Ownership of real property - Special problems

Learning Outcomes

This article examines several special problems relating to the ownership of real property, critical for the MBE. It clarifies the elements required to establish title through adverse possession, including tacking and disabilities. It also outlines the characteristics and complexities of concurrent estates, such as partition rights and duties between co-tenants. Finally, it addresses specific issues arising in land sale contracts, particularly exceptions to the Statute of Frauds. After reviewing this article, you will be equipped to analyze MBE questions involving these challenging property ownership scenarios.

MBE Syllabus

For the MBE, understanding special issues in real property ownership is essential. This includes doctrines that alter typical ownership rules or create unique rights and liabilities. You should be prepared to:

• Analyze the requirements for acquiring title by adverse possession (actual, exclusive, open and notorious, hostile, continuous possession for the statutory period).
• Understand how tacking applies between successive adverse possessors.
• Recognize the effect of disabilities on the running of the statute of limitations for adverse possession.
• Differentiate between the types of concurrent estates: tenancy in common, joint tenancy (including severance), and tenancy by the entirety.
• Assess the rights and duties of co-tenants regarding possession, rents, operating expenses, repairs, and improvements.
• Evaluate the remedy of partition for concurrent estates.
• Identify exceptions to the Statute of Frauds for land sale contracts, particularly part performance and detrimental reliance.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. To acquire title by adverse possession, possession must be:
   1. Permissive, open, and continuous.
   2. Actual, exclusive, open and notorious, hostile, and continuous.
   3. Actual, shared, notorious, and hostile for five years.
   4. Exclusive, hostile, and known to the true owner.
2. Which of the following acts by one joint tenant will typically sever a joint tenancy, converting it into a tenancy in common with respect to the severing tenant's share?
   1. Execution of a will devising the tenant's interest.
   2. Temporarily leasing the property to a third party (in most jurisdictions).
   3. Obtaining a mortgage on their interest in a lien theory state.
   4. Inter vivos conveyance of their interest to a third party.
3. Which of the following actions is LEAST likely to satisfy the part performance exception to the Statute of Frauds for an oral land sale contract?
   1. The buyer pays the full purchase price.
   2. The buyer takes possession of the property and pays a substantial portion of the purchase price.
   3. The buyer takes possession and builds a permanent structure on the land.
   4. The buyer pays a small deposit and obtains financing approval.

Introduction

Beyond the creation and transfer of basic estates like the fee simple absolute and life estate, several special problems arise in real property ownership that frequently appear on the MBE. These involve situations where ownership rights are acquired unconventionally (adverse possession), shared among multiple parties (concurrent estates), or where enforceability issues arise in transfers (Statute of Frauds exceptions). Understanding these specific doctrines is essential for correctly analyzing complex property fact patterns.

Adverse Possession

Adverse possession allows a person to acquire title to real property owned by another through wrongful possession for a statutorily defined period. The fundamental policy rationales include punishing dormant owners and rewarding productive use of land. Title acquired by adverse possession relates back to the date the adverse possession began.

Elements of Adverse Possession

To establish title by adverse possession, the possession must be:

1. Actual: The possessor must physically occupy the land in some manner (e.g., residing, farming, building).
2. Exclusive: Possession must not be shared with the true owner or the public generally. (Possession shared between multiple adverse possessors results in them taking title as tenants in common).
3. Open and Notorious: Possession must be sufficiently visible and obvious to put a reasonable true owner on notice that a trespass is occurring.
4. Hostile (Adverse): Possession must be without the true owner’s permission. The possessor’s state of mind is generally irrelevant (majority view); it doesn't matter if they believe they own the land, know they don't, or are unsure. Possession that starts permissively (e.g., a tenant) does not become hostile until the possessor clearly repudiates the permission.
5. Continuous: Possession must continue uninterrupted throughout the statutory period. The period required varies by state (commonly 10, 15, or 20 years).

Key Term: Adverse Possession
A method of acquiring title to real property by possessing the property for a statutory period under certain conditions (actual, exclusive, open and notorious, hostile, continuous).

Special Issues in Adverse Possession

Tacking

An adverse possessor may "tack" their period of possession onto the possession period of a prior adverse possessor to meet the statutory requirement, provided there is privity between the successive possessors.

