Chapter 3: Ownership Principles

Ownership Principles
I. Forms of Property Ownership
A. An Estate in Severalty or Sole Ownership: Title is held by only one person, all others have
been “severed” from the title. All other forms of ownership are classified as co-ownership or
concurrent ownership.

B. Joint Tenancy
1. Requires that four unities be in place when the tenancy is created. If any of the unities are
absent, joint tenancy cannot be created. The four unities (mnemonic = PITT) of joint
tenancy are:
a. Possession: Full and undivided rights of possession for all owners.
b. Interest: Each of the owners hold an equal portion of ownership.
c. Time: All grantees must become owners at the same time.
d. Title: All must be named on the same instrument of title, i.e. the deed.
2. Full Right of Survivorship: If Jason and Janice own their home as Joint Tenants, when
one of them dies, the survivor automatically and without probate becomes the owner in
severalty. If Jason, Janice, and Jessica owned a property as joint tenants, each would
own a one-third interest. If one of them died, the two survivors would automatically
own a half interest, still as joint tenants.
3. One joint owner can sell his interest without the consent of other joint owners. If Jason,
Janice and Jessica own as joint tenants and Jessica sold her interest to James, Jason and
Janice would own two thirds as joint tenants and James would own one third as a tenant
in common.
4. There can be any number of joint owners.
5. Joint tenancy takes precedence over a will. Joint tenancy takes effect “at death” while a
will takes effect “after death.” There is a legal instant between these two events causing
the joint tenancy to take priority over the will.
6. Under Utah law, if a deed says: “John Doe and Mary Doe, husband and wife . . .” with
no indication as to how they are taking title, the law assumes it to be joint tenancy.

C. Tenants in Common
1. Each owner has a full and undivided right of possession regardless of his percentage of
ownership. This is the only unity of joint tenancy which applies in tenancy in common.
2. Owners can hold varying percentages of ownership. Interest must be stated in the deed
or the law will presume that the owners each hold equal interest.
3. Ownership can be taken any time (does not have to be taken at the same time).
4. Each owner has his own deed.
5. There is no right of survivorship, and the future estate is determined by will, trust,
probate, etc.
6. In many states, if two people are named on a deed with no indication of their being
married, or of how they are taking title, the law will presume them to be tenants in
common.
7. In selling a portion of ownership in a commercial investment project, all the owners own

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as tenants in common. This is defined in Utah law as an “undivided fractionalized long-

term estate.” In real life, it is commonly referred to as a “tenant-in-common interest.”

D. Tenants by the Entirety

1. Its form is most nearly like joint tenancy, including the right of survivorship.
2. It pertains only to husband and wife.
3. The difference between this and joint tenancy is essentially that neither husband nor
wife can sell, mortgage, or otherwise encumber the property without the agreement of
the spouse.

E. Community Property
1. It applies only to husband and wife.
2. It is used only in a few states: among them, California, Idaho, Arizona, Texas, New
Mexico, Louisiana, Wisconsin, Washington and Nevada.
3. It is based on the concept that husband and wife are “equal partners” each owning a half
interest in any property obtained during marriage.
4. In community property states, separate property is that which is acquired before
marriage, after dissolution of the marriage, or by gift or inheritance during the marriage.
It can be owned in severalty or with other partners and not include the spouse.

F. Partition Action. When co-owners disagree on whether or not to sell a property, the one(s)
desiring to sell can bring a partition suit against the one(s) blocking the sale. This provides
a way for people to free themselves of an unwanted common ownership. It can be used to
invite the court to dissolve a joint tenancy or tenancy in common. If the property cannot be
physically divided without prejudice to the parties, the court could order the property to be
sold.
II. Partnerships
A. Types of Partnerships:
1. General Partnership: All partners have to be general partners.
2. Limited Partnership: There must be at least one or more general partners and there can
be as many limited partners as desired.

B. Types of Partners:
1. General Partner: Has full financial liability and full right of decision making authority.
2. Limited Partner: Financial liability extends only to the amount of his investment and
he has no decision making power.

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C. A partnership is not considered a legal person, and the partners could be sued individually.
A general partner can be sued for the full amount of the suit. Limited partners will not lose
more than their investment.
III. Other Forms of Co-ownership
A. Joint Venture: Where two or more parties combine to carry out a single business project.

B. Corporation: A person or persons joined for business purposes.

1. It creates a single, legal person, rather than a natural person (real person), regardless of
how many officers or agents may be in the corporation.
2. It creates some protection for personal assets.
3. Ownership is held in the form of stock.
4. A legal person and a natural person may own property together only as tenants in
common. A corporation taking ownership alone would take ownership in severalty.

C. Real Estate Investment Trust (“REIT”): A REIT is a business trust that allows the
investors to avoid double taxation if certain governmental requirements are met. Though
the requirements change from time to time, currently a REIT must have, among other
requirements, at least 100 shareholders and 90% of the profits must be disbursed to the
shareholders as dividends each year.
IV. Dedication
A method by which a person can give real property as a gift. It is sometimes called a private grant.
Dedication allows for transfer of real property from a private individual to the public (government)
or a special interest group (church).
A. Voluntary dedication: Private individual gives real property as a gift for a park or church.
The deeds often contain a clause specifying that the property must be used for the intended
purpose or it reverts to the grantor, thus creating a defeasible fee.

