The Right of Possession

Winter Park Home, Volume 8 / Issue 3, 2010

There are three principal ways in which individuals acquire ownership in real property–as tenants by the entireties, as joint tenants with rights of survivorship, or as tenants in common.

Tenants by the entireties is limited to ownership by a husband and wife, and provides for an equal right of possession, and for automatic transfer of all interest in the property to the surviving spouse upon the death of the other spouse. Judgments against one spouse do not attach to property owned as tenants by the entireties. Also, neither spouse under a tenancy by the entireties can convey the property without the joinder (formal agreement) of the other spouse. A husband and wife can acquire property as tenants in common–but the vesting deed must include and document this contrary intention. Due to the insulation offered from judgment creditors, as well as the survivorship feature, acquiring property as tenants by the entirety is almost always the recommend form of ownership for a married couple. If divorced, their interest automatically transfers to a tenancy in common.

Joint Tenants with rights of survivorship–To acquire property as joint tenants, the vesting deed must recite their ownership as “joint tenants with full rights of survivorship.” Each joint tenant has an equal ownership interest in the property, and an equal right to occupy and use the property. Each joint tenant may also subsequently convey his/her individual interest to a third party. Provided no action has been taken to terminate the joint tenancy, when one owner dies his/her ownership interest automatically transfers to the other owner, and no probate is required for the deceased’s estate. For example, if John and Jake purchase property as joint tenants with full right of survivorship, and Jake dies, John takes the whole. However, if Jake previously conveyed his interest to Mary, the joint tenancy is severed, and John and Mary own the property as tenants in common. If John and Mary now wish to create a joint tenancy between themselves, a new properly executed deed from John and Mary to themselves, with the recitation “as joint tenants with full rights of survivorship,” must be recorded in the public records.

Tenants in common is the most widely used form of individuals’ concurrent ownership of real property. Whenever two or more individuals (other than husband and wife) purchase real property, and no contrary intention is stated, each acquires an equal ownership interest in the property as tenants in common, with equal rights to occupy and use the property. Typically these individuals are related, or may be friendly business associates. When one of the tenants dies, his/her estate must be probated to determine the owners of the deceased’s interest in the real property - i.e. there is no survivorship feature.

Problems may arise when one of the joint tenants or tenants in common moves out and wants to sell the property, and the other does not. Although each tenant/owner legally may separately convey his or her interest in the real property to another person, there are certain practical considerations. First, of course, the selling owner must find someone who is willing to own the property with the other tenant(s) in common. Second, even if the selling owner finds someone who wants to purchase his interest, they must address whether there are any mortgages on the property that contain a due on transfer clause. This provides that the lender must approve a transfer of any interest in the real property. Without that approval, the lender may declare the mortgage in default, and the property may be foreclosed.

The following example illustrates the due on transfer application. John and Jake currently have a mortgage on their house. The mortgage contains a due on transfer clause. If Jake were to convey his interest to his sister Mary without first obtaining the lender’s consent, the lender has the legal right to immediately foreclose on the house. The lender’s consent to the transfer, of course, would not by itself release Jake from his continuing obligations under the promissory note and the mortgage.

What are the rights of the tenants in common when one owner resides on the property, and the other owner lives elsewhere? For example, Peter and Steve, two college fraternity brothers, bought a home in Winter Park ten years ago. Peter continues to work locally and lives in the house by himself, while Steve recently moved out of the house to take a job in Miami. Due to the downturn in the market, neither wants to sell the house at this time, and Peter does not want to buy out Steve’s interest in the house. Is Peter obligated to pay Steve rent for his half interest in the property? Florida law clearly says no, provided Peter isn’t adversely preventing Steve from occupying the home, and Peter is not collecting rent payments on the property.

What recourse, does any out of possession tenant have if he wants the property to be sold, and the co-tenant refuses? Generally, a tenant in common has the absolute right to bring a court action to partition the property and sell it for its fair market value. The owners would then split the proceeds, after all costs and credits, if any, have been applied. In this example, Steve may choose to wait until the market values improve and, if Peter then refuses to sell, bring a partition action in the Orange County Circuit Court.

Any decision to purchase real property with another individual should be carefully considered by each of the parties, together with a determination of the best form of ownership. Each purchaser should consult with his/her attorney to determine whether the form of tenancy is consistent with each of their individual goals.

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Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.