## Facts

- Parents (Manuel and Flora) and their adult son (Joao) bought a single-family home in 1980 for $34,500 and took title as tenants in common, each side holding an undivided one-half interest.
- Manuel and Flora contributed $10,000; Joao contributed $10,000; the remaining $14,500 was financed by mortgage.
- All three initially lived in the home; Joao performed repairs and improvements and then moved out.
- For approximately 18 years, Manuel and Flora exclusively occupied the home and did not rent any portion to others.
- During that period, Manuel and Flora paid all mortgage, taxes, insurance, and maintenance; the trial court found $61,892 in operating and maintenance expenses.
- The home was sold in 1998, yielding net proceeds of $114,453.18; after each side withdrew $10,000, $94,453.18 was escrowed for judicial allocation.
- The trial court credited Joao $2,000 for excess labor but required him to reimburse one-half of the operating and maintenance expenses and denied any offset for the rental value of the parents’ exclusive occupancy.

## Issues

1. Whether, in a post-sale accounting between tenants in common, an occupying cotenant who seeks contribution for operating and maintenance expenses must allow the nonoccupying cotenant a credit for the reasonable value of the occupying cotenant’s exclusive possession, even absent ouster.

## Decision

- Reversed and remanded for a new accounting.
- Held that when a cotenant in sole possession seeks reimbursement from a cotenant out of possession for operating and maintenance expenses, equity requires a credit to the nonoccupying cotenant for the reasonable value of the occupying cotenant’s sole occupancy.
- Directed the trial court to determine any such credit based on proof of reasonable rental value and then recalculate distribution of the sale proceeds.

## Legal Principles

- Tenants in common generally must bear operating and maintenance costs on a pro rata basis.
- Absent ouster, a cotenant out of possession is generally not entitled to affirmative rent from a cotenant in possession.
- In an equitable accounting where the occupying cotenant affirmatively seeks contribution for carrying costs, the nonoccupying cotenant may receive an offset for the reasonable value of the occupying cotenant’s exclusive occupancy.
- The nonoccupying cotenant bears the burden to prove the reasonable rental value used to compute the occupancy credit.

## Conclusion

The court required an equitable accounting that balances expense contribution with the value of exclusive use: an occupying cotenant who seeks reimbursement for carrying costs must credit the nonoccupying cotenant for the reasonable value of the occupancy, with rental value to be proven on remand.


Esteves v. Esteves, 341 N.J. Super. 197 (App. Div. 2001)