WA-Probate > Probate-Litigation > Determining Co-Owners' Interests in Property

O.  Determining Co-Owners' Interests in Property

1. The Typical Situation

2. General Rule: Tenancy-in-Common

3. Exceptions to the Tenancy-in-Common Rule

4. General Rule: Each Party Has an Equal Interest

5. Exceptions to the Equal Interest Rule

6. Division of Property upon Dissolution of Relationship or Death

1.  The Typical Situation    ñ

Usually:  Deed to real property in the names of two or more persons, saying nothing more, such as:

• In Joint Tenancy (with right of survivorship).

• As Tenants-in-Common, and perhaps silent as to their respective shares.

• As Community Property (if with a married couple).

Occasionally: Deed to real property in the name of one person but another person has contributed all the down payment or purchase price.

2.  General Rule: Tenancy-in-Common    ñ

Every interest in property created in favor of two or more persons is an interest as a Tenant-in-Common.  RCW 64.28.020(1)

A Tenancy-in-Common is a form of ownership of jointly held property in which each co-owner:

• Has an equal right to use the property (as is true of all jointly held property in general), but

• May hold a different fractional interest in the property as regards ownership and transfer, and

• Has the right to transfer his/her share in the property during life and at death.

An interest in property as a Tenant-in-Common is a:

• Probate asset,

• Is subject to probate, and

• Does not pass "outside of probate," as does an interest in property as a Joint Tenant (with right of survivorship).

Example: Person A as to a 2/3rds share & Person B as to a 1/3rd share, each as to an undivided interest as Tenants-in-Common:

• Both A & B have equal rights to possess and use the property.

• A is entitled to 2/3rds of its rents or profits and can transfer any or all of his/her 2/3rds interest during life or at death.

• B is entitled to 1/3rd of its rents or profits and can transfer any or all of his/her 2/3rds interest during life or at death.

Practical Problem with Property Held as Tenants-in-Common: If the property cannot be easily physically divided into shares, any co-owner can file a Partition Action with the Court, requesting the Court to order a compulsory sale of the property by public auction, with its net sale proceeds to be distributed among all the co-owners according to their respective shares.  RCW 7.52.010

3.  Exceptions to the Tenancy-in-Common Rule    ñ

The property is:

1. Acquired by the parties in partnership for partnership purposes.  RCW 64.28.030(1)  A partnership requires the parties to have entered into a business relationship for profit.  Latham v. Hennessey, 13 Wn.App. 518 (1975); affirmed 87 Wn.2d 550 (1976).  Or:
    

2. Declared in its creation to be a Joint Tenancy (with Right of Survivorship).  RCW 64.28.030(1)  Or:
    

3. Acquired by Executors or Trustees.  RCW 64.28.030(1)  Or:
    

4. Acquired by husband and wife, in which case the interest is presumed to be their community property.  RCW 64.28.030(2)&(3); RCW 26.16.030; Estate of Salvini, 65 Wn.2d 442 (1964).

4.  General Rule: Each Party Has an Equal Interest    ñ

In a cotenancy, each party has an equal interest.  Marriage of Monaghan, 78 Wn.App. 918 (1995); Cummings v. Anderson, 94 Wn.2d 135 (1980).

5.  Exceptions to the Equal Interest Rule    ñ

1. If the document by which the parties acquired their interests specifies otherwise.  Cummings.
    

2. If they contributed unequally to the purchase price, they are presumed to share the property proportional to their respective contributions to the purchase price.  Cummings.  West v. Knowles, 50 Wn.2d 311 (1957).
   
   Exceptions to proportion contribution presumption:
    

   1. The parties' relationship is such that a gift from one to the other is presumed to be intended.  Cummings.  People v. Varel, 351 Ill. 96 (1932).  For example, if property is taken in the name of a noncontributing grantee, that grantee is presumed to hold legal title subject to the equitable ownership of the contributor (ie, a resulting trust), unless (i) the grantee is a natural object of the contributor’s bounty (ie, a gift) or (ii) the parties are in a meretricious relationship.  Walberg v. Mattson, 38 Wn.2d 808 (1951).
       

   2. The property was acquired jointly by a couple who lived together many years as husband and wife, intending to share their acquisitions equally.  Foster v. Thilges, 61 Wn.App. 880 (1991)[couple lived together ten years, pooled their incomes, obtained joint loan to build a new home, and purchased other real property together].

6.  Division of Property upon Dissolution of Relationship or Death    ñ

a.  If Parties Married to Each Other.  Washington law requires a marriage to be solemnized to be valid.  RCW 26.04.010(1)  It does not recognize a common-law marriage unless it was validly entered into in another state.  Peffley-Warner v. Bowen, 113 Wn.2d 243 (1989).

1. Dissolution:  Both separate & community property is subject to a “just and equitable division.”  RCW 26.09.080
    

2. Death:  Each spouse controls and may dispose of all of his or her separate property and one-half of the community property.  RCW. 26.16.010-030

b.  If Meretricious Relationship.   “A stable, marital-like relationship where both parties cohabit with knowledge that a lawful marriage between them does not exist.”  Connell v. Francisco, 127 Wn.2d 339, 346 (1995).  See: In re Pennington, 142 Wn.2d 592 (2000) for the relevant factors.

1. Dissolution:  All property that would have been community property had the parties been married is subject to a just and equitable division.  Connell.  All property acquired during the relationship is presumed to be owned by both parties (regardless of how title is held), and thus community property, and thus subject to a just and equitable division; this presumption may be overcome by tracing of the funds used for its acquisition.  Connell.  Property that would have been the separate property of one party had the parties been married remains the separate property of that party and is not subject to a just and equitable division.  Connell.
    

2. Death:  The surviving party is not a “surviving spouse” for purposes of inheritance etc.  Peffley-Warner.  But, as in the dissolution situation, “any property acquired during the relationship that would have been community property is jointly owned and subject to a just and equitable division.”  Olver v. Fowler, 141 Wn.App. 135, 146 (2006); on appeal to WA Supreme Court, 154 Wn.2d 1006 (2006).

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