into a tenancy in common.
Answer is C
The modem trend focuses much more on the intent of the parties as opposed to the four unities. Under the modem trend, the default estate is tenancy in common unless the parties adequately express an intent to opt out of tenancy in common.
When Obi-Wan conveyed to Leia and Luke Skywalker, the express language in the deed indicated the intent that Lisa and Luke hold "as joint tenants and not as tenants in common." This language adequately expresses the intent to create a joint tenancy. Joint tenants have the power unilaterally to transfer their interests intervivos. If a joint tenant transfers his or her interest, however, the transfer breaks the unities as to the share transferred. Luke Skywalker has the power unilaterally to transfer Luke Skywalker's interest to Luke Skywalker and Mara Jade. Leia now holds Leia's share as a tenant in common with the holders of Luke Skywalker's share.
The issue is how to characterize Luke Skywalker's share now that Luke Skywalker and Mara Jade hold it. The express language of deed from Luke Skywalker to Luke Skywalker and Mara Jade indicates intent to create a tenancy by the entirety. A tenancy by the entirety requires the 4 unities of a joint tenancy plus the fifth unity of marriage. Since delivery occurred prior to marriage, the fifth unity IS lacking and Luke Skywalker and Mara Jade cannot hold as tenants by the entirety.
Under the minority approach, the default co-tenancy is a tenancy in common. Even if the conveyance satisfies the four unities of time, title, interest, and possession, the co-tenancy is presumed to be a tenancy in common. To opt out of tenancy in common, the deed must express precise language indicating an intent to create a joint tenancy. Such language would need to provide expressly that the conveyance was to “as joint tenants with right of survivorship.” There is no such express language in the conveyance, thus under the minority approach, Luke Skywalker and Mara Jade are tenants in common.
Moreover, although at common law, if one wanted to create a joint tenancy in property which one already held, the owner had to use a straw party to satisfy the four unities (particularly the unities of time and title), the modem trend no longer requires the “two to transfer” requirement. Luke Skywalker can from Luke Skywalker to Luke Skywalker and Mara Jade as joint tenants.
Questions 2 & 3 Fred is the rightful owner of Bedrock in fee simple absolute. In 1970, Fred properly executes a deed conveying Bedrock "to Pebbles and Bam Bam and their heirs jointly.” Pebbles and Bam Bam built a small restaurant on the property and began operating ”Bedrock's Diner" on the spot. In 1975, Pebbles dies with a properly executed will which gives all of Pebbles’ property to Wilma. In 1979, Bam Bam executes a written lease, which "conveys the exclusive right of possession to Barney for a term of twenty years commencing on January 1, 1980, at a rate of $12,000 a year, payable $1,000 a month." The lease also contains an approval clause requiring "Barney to get Bam Bam's consent before assigning the property.” In 1990, without Bam Bam's knowledge or consent, Barney executes a written instrument which "assigns, subleases and conveys" all of Barney's interest to Betty. The agreement also contains a right of re-entry clause in the event Betty breaches any provision of the agreement. In July of 1994, Wilma shows up, takes possession of Bedrock and locks out everybody else. Betty attempts to take possession but is rebuffed by Wilma. Betty stops paying rent to Barney, who in turn stops paying rent to Bam Bam. It is now December of 1994. Wilma is still in exclusive possession of Bedrock, and nobody is paying rent to anybody.
2. Under the traditional common law approach state the title to Bedrock:
A. Bam Bam alone holds Bedrock, subject to Barney's leasehold interest, but Betty’s leasehold interest is voidable since the transfer to Betty breached the lease. B. Bam Bam and Wilma hold Bedrock as tenants in common, subject to Barney’s leasehold interest and subject to Betty’s interest. C. Bam Bam and Wilma hold Bedrock as tenants in common, subject to Barney’s leasehold interest but Betty’s leasehold interest is voidable since the transfer to Betty breached the lease. D. Bam Bam and Wilma hold Bedrock as joint tenants, subject to Barney’s leasehold interest but Betty’s leasehold interest is voidable since the transfer to Betty breached the lease.
Answer is A The first issue is which co-tenancy did Fred create when Fred conveyed Bedrock to "to Pebbles and Bam Bam and their heirs jointly." At traditional common law, as long as the four unities of time, title, interest, and possession were present, the co-tenancy was joint tenancy. The joint tenants must acquire their interests at the same time (time); they must acquire their interests through the same instrument or by joint adverse possession (title); they must have equal undivided shares of the same duration (interest); and they must each have a right to possess the whole (Possession). Here, TTIP was present and thus established a joint tenancy between Bam Bam and Pebbles. A joint tenancy, under the Common Law, has an implied right of survivorship. Meaning, the surviving tenant will automatically receive the deceased tenant’s interest. When Pebble’s died her interest in the property automatically shifted to Bam Bam, giving Bam Bam an interest in the entire property. When Bam Bam leased the property, his interest now becomes subject to those leases. However, Bam Bam is only subject to the assignments and subleases authorized by the lease. Since, Bam Bam’s lease with Barney specifically prohibited all assignments and subleases, Betty’s lease interest is voidable and Bam Bam will not be subject to it.
