Dictionary Definition
cotenant n : one of two or more tenants holding
title to the same property
Extensive Definition
A concurrent estate or co-tenancy is a concept in
property
law, particularly derived from the common law of
real
property, which describes the various ways in which property
can be owned by more than one person at a given time. If more than
one person own the same property, they are referred to as
co-owners, co-tenants or joint tenants. Most common law
jurisdictions recognize tenancies in common and joint tenancies,
and some also recognize tenancies by the entirety. Many
jurisdictions refer to a joint tenancy as a joint tenancy with
right of survivorship, and a few U.S. States
treat the phrase joint tenancy as synonymous with a tenancy in
common.
The type of ownership determines the rights of
the parties to sell their interest in the property to others, to
will
the property to their devisees, or to sever their
joint ownership of the property. Just as each of these affords a
different set of rights and responsibilities to the co-owners of
property, each requires a different set of conditions in order to
exist.
It should be borne in mind that the law can vary
from place to place, and that the following general discussion will
not be applicable in its entirety to all jurisdictions.
Rights and duties of co-owners
Co-owners, irrespective of the type of tenancy, share certain rights relative to each other and to the property, except to the extent they have modified these rights through an agreement among themselves:- Each owner has an unrestricted right of access to the property. Where one co-owner wrongfully excludes another from making use of the property, the excluded co-owner can bring a cause of action for ouster, and may receive the fair rental value of the property for the time that he or she was dispossessed.
- Each owner has a right to an accounting of profits made from the property. If the property generates income such as rent, each owner is entitled to a pro-rata share of that income.
- Each owner has a right of contribution for the costs of owning the property. Co-owners can be forced to contribute to the payment of expenses such as property taxes and mortgages on the entire property.
Co-owners do not have any obligation to
contribute to any costs of repairing or improving the property. If
one co-owner adds a feature that enhances the value of the
property, that co-owner has no right to demand that any others
share the cost of adding that feature - even if other co-owners
reap greater profits from the property because of it. However, at
partition, a co-owner is entitled to recover the value added by his
or her improvements of the property. Conversely, if the co-owner's
"improvements" decrease the value of the property, the co-owner is
responsible for the decrease. In an Australian case,
the High
Court said that the costs of repairing by one co-owner must be
taken into account on the partition or final distribution (ie sale)
of the property.
Furthermore, each co-owner can independently
encumber the co-owner's own share in the property by taking out a
mortgage on that share
(although this may effectively convert a joint tenancy to a tenancy
in common, as described below); other co-owners have no obligation
to help pay a mortgage that only runs to another owner's share of
the property, and the mortgagee can only foreclose on that
mortgagor's share. Bank loans secured by mortgages on individual
shares of co-owned property is one of the most rapidly expanding
areas in the mortgage lending industry.
Finally, co-owners owe one another a duty of fair
dealing. Because of this, any co-owner who acquires a mortgage
claim against the property must give his co-owners a reasonable
opportunity to purchase proportionate shares in that claim.
Tenancy in common
Tenancy in common is the default form of concurrent estate, in which each owner, referred to as a tenant in common, is regarded by the law as owning separate and distinct shares of the same property. By default, all co-owners own equal shares, but their interests may differ in size.This form of ownership is most common where the
co-owners are not married or have contributed different amounts to
the acquisition of the property. The assets of a commercial
partnership are normally owned on a tenancy in common basis. Also,
if the joint owners had attempted to use a form of joint ownership,
such as a joint tenancy with right of survivorship or a tenancy by
the entirety, and the effort was for some reason invalid, the joint
owners would by default be classed as tenants in common. If
conclusive evidence is not available of the desire to create a
tenancy with rights of survivorship or a tenancy by the entirety, a
court will normally
determine that a tenancy in common has in fact been created.
Tenants in common have no right
of survivorship, meaning that if one joint owner dies, that
owner's interest in the property will be part of his or her estate
and pass by inheritance to that owner's
devisees or heirs, either by will, or by
intestate
succession. Also, as each joint owner has an interest in the
property, they may, in the absence of any restriction agreed to
between the joint owners, sell or otherwise deal with the interest
in the property (e.g. mortgage it) during their lifetime, like any
other personal interest.
Destruction of a tenancy in common
Where any party to a tenancy in common wishes to
terminate (usually termed "destroy") the joint interest, he or she
may obtain a
partition of the property. This is a division of the land into
distinctly owned lots, if such division is legally permitted under
zoning and other local land use restrictions. Where such division
is not permitted, a forced sale of the property is the only
alternative, followed by a division of the proceeds.