Key Term: Tacking (Adverse Possession)
The joining of consecutive periods of possession by different persons to treat the periods as one continuous period; requires privity between the possessors.

Key Term: Privity (Adverse Possession)
A relationship between successive adverse possessors required for tacking, typically satisfied by transfer via deed, will, or intestate succession (though even non-hostile transfers like an oral agreement may suffice). Ouster or abandonment breaks privity.

Disabilities

If the true owner is under a disability (infancy, insanity, imprisonment) at the time the adverse possession begins, the statute of limitations clock does not start running until the disability is removed. If the disability arises after the adverse possession begins, it does not stop the clock. Disabilities cannot be tacked; only the owner's disability at the inception matters.

Worked Example 1.1

In 2000, Adam began adversely possessing Blackacre, owned by Olivia. The statutory period is 10 years. In 2005, Olivia was declared legally insane. In 2011, does Adam acquire title?

Answer:
Yes. The statute of limitations began running in 2000 when Adam's possession started. Olivia's disability (insanity) arose in 2005, after the adverse possession began. Therefore, the disability does not toll the statute. The 10-year period ran from 2000 to 2010. Assuming Adam met all other elements, he acquired title in 2010.

Concurrent Estates

Concurrent estates exist when two or more persons own property at the same time. The three main types tested are tenancy in common, joint tenancy, and tenancy by the entirety.

Tenancy in Common

• Characteristics: Each co-tenant owns an individual part, but has a right to possess the whole property. Interests can be unequal (e.g., A owns 1/3, B owns 2/3). Each interest is descendible, devisable, and alienable inter vivos. There is no right of survivorship.
• Creation: This is the default co-tenancy. A conveyance to two or more persons (e.g., "to A and B") presumptively creates a tenancy in common.

Joint Tenancy

• Characteristics: Key feature is the right of survivorship: when one joint tenant dies, their interest automatically passes to the surviving joint tenant(s). The interest is alienable inter vivos (but such a transfer severs the joint tenancy), but not devisable or descendible.
• Creation: Requires the four conditions (PITT):
  • Possession: Equal right to possess the whole.
  • Interest: Equal shares of the same type of interest (e.g., both fee simple).
  • Time: Interests must vest at the same time.
  • Title: Interests must be acquired by the same instrument (deed or will).
  • Modern statutes often relax the strict requirement for all four conditions, but clear language expressing intent to create a right of survivorship (e.g., "to A and B as joint tenants with right of survivorship") is essential.
• Severance: An inter vivos transfer of a joint tenant's interest severs the joint tenancy as to that share, converting it into a tenancy in common. The remaining joint tenants (if more than two started) continue as joint tenants among themselves.
  • Mortgages: Jurisdictions split. Lien theory (majority): Mortgage does not sever. Title theory (minority): Mortgage severs.
  • Leases: Jurisdictions split on whether a lease severs.

Tenancy by the Entirety

• Characteristics: A marital estate similar to joint tenancy (requires the four conditions plus the fifth condition of marriage). Includes a right of survivorship. Protected from individual creditors of one spouse. Neither spouse can unilaterally convey or encumber their share; requires consent of both.
• Severance: Can only be terminated by death, divorce (converts to tenancy in common), mutual agreement, or execution by a joint creditor of both spouses.

Rights and Duties of Co-Tenants

• Possession: Each co-tenant has the right to possess the entire property. One co-tenant may not exclude another (ouster).
• Rents/Profits: A co-tenant in possession generally does not owe rent to co-tenants out of possession, unless there's an ouster or agreement otherwise. Rents received from third parties must be shared proportionally based on ownership interests.
• Operating Expenses: Expenses like taxes and mortgage payments are shared proportionally. A co-tenant paying more than their share can seek contribution.
• Repairs: Necessary repairs – contribution generally allowed after notice (majority view).
• Improvements: No right to contribution for improvements, but the improver may get credit (or bear the loss) in a partition action.
• Waste: A co-tenant cannot commit waste (affirmative, permissive, or ameliorative).
• Partition: Joint tenants and tenants in common have a right to partition the property, either physically (partition in kind, preferred) or by sale with proceeds divided proportionally (partition by sale, used if physical division is impractical or unfair). Tenancy by the entirety cannot be unilaterally partitioned.

Key Term: Joint Tenancy
A form of concurrent ownership where two or more persons own property with the right of survivorship; requires the four conditions (time, title, interest, possession) for creation.

