Concurrent or Common Ownership

HOA cannot prohibit short-term leasing if original covenants contained no restraints on alienation

/ Concurrent or Common Ownership, Condominiums and Homeowners Associations, Servitudes

A North Carolina court refused to allow a homeowners association (HOA) to amend its covenants to ba short-term leasing (leasing for less than 90 days) even though the HOA followed the correct procedures to amend the covenants and nothing limited their power to adopt the restriction. McDougald v. White Oak Plantation Homeowners Ass’n, 904 S.E.2d 180 (N.C. Ct. App. 2024). The modern approach to covenants tends to see them as valuable property rights and the ability of an association to “govern” the association by imposing limits on land use as a welcome power, the traditional approach viewed covenants as meddlesome encumbrances on ownership that burden an owner’s freedom to use their property as they see fit, especially when ownership is held in fee simple. These contrasting attitudes mean that the modern approach interprets ambiguities in the declaration to achieve the intent of the grantor and perhaps even to give the …

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What happens when unmarried couples purchase property as tenants by the entirety?

/ Concurrent or Common Ownership

Only married couples can own property as tenants by the entirety so what happens if an unmarried couple buys property with a deed that purports to convey a tenancy by the entirety interest? If we presume that the goal was to create a right of survivorship, then we should interpret it as a joint tenancy. If we adopt the general presumption in favor of tenancy in common for ambiguous conveyances, then it should be a tenancy in common. The D.C. Court of Appeals adopted the former assumption and interpreted a conveyance to a father and a son as a joint tenancy finding the entireties language sufficient to overcome the statutory preference for tenancies in common. In re Estate of Hamilton, 299 A.3d 542 (D.C. 2023).

Joint tenancy severed by agreement

/ Concurrent or Common Ownership

The Massachusetts Supreme Judicial Court has held that joint tenants can sever the joint tenancy and destroy the right of survivorship by agreement. Furnas v. Cirone, 221 N.E.3d 772 (Mass. 2023). While a joint tenant does not sever the joint tenancy by moving out, severance does happen when when the parties agree that one owner will remove all his personal property, continue to make monthly payments to his co-owner for half the monthly mortgage payment, and that the co-owner would either refinance or put the property up for sale. This agreement, by itself, was sufficient in the court’s eyes to “sever” the joint tenancy and turn the interests into tenancy in common interests.

Texas Supreme Court interprets life estate as a fee simple because the remainders were subject to divestment

/ Concurrent or Common Ownership, Estates and Future Interests, Real Estate Transactions, Wills and Inheritance

In Jordan v. Parker, 2022 WL 17998227 (Tex. Dec. 30, 2022), the Texas Supreme Court held that a conveyance of a life estate actually conveyed a fee simple since the remainders were subject to alteration or even complete divestment by the life estate owner. In this case, a man devised his entire estate to his widow for life with remainders in their children, but the devise gave the widow complete power to transfer both the life estate property and to redirect ownership of the remainders. Part of the estate was a fractional ownership interest in a ranch. Some years later, while the widow was still alive, a son who was a remainder owner conveyed his remainder interest to his daughters (the granddaughters of the widow and the testator). The widow never exercised her power to alter the remainders in her children during her lifetime, and the question was whether the widow …

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Homeowners Association architecture regulations must be reasonable and authorized by governing documents

/ Concurrent or Common Ownership, Condominiums and Homeowners Associations

The Nevada Supreme Court adopted §6.7 and §6.9 of the Restatement (Third) of Property (Servitudes) and held that restrictions on construction (including architectural review committees) are only valid if owners are on notice of them and they exercise their powers “reasonably.” Moretto Trustee of the Jerome F. Moretto 2006 Trust, v. ELK Point Country Club Homeowners Ass’n, Inc., 507 P.3d 199 (Nev. 2022). Those sections state that no homeowners association has implied power to regulate the architecture of individual units unless the governing documents (the declaration that establishes the association) explicitly confers that power on the association, and even then, the exercise of that power must be reasonable. In this case, the governing bylaws required owners to get board approval before building any structure on their property. After purchasing a lot subject to the bylaws, the executive board created an architectural review committee and some architectural guidelines. One of the owners …

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Restraint on partition or conversion of joint tenancy interest to tenancy in common is an invalid restraint on alienation

/ Concurrent or Common Ownership

A deed prohibiting joint tenants from suing for partition or converting their joint tenancy interest into a tenancy in common without the consent of the other owners was an invalid restraint on alienation and unenforceable. Mindock v DuMars, 2022 WL 1410017, 2022 US App LEXIS 12044 (10th Cir 2022). The court did not accept the argument that the restraint was reasonable as a means to keep ownership of the home in the family when the joint tenants were all the grandchildren of the grantor.

Short-term rentals do not violate “residential use only” covenant

/ Concurrent or Common Ownership, Condominiums and Homeowners Associations, Leaseholds, Real Estate Transactions, Servitudes

The Mississippi Supreme Court has held that short term rental of property is not a commercial use that would violate a covenant limiting land to residential purposes. Lake Serene Prop. Owners Ass’n v. Esplin, 334 So.3d 1139 (Miss. 2022). There has been some disagreement among state courts on this question because the use of property as an Airbnb or other short term rental can be viewed as changing property to “hotel” use, at least when the owner does not share occupancy with the guest.

Physical partition denied when the sale value significantly exceeds the value of the separate parcels despite a co-owners attachments to the land

/ Concurrent or Common Ownership

The Nebraska Supreme Court held that partition by sale is preferred to physical partition if the fair market value of the land as a whole exceeds the market value of separate parcels even if a co-owner objects to the sale because of sentimental attachments to the land. FTR Farms, Inc. v. Rist Farms, Inc., 942 N.W.2d 204 (Neb. 2020). A somewhat similar case came out the opposite way in Ark Land Co. v. Harper, 599 S.E.2d 754 (W.Va. 2004)

Proceeds of partition by sale divided according to ownership interests without any credit given to co-owner whose funds were used to buy the property

/ Concurrent or Common Ownership, Estates and Future Interests, Real Estate Transactions

Because the Texas partition statute requires the proceeds of a partition sale to be divided “according to [the owners’] just rights therein,” joint tenants were entitled to 50% of the sale proceeds even though one of the co-owners had used his own funds to purchase the property. Gallagher v. Townsend, 443 P.3d 847 (Wyo. 2019). At the same time, the court would be entitled to adjust the amounts each party received to reflect the fact that one co-owner had paid more of the property taxes.

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