Often there are more than one dwelling unit in a single building. Some of these, such as apartment buildings have a single owner and the dwellers are tenants. There may be as few as two apartments in the building, or even hundreds. In all cases, apartment dwellers do not have ownership interests by virtue of the fact that they live there.
"Double Trouble - Inheriting a Duplex"
"An Estate Plan With Unintended Consequences - One More Time"
Condominiums and townhouses are typically multi-unit structures where the dwellers own their particular units whereas stairways, hallways, entrances, grounds, etc are owned collectively by the unit owners. Of course, the owner of a condominium may elect to rent the unit to a third party, but that third party is exactly the same as a tenant in an apartment and has no ownership interest in the unit. Many buildings that were originally built as apartments have been converted into condominiums and there may be any number of individual units in a condominium or townhouse building. The important distinction from an apartment building is that absent unusual circumstances, with condominium or townhouse buildings, there is no single owner of the entire building and each unit is deeded individually.
In many urban areas, it was common to build duplexes whereby there were, in effect, two apartments in the same building, often one on each of two floors, although side-by-side units are not uncommon. In past times, these structures were intended either for related families, one on each floor, or for an owner who would occupy one floor and obtain income by renting out the other floor. Because the individual floors are not separately deeded as would be the case with condominiums, whomever owns the building typically has a legal right to occupy the entire building. Where one floor is rented to a third party, the owner's right to occupancy is obviously constrained by the terms of the lease. This situation involves a two story duplex in San Francisco. Mom and Dad purchased the property long ago, intending to occupy the first floor and rent out the upper floor. The duplex was located on a nice street where there were many duplexes and large, single family residences. As Mom and Dad aged, they had difficulty maintaining the building and at some point the upper floor became vacant. Their two children, sisters, grew up, moved away and got married. Dad passed away first and Mom inherited his community interest. While the sisters were cordial, they were not close. When Mom died, the property was left to the two sisters who inherited as tenants in common. A tenancy in common is an interest in real property whereby each tenant in common has an undivided interest in the whole. That means that each sister was entitled to use and occupy the entire structure and hence it was not the case that one sister, in effect owned the lower unit and the other, the upper unit. For awhile, the sisters were able to agree that the two flats would be rented out and they enjoyed the rental income. One of the sisters died leaving two children who inherited her interest in the property. By virtue of that inheritance, they became tenants in common with the surviving sister, their aunt. (Each of the children had a 25% tenancy in common and the aunt had a 50% tenancy in common.) The children had no interest in managing or being involved in the property and in a transaction that had great potential to lead to difficulties, their attorney arranged for them to sell their tenancy in common interest to a third party, Mr. Nero. While it is perfectly legal to sell a tenancy in common interest, when the buyer is completely unknown to the remaining tenant in common, who in this case was the surviving sister, the co-owners are certainly involuntary, and the risk that they will not see eye-to-eye as to the management of the property is high. The transaction was unusual in that it was probably impossible to obtain conventional or bank financing for the sale of the tenant-in-common interest and hence Mr. Nero made a small down payment and the children of the deceased sister financed the purchase by taking back a deed of trust. Because the duplex was not a condominium, and each owner had an undivided right to the whole, that deed of trust became a lien on the buyer's interest in the entire building, the interest of the surviving sister was affected as a practical matter since it would be all but impossible to sell the building unless the proceeds were adequate to satisfy that lien. There was no agreement between Mr. Nero and the surviving sister as to the payment of taxes, as to the responsibility for insurance, or as to maintenance of the building. This recipe for disaster was magnified by the fact that Mr. Nero was a cantankerous hostile individual whose agenda was to obtain the other half of the building by harassing the surviving sister. There was no cooperation between the owners. The second sister died shortly thereafter leaving her interest in the property to her only daughter. The daughter was named as the executor of her mother's estate which included that half interest in the duplex. As soon as the mother died, Mr. Nero began to threaten the daughter in an effort to intimidate her into selling her inherited interest at a discount to market value. In the meanwhile, Mr. Nero paid no taxes, and left the property to deteriorate. After informal negotiations failed, the daughter filed a partition action against Mr. Nero in her capacity as executor of her mother's estate. Mr. Pecherer was appointed as the referee in partition. The referee was instructed to sell the property. The situation was interesting in that the attorney representing Mr. Nero was inexperienced in partition litigation and made a number of errors that had the result of increasing the complexity and expense of the proceeding. Mr. Nero became belligerent and uncooperative with the referee such that it became necessary to obtain restraining orders and ultimately and order ejecting him from the property. The property was ultimately sold and after the court sorted out the obligations of the parties to each other, the proceeds were distributed accordingly.
This example well illustrates the concept of involuntary co-ownership and the consequences of casual estate planning. There were many ways in which this dispute could have been avoided, both in the original estate plan and later, had Mr. Nero been more reasonable. There was essentially no practical way to obtain his cooperation and hence a partition action became inevitable. Had Mr. Nero's attorney been more knowledgeable about the law of partition, it might have been possible to settle the matter and perhaps, even to achieve Mr. Nero's objective of owning the entire building. That possibility was lost by their adopting a posture of intransigence.