Key Term: Tenancy in Common
A form of concurrent ownership where two or more persons hold separate fractional shares in undivided property; no right of survivorship exists. This is the default co-tenancy.

Key Term: Right of Survivorship
A feature of joint tenancy and tenancy by the entirety where, upon the death of one co-tenant, their interest automatically passes to the surviving co-tenant(s).

Key Term: Ouster
The wrongful exclusion of a co-tenant from possession of the whole or any part of the concurrently owned property.

Worked Example 1.2

Amy and Ben own Greenacre as joint tenants. Amy conveys her interest to Charles by deed without Ben's knowledge or consent. What is the state of title?

Answer:
Charles and Ben own Greenacre as tenants in common. Amy's inter vivos conveyance of her interest severed the joint tenancy as to her share. The right of survivorship is destroyed between Charles and Ben. Charles holds an undivided one-half interest, and Ben holds an undivided one-half interest, as tenants in common.

Land Sale Contracts: Statute of Frauds Exceptions

Contracts for the sale of an interest in land must generally be in writing and signed by the party to be charged to satisfy the Statute of Frauds. However, equity may enforce an oral land sale contract under specific exceptions.

Part Performance

An oral land sale contract may be enforced if the buyer's actions unequivocally prove the existence of the contract. Most jurisdictions require at least two of the following three acts by the buyer:

1. Payment of all or a substantial part of the purchase price.
2. Taking possession of the property.
3. Making substantial improvements to the property.

Key Term: Statute of Frauds
A legal doctrine requiring certain types of contracts, including those for the sale of land, to be in writing and signed by the party against whom enforcement is sought.

Key Term: Part Performance
An equitable doctrine allowing enforcement of an oral contract for the sale of land if the buyer performs certain acts (typically possession plus payment or improvements) that unequivocally prove the contract's existence.

Detrimental Reliance (Equitable Estoppel)

Courts may enforce an oral land contract, despite the Statute of Frauds, if a party has reasonably relied on the contract to their substantial detriment, and refusing enforcement would result in undue hardship or unjust enrichment. This is often pleaded alongside part performance.

Worked Example 1.3

Seller orally agrees to sell his farm to Buyer for $200,000. Buyer pays Seller $10,000 as a down payment, moves onto the farm, and builds a new barn worth $50,000. Seller then repudiates the agreement. Can Buyer enforce the oral contract?

Answer:
Yes, most likely. Buyer's actions (possession, partial payment, substantial improvements) satisfy the requirements for the part performance exception to the Statute of Frauds in most jurisdictions. Enforcing the contract prevents injustice given Buyer's significant reliance.

Exam Warning

Remember that acquiring title by adverse possession is an exception to recording acts. A subsequent bona fide purchaser who records will not prevail against someone who has already acquired title through adverse possession, even if the adverse possessor's title is unrecorded.

Revision Tip

Focus on the precise requirements for each element of adverse possession. Pay close attention to how hostility is defined (objective standard in majority) and when the statutory clock starts and stops (disabilities). For concurrent estates, ensure you can distinguish the creation and severance rules, especially for joint tenancies.

Key Point Checklist

This article has covered the following key knowledge points:

• Adverse possession requires actual, exclusive, open & notorious, hostile, and continuous possession for the statutory period.
• Tacking allows combining possession periods if privity exists.
• Owner disabilities at the inception of adverse possession toll the statute.
• Tenancy in common is the default; no right of survivorship.
• Joint tenancy requires four conditions (PITT) and has a right of survivorship.
• Severance of joint tenancy (e.g., by inter vivos transfer) creates a tenancy in common.
• Tenancy by the entirety requires marriage and prevents unilateral transfers or encumbrances.
• Co-tenants share rights/duties regarding possession, expenses, and rents from third parties.
• Partition is a remedy for joint tenants and tenants in common.
• Part performance (possession + payment/improvements) can make an oral land contract enforceable despite the Statute of Frauds.
• Detrimental reliance can also overcome the Statute of Frauds in equity.

Key Terms and Concepts

• Adverse Possession
• Tacking (Adverse Possession)
• Privity (Adverse Possession)
• Joint Tenancy
• Tenancy in Common
• Right of Survivorship
• Ouster
• Statute of Frauds
• Part Performance