If the parties are unable to agree to a
partition, any or all of them may seek the ruling of a court to
determine how the land should be divided - physically division
between the joint owners (partition in kind), leaving each with
ownership of a portion of the property representing their share.
Courts may also order a partition by sale in which the property is
sold and the proceeds are distributed to the owners. Where local
law does not permit physical division, the court must order a
partition by sale.
Each co-owner is entitled to partition as a
matter of right, meaning that the court will order a partition at
the request of any of the co-owners. The only exception to this
general rule is where the co-owners have agreed, either expressly
or impliedly, to waive the right of partition. The right may be
waived either permanently, for a specific period of time, or under
certain conditions.
Joint tenancy
A joint tenancy or joint tenancy with right of survivorship (JTROS or JTWROS) is a type of concurrent estate in which co-owners have a right of survivorship, meaning that if one owner dies, that owner's interest in the property will pass to the surviving owner or owners by operation of law. The deceased owner's interest in the property simply evaporates and cannot be inherited by his or her heirs, and avoiding probate. Under this type of ownership, the last owner living owns all the property, and on his or her death the property will form part of their estate. Unlike a tenancy in common, where co-owners may have unequal interests in a property, joint co-owners have an equal share in the property.It is important to note, however, that creditors' claims against the
deceased owner's estate may,
under certain circumstances, be satisfied by the portion of
ownership previously owned by the deceased, but now owned by the
survivor or survivors. In other words, the deceased's liabilities
can sometimes remain attached to the property.
This form of ownership is common between husband
and wife, and parent and child, and in any other situation where
parties want ownership to pass immediately and automatically to the
survivor. For bank and brokerage accounts held in this fashion, the
acronym JTWROS is commonly appended to the account name as evidence
of the owners' intent.
To create a joint tenancy, clear language
indicating that intent must be used - eg. "to AB and CD as joint
tenants with right of survivorship, and not as tenants in common".
This long form of wording may be especially appropriate in those
jurisdictions which use the phrase "joint tenancy" as synonymous
with a tenancy in common. Shorter forms such as "to AB and CD as
joint tenants" or "to AB and CD jointly" can be used in most
jurisdictions. Words to that effect may be used by the parties in
the deed of conveyance or
other instrument of transfer of title, or by a testator in a will, or in an inter vivos
trust
deed.
If a testator leaves property in a will to
several beneficiaries "jointly" and one or more of those named
beneficiaries dies before the will takes effect, then the survivors
of those named beneficiaries will inherit the whole property on a
joint tenancy basis. But if these named beneficiaries had been
bequethed the property on a tenancy in common basis, but died
before the will took effect, then those beneficiaries' heirs would
in turn inherit their share immediately (the named beneficiary
being deceased).
The four unities To create a joint tenancy, the
co-owners must share "four unities":
- Time - the co-owners must acquire the property at the same time.
- Title - the co-owners must have the same title to the property. If a condition applies to one owner and not another, there is no unity of title.
- Interest - the co-owners must have the same interest in the property. For example, one owner can't have a life estate and another a fee simple absolute.
- Possession - the co-owners must have an equal right to possess the whole property.
If any of these elements is missing, the joint
tenancy is ineffective, and the joint tenancy will be treated as a
tenancy in common in equal shares.
Breaking a joint tenancy
If any joint co-owner deals in any way with a
property inconsistent with a joint tenancy, that co-owner will be
treated as having terminated (sometimes called "breaking") the
joint tenancy, as far as it relates to that co-owner. In relation
to the other co-owners, if more than one, they remain joint owners
of the remaining interest. The dealing may be a conveyance or sale
of the co-owner's share in the property. The position in relation
to a mortgage is more doubtful (see below). For example, if one of
three joint co-owners conveys his or her share in the property to a
third party, the third party owns a 1/3rd share on a tenancy in
common basis, while the other two original joint co-owners continue
to hold the remaining 2/3rds on a joint tenancy basis. This result
arises because the "unity of time" is broken: that is, because on
the transfer the timing of the new interest is different from the
original one. If it is desired to continue to maintain a joint
tenancy, then the three original joint co-owners would need to
transfer, in the one instrument, the joint interest to the two
remaining joint co-owners and the new joint co-owner.