B. Statutory dedication: Usually involves the dedication of streets and roads to the city or
county when getting approval to develop a subdivision.
V. Adverse Possession
A. Definition: The right of adverse possession is based on the concept that land is too valuable
to be left unattended for long periods of time. A person can enter and possess unused
property and, after meeting the requirements for the statutory period of time, obtain title. You
cannot acquire government property through adverse possession.

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B. To make a valid claim of adverse possession of the property, the adverse possessor must be
able to show that his possession was:
1. Open and Notorious: The owner or anyone else must be able to plainly detect the
possession.
2. Continuous (not occasional): The owner uses it to the extent that any other owner would
for the entire statutory period.
3. Hostile: This does not mean that the owner and the adverse possessor were fighting.
It simply means that the adverse possessor is on the property without the owner’s
permission..
4. Exclusive: The adverse possessor must act as though he owns the property, which is to
say that he/she holds the land to the exclusion of the true owner.

C. The ownership must be for the statutory period of time:

1. The statutory period ranges in the United States from three to 30 years
2. It is seven years in Utah. U.C.A. § 78B-2-214.
3. The adverse possessor is said to hold the property under color of title.

D. In some states, as in Utah, the property taxes must be paid by the adverse possessor, not the
legal owner, during the period of adverse possession. If the owner is paying the property
taxes, the adverse possessor will not be able to obtain title by adverse possession.

E. Tacking: A legal process of combining the rights of adverse possession of two or more
successive adverse possessors. For instance, Mr. A adversely possesses a property for four
years. He subsequently transfers his rights of adverse possession to Mr. B. After three more
years, Mr. B can establish his right of adverse possession through a Quiet Title Action. Mr.
A would transfer those rights with a Quit Claim Deed.

F. Quiet Title Action: A lawsuit used to clear title or to make a claim of interest and have title
legally transferred to the adverse possessor.

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Ownership Principles Terms to Know

̑̑ Adverse Possession
̑̑ Color of Title
̑̑ Community Property
̑̑ Corporation
̑̑ Dedication
̑̑ General Partner
̑̑ General Partnership
̑̑ Joint Tenancy
̑̑ Joint Venture
̑̑ Limited Partner
̑̑ Limited Partnership
̑̑ Natural Person
̑̑ Partition Suit
̑̑ Quiet Title Action
̑̑ Severalty
̑̑ Statutory Dedication
̑̑ Survivorship
̑̑ Tacking
̑̑ Tenancy by the Entirety
̑̑ Tenancy in Common
̑̑ Title
̑̑ Voluntary Dedication

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Ownership Principles Quiz

1. Jason and Harriet Telford bought a home. The deed named them as grantees, but failed to indicate if
they were tenants in common or joint tenants. Later Jason was killed in an accident. His will read that
all of his real and personal property was to be divided equally between his children. Harriet claimed
that she and Jason were joint tenants and therefore she should get all of the property. It ended up in
court. How will the court most likely rule in this case?
A. By Utah law, if the deed is ambiguous, the court will declare it to be joint tenancy between
husband and wife. The kids have no claim.
B. The court will always rule in favor of the wife and name her a joint tenant, thus giving Harriet
the property.
C. Since they were husband and wife in Utah, community property rules will take precedence and
Harriet will get the property.
D. The court will hold that they must duel it out. So the children must appoint a representative and
that person will meet Harriet at dawn of the designated date. Then with pistols of their choice,
they will each take ten paces, turn, fire, and settle this matter in a civilized manner.
2. When all partners are general partners, the organization is considered to be a:
A. General Partnership
B. Limited Partnership
C. Joint Venture
D. Corporation
3. Which of the following is a feature of a corporation?
A. Personal assets are protected from lawsuits brought against the corporation.
B. All partners are limited partners.
C. Each member has full liability.
D. Each owner has full right to make binding decisions on the corporation.
4. John and Lucy Mason own their home together. If one of them dies the other will automatically own
the property. Therefore they own their property as:
A. Tenants in Common
B. Owners in Severalty
C. Joint Tenants
D. Tenants in Community Property

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5. Kyle and Bob own property as joint tenants. Bob dies. Kyle has Bob’s name removed from the
ownership. Kyle now:
A. Owns the property as a tenant in common with Bob’s heirs.
B. Owns the property as a tenant in severalty.
C. Has no ownership since his interest was dependent on the life of Bob.
D. Bob’s interest in the property will be part of his estate and must go through probate
before anyone can own it.
6. A little known fact about joint tenancy is that:
A. One joint tenant cannot sell his interest in the property without the approval of the other
joint tenants.
B. Joint tenants cannot own unequal shares of the property.
C. Joint tenancy applies only to husband and wife.
D. Joint tenancy avoids probate only if the deceased has no will.

ANSWERS TO THIS QUIZ ARE FOUND IN THE “QUIZ ANSWERS” SECTION.

SEE TABLE OF CONTENTS

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