Co-Owning Property in Texas May Have Unforseen Issues

Posted by on Jul 11, 2014 in Real Estate

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sam-moak

“THE LEGAL CORNER”

By Sam A. Moak

Co-Ownership of Property in Texas

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

 Occasionally I run into situations between unmarried individuals owning property together. This can be a result of two or more people purchasing property together, but more often it is a result of two or more people inheriting property from a deceased individual.

Attorneys often face co-ownership issues when advising on inheritance and probate avoidance. Inheritance in such cases may be determined by express language in a deed or a last will and testament, or in the absence of either, by intestacy provisions of the Estates Code. In some circumstances a co-owner may have no survivorship rights at all.

Texas real estate may be owned individually or jointly. Joint owners are called co-owners or cotenants, and the

relationship is known as a cotenancy. Texas law recognizes three forms of cotenancy: community property, joint tenants with the right of survivorship (JTWS), and tenants in common (TIC). In this article I will focus on TIC.

Co-ownership, regardless of the type, gives each cotenant the right to use, occupy and possess each part of the property, but not exclusively. Cotenants may not exclude other cotenants from possessing, using or occupying the same part or parcel. This undivided right of possession forms the basis of the cotenancy relationship. Cotenants may terminate the cotenancy at any time by

partitioning, which changes co-ownership to sole ownership. Partitioning divides the property according to value, not area, and may occur voluntarily or judicially. Voluntary partitioning requires an agreement among the cotenants to divide the property in a certain manner. After

exchanging deeds, each former cotenant owns a certain parcel outright.

 Judicial partitioning, on the other hand, is done by the court. If the court finds the property cannot be divided fairly and

equally, it orders the property to be sold with the proceeds divided among the owners according to their undivided interests. Judicial partitioning is a time-consuming, expensive process. Cotenants have the right to transfer their undivided interests to a third party without the other cotenants’ consent.

 Although co-owners share the nonexclusive right to use and possess the property, the legal relationship ends there. No cotenant is a legal partner or agent of the other. Except in limited circumstances, no cotenant has the authority to bind another cotenant to an agreement or a debt. No fiduciary duty exists among the cotenants unless an express agreement exists. However, cotenants do share some responsibilities.

This is often where problems arise between cotenants.

 Individually and collectively, cotenants have a duty to protect and preserve the property. A cotenant who expends funds

for this purpose is entitled to reimbursement from the others for their proportional share. Equity gives the cotenant making the expenditures a lien on the property to enforce repayment.

 Similarly, cotenants have a duty to preserve and protect the property from waste. Waste constitutes the unauthorized or wrongful destruction or severance of improvements, trees, minerals or other tangible property from the property. Waste does not include ordinary wear and tear. The party committing the waste becomes liable to the others for damages.

 Cotenants are responsible for the payment of a common debt, such as the mortgage and property taxes. A cotenant paying a disproportionate share of these debts may recover the costs from the others. Again, equity holds each cotenant equally liable, and all are bound to contribute proportionately according to their undivided interest. This raises some questions. Assume one cotenant pays all the property taxes for years and the others refuse to reimburse him or her. Rather than sue, the cotenant quits paying the taxes and purchases the property at the tax foreclosure sale. Does this give the cotenant sole title to

the land? The answer is no. Texas law presumes a cotenant purchasing the property at a tax sale does so for the benefit of all the cotenants. The purchaser simply reinstates the cotenancy relationship as it existed before the tax sale.

 Today’s column states just a few examples of the issues that can arise in cotenancy. Therefore, if you find yourself in a cotenancy relationship that is not working out, then you should consult an attorney for assistance.

 Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

www.moakandmoak.com

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