3. Under the minority approach, state the title to Bedrock:
A. Bam Bam alone holds Bedrock, subject to Barney's leasehold interest, but Betty's leasehold interest is voidable since the transfer to Betty breached the lease. B. Bam Bam and Wilma hold Bedrock as tenants in common, but Betty's leasehold interest is voidable since the transfer to Betty breached the lease. C. Bam Bam and Wilma hold Bedrock as tenants in common, neither subject to Barney's leasehold interest nor subject to Betty’s leasehold interest. D. Bam Bam and Wilma hold Bedrock as joint tenants, subject to Barney's leasehold interest but Betty's leasehold interest is voidable since the transfer to Betty breached the lease
Answer is B The first issue is which co-tenancy Fred created when Fred conveyed Bedrock to "to Pebbles and Bam Bam and their heirs jointly."” Under the minority approach, the default co-tenancy is a tenancy in common. Even if the conveyance satisfies the four unities of time, title, interest, and possession, the co-tenancy is presumed to be a tenancy in common. To opt out of tenancy in common, the deed must express precise language indicating an intent to create a joint tenancy. Such language would need to provide expressly that the conveyance was to “Pebbles and Bam Bam as joint tenants with right of survivorship” or “to Pebbles and Bam Bam as joint tenants with right of survivorship and not as tenants in common.” There is no such express language in the conveyance from Fred to Pebbles and Bam Bam. Under the minority approach, Pebbles and Bam Bam would hold the property as tenants in common. There is no right of survivorship associated with a tenancy in common. Moreover, each tenant in common has the right unilaterally to convey his or her interest, inter vivos or testamentary, to another. When Pebbles dies with a properly executed will which purports to convey Pebble's interest in Bedrock to Wilma, the devise is valid and Bam Bam and Wilma now hold Bedrock as tenants in common. Each cotenant has the right to lease his or her share, but not to bind the share of other cotenants. Therefore, Bam Bam and Wilma are tenants in common subject to Barney’s lease and Betty’s Sublease.
4. Oden is the owner of Cottonwood Ranch, a 500-acre farm with a beautiful home on it. In 2000, Oden properly executes and delivers a deed, which conveys Cottonwood Ranch “to Ann, Ben, Cecil and Dee as joint tenants.” On January 1, 2002, Ben finds out that his son, Eddie, is getting married to Faith. As a wedding gift, Ben properly executes and gives a deed at the rehearsal dinner conveying his interest in Cottonwood Ranch to Eddie. On January 1, 2003, Ann dies in a fatal car accident on her way to the gym. One month before Ann’s death, Ann executed a valid will leaving all of her property to Gene. Shortly after inheriting Ann’s interest in Cottonwood Ranch, Gene sells her interest to Henry. On January 1, 2004, Dee takes out a mortgage on Cottonwood Ranch to Isabel, his sister, for 5 years at $8,000 a month, even though the fair market value is $10,000 a month. State the title to Cottonwood Ranch applying the approach in a Lien theory jurisdiction: A. Both Eddie and Henry hold ¼ interest each as tenants in common with Cecil and Dee, who holds a half interest as joint tenants B. Gene holds a ¼ interest as a tenant in common with Cecil and Dee, who hold a ¾ interest as tenants common, and Isabel is an adverse possessor because Cecil did not agree to the mortgage to Isabel. C. Henry holds a ¼ interest as a tenant in common with Cecil and Dee, who hold a ¾ interest as joint tenants, and Dee’s mortgage to Isabel, which is valid, did not break the joint tenancy. D. Eddie holds ¼ interest as a tenant in common with Cecil and Dee, who hold a ¾ interest as joint tenants and Dee’s mortgage to Isabel, which is valid, did not break.