A joint co-owner may break a joint tenancy and
maintain an interest in the property. Most jurisdictions permit a
joint owner to break a joint tenancy by the execution of a document
to that effect. In those jurisdiction which retain the old common
law requirements, an actual exchange with a straw
man is required. This requires another person to "buy" the
property from the joint co-owner for some nominal consideration,
followed immediately by a sale-back to the co-owner at the same
price. In either case, the joint tenancy will revert to a tenancy
in common as to that owner's interest in the property.
There is a big problem that is possible with the
simple document execution method. In the straw man approach, there
are witnesses to the transfer. With the document, there may not be
witnesses. With either method, as soon as the break occurs, it
works both ways. Because there may not be witnesses, the party with
the document could take advantage of that fact and hide the
document when the other party dies.
Effect of a mortgage
If one joint co-owner takes out a mortgage on
jointly owned property, in some jurisdictions this may terminate
the joint tenancy. Jurisdictions which use a title theory
in this situation treat a mortgage as an actual conveyance of title
until the mortgage is repaid, if not permanently. In such
jurisdictions, the taking of a mortgage by one owner terminates the
joint tenancy as to that co-owner.
However, in jurisdictions which use the lien theory,
the mortgage merely places a lien on the property, leaving the
joint tenancy undisturbed. As a lien is not enough to terminate a
joint tenancy, if the debtor dies before the creditor sues, the
creditor is left with no claim against the property, as the
debtor's interest in the property evaporates and automatically
vests in the other surviving co-owners.
Tenancy by the entirety
A tenancy by the entirety (sometimes called a tenancy by the entireties) is a type of concurrent estate available only to married couples, where ownership of property is treated as though the couple were a single legal person. Like a JTWROS, the tenancy by the entirety also encompasses a right of survivorship, so if one spouse dies, the entire interest in the property passes to the surviving spouse, without going through probate.To create a tenancy by the entirety, the parties
must specify in the deed that the property is being conveyed to the
couple "as tenants by the entirety". Also, besides sharing the four
unities necessary to create a joint tenancy with right of
survivorship - time, title, interest, and possession - there must
also be the fifth unity of marriage. However, unlike a JTWROS,
neither party in a tenancy by the entirety has a unilateral right
to sever the tenancy. The termination of the tenancy or any dealing
with any part of the property requires the consent of both spouses.
A divorce breaks the unity of marriage, leaving the default
tenancy, which may be a tenancy in common in equal shares. Many US
jurisdictions no longer recognize tenancies by the entirety. Where
it is recognized, benefits can include the ability to shield the
property from creditors of only one spouse, as well as the ability
to partially shield the property where only one spouse is filing a
petition for bankruptcy relief. If a
non-debtor spouse in a tenancy by the entirety survives a debtor
spouse, the lien can never be enforced against the property. On the
other hand, if a debtor spouse survives a non-debtor spouse, the
lien may be enforced against the whole property, not merely the
debtor spouse's original half-interest.
References
External links
Note that every country and every state in the United States has at least minor variations on the law as applied to joint ownership of property. These links generally discuss the law as applied in the state from which they originate:This outline discusses the general common law of
joint ownership of property:
IRS Revenue Procedure 2002-20, which covers the
finer details controlling what constitutes a Tenant in Common for
federal tax purposes.
Tenant in Common Association
Comprehensive Tenancy in Common Resource Database
Detailed Info on San Francisco Tenancy in Common
Rules
Tenancy By the
Entirety in Massachusetts.
For a good discussion on this misunderstood
estate see Coraccio v. Lowell Five Cents Savings Bank, 415 Mass. 145,
612 N.E. 2d 650.
There is nothing in the laws of Massachusetts,
or New
York as stated in Coraccio, to prevent one co-tenant from
conveying her own or his own interest in the property, subject to
the continuing rights of the other. While it is generally believed
that one tenant by the entirety cannot convey their interest
because the tenancy cannot be severed, rather it is the
survivorship rights of the other that cannot be severed. Thus, if a
husband conveyed his interest in the property held as tenants by
the entirety to his brother, the husband no longer owns an interest
in the property. The brother takes his (the husband's) place within
the tenancy. Here is the tricky part: if the wife dies then the
husband's brother acquires all interest in the real estate. If the
husband dies before the wife then it all goes to her free and clear
and the husband's brother has nothing. Some conveyancers have
treated deeds by one tenant by the entirety as null. However, such
a deed conveys the interest of the grantor in the property subject
to the survivorship rights of the other co-tenant. KLussier
Tenancy By the Entirety at Common Law/effect of a
conveyance by one:
cotenant in Spanish: Copropiedad
cotenant in French: Colocation