Answer is D Mortgage: Lien Theory (Majority Rule) = a JTs execution of a mortgage on his interest will NOT sever. Title Theory (Minority Rule)= a mortgage WILL sever
5. After Cathy’s divorce, she moved 500 miles back to her hometown, where she moved in with her older sister, Anna, an unmarried woman. Anna’s place was too small, so the sisters bought a larger home, each paying onehalf of the purchase costs. They agreed to share all the expenses of the homeownership, but one year later Cathy lost her job, causing Anna to should most of the expenses. Soon they began bickering. This went on for six months, with the sibling relationship steadily deteriorating. One day Anna told Cathy that she was putting the home up for sale and that she “better find a place to live.” Cathy promptly moved out. Anna remained in possession and listed the house for sale with a real estate broker, but the market was terrible. Anna sold the house ten months after Cathy departed. Anna sent Cathy a check for one-half the net proceeds of the sale, but Cathy wanted more money. She sued for damages based upon Anna’s use of the house for the ten months prior to the sale. The most probable result is:
A. Cathy may recover damages because Anna enjoyed sole possession of the house. B. Cathy may recover damages because Anna ordered Cathy to leave. C. Cathy cannot recover damages because she left the house voluntarily. D. Cathy cannot recover damages because she defaulted in her obligation to pay one-half of the expenses.
Answer is B See page 351-351 of TEXTBOOK- This question tests your understanding of “ouster,” although neither the facts nor the responses use the word. Cathy’s claim is based on the allegation that her sister has ousted her from the house. A is WRONG because Anna’s sole possession, by itself, is NOT sufficient to impose liability for damages. If Cathy chose to leave, Anna is entitled to remain in sole possession without having to pay. D is WRONG; even though it is true that Cathy’s loss of employment does not excuse her from the obligation to pay one-half of the house expenses. In the litigation, Anna has the right to assert a counterclaim based on Cathy’s failure to pay expenses. But this isn’t a defense to Cathy’s claim. We’re down to B and C, both of which are plausible. If Cathy decided to leave the house voluntarily after their conversation, then there is no ouster. On the other hand, if Anna stated that she must leave, then there is an ouster. A court is unlikely to find “non ouster” just because Anna did not use physical force to get Cathy out of the house. An Ouster occurs when the occupying tenant acts to prevent the other co-tenants from using the property. It may occur if the occupying tenant changes the locks or if the occupying tenant makes use of the property in a way that no other use can be made of any part of the property and refuses to make room for another’s use. Generally before you can have an ouster, the co-tenant must demand access to the property or be denied access. FACT HEAVY: Here, Anna told her sister, and Anna said her sister “better find a place to live.” This statements seems much more direct than simply suggesting that Cathy might move if she wanted to. Therefore, Cathy was forced to remove out, denied access, and thus ousted from the property. When an ouster occurs, rent is due to the non-occupying tenant. Thus, B is the better answer. NOTE: the majority rule is that a Joint Tenant or Co-tenant using the whole property, absent an ouster, does NOT owe rent to the other co-tenants, even if the other tenants are not occupying the property.
6. William Wallis purchased Freedom Hills from Hamish. William Wallis gave $150,000 of the $500,000 purchase price in cash, and gave Hamish a promissory note for $350,000. The note was secured by a First Mortgage lien on Freedom Hills. Shortly thereafter, William Wallis had to go fight for Scotland’s freedom, and decided to sell Freedom Hills to Princess Isabelle for $100,000. Freedom Hills was conveyed to Princess Isabelle “subject to the outstanding indebtedness in favor of Hamish in the amount of $350,000.� However, Princess Isabelle, even though thought she told William Wallis she would pay the remainder of the mortgage, defaulted on the mortgage. Hamish, angered by these recent events, would like to foreclose on the property. If Hamish decides to foreclose, it is most likely that:
A. Hamish may foreclose and hold both William Wallis and Princess Isabelle personally responsible for the difference between the $350,000 and the foreclosure sale price
B. Hamish may foreclose and hold William Wallis personally responsible for the difference between the $350,000 and the foreclosure sale price; C. Hamish may foreclose and hold only Princess Isabelle personally responsible for the difference between the $350,000 and the foreclosure price. D. Hamish may foreclose and may not hold either William Wallis or Princess Isabelle personally responsible for the difference between the $350,000 and foreclosure sale price.
Answer is B Princess Isabelle took Freedom Hills “subject to” the existing first mortgage. By, “taking subject to” the person is not undertaking personal liability. This can be confusing because Princess Isabelle, by taking subject to, is agreeing that William Wallis will no longer be making payments to Hamish and that Princess Isabelle is undertaking the risk of losing Freedom Hills by foreclosure if she fails to make the mortgage payments. Even though Princess Isabelle told William Wallis she would pay the remained of the mortgage she did not assume it in the conveyance, never incurring personal liability on the balance. Meaning William Wallis needs to make sure Princess Isabelle makes the payments or he does to avoid the mortgagee coming after him is Princess Isabelle defaults.