Ka Wai Ola - Office of Hawaiian Affairs, Volume 15, Number 12, 1 Kekemapa 1998 — CO-TENANCY IN HAWAIʻI [ARTICLE+ILLUSTRATION]

CO-TENANCY IN HAWAIʻI

I own land with several other persons. What kind of an ownership interest do I have? Tliere are two eommon types of co-tenancy ownersltips: tenancies in eommon and joint tenancies. How do i know whether l'm a tenant in eommon or a joint tenant? Joint tenancies ean only be created by deed or will, and the document that creates the interest will identif>r the owners of the property either as joint tenants or (for married eouples) tenants by the entirety. If the deed or will doesn't state that the undivided interest conveyed was a joint tenancy or tenancy by the entirety, the law presumes that the person received a tenancy in eommon interest. Moreover, an undivided interest inherited from someone who did not devise it by will is a tenancy in eommon, by operation of law. What ean i do with my joint tenancy interest? You ean rent the property and mortgage your interest; however, your undivided interest is not transferrable to the same extent that it would be if you were a tenant in eommon. When a person dies, the general rule is that joint tenancies automatically pass the ownership interest to the surviving co-owners, with the ultimate result being that the last survivor acquires all of the property. Joint tenants, in theory, cannot transfer their interest during their lifetimes, and creditors of a joint tenant who has died have no recourse against the co-owners, as the deceased owner's interest terminates upon his or her death. However, if a joint tenant during his lifetime conveys his interest, the person receiving the interest becomes a tenant in eommon in relation to the remaining joint tenants, and the grantee's interest will pass upon his death to his heirs, and not to the other joint tenants. I own an interest in property as a joint tenant: Can i mortgage the property? You cannot mortgage all of tlie property; only your undivided interest. However, if your interest is foreclosed, the mortgagee automatically becomes a tenant in eommon witli tlie other joint tenants, and only the unforeclosed portion of the property remains with tlie other surviving joint tenants. If l'm a tenant in eommon, what ean I do with my undivided interest? There are a number of matters involved here. Let's take them one at a titne. • Can / move onto or use the property? You ean occupy the property at least in proportion to your

interest, and if the other co-tenants are not using the property, you ean occupy the whole premises. However, if other co-tenants also want to use the property and you are unwilling to accommodate them, you may be liable for the fair rental value of the property, in portion to their interest. If you want to just use the property, short of living on it, these same rules apply. • What about ineome earned Jrom my use of the property? In general, you don't have to account to your co-tenants for profits realized from your own labor, for example, from the sale of vegetables that you planted; however, courts have the discretion to order an accounting, where circumstances warrant the sharing of such profits. In addition, you can't pass expenses relating to your use of the property on to your co-tenants, unless the payments you made were incurred to preserve or maintain the property, and you may be required to offset those payments by the fair rental value of the property. • What if one of my other co-tenants is already using or living on the property? If the other co-tenants won't let you occupy or use the property in proportion to your interest, you have the right to go to court to ask a judge to either let you physically partition the property, or if it is too small to be divided among all the co-tenants who want separate lots, to have a eommissioner appointed to seU the property at a public auetion. • (an I rent out the property? Any co-tenant ean rent tlie property; however, the rental proceeds must be distributed, after taxes and other charges have been paid, to the other co-tenants in proportion to their interests. Unless tliere is a written agreement allowing you to deduct the fair market value of your services for managing the property, you cannot elaim compensation for management services. • No one is using the property, hutlpay the property taxes and mainlenanee: Can / seek reimbursement? Generally speaking, you ean be reimbursed for upkeep of the property, unless you've prevented the other co-tenanLs from using or occupying the property. Although the Hawaii courts have not ruled on this issue, a cotenant out of possession may be entitled to elaim a credit based upon liis share of the fair market rental value of the property. And remember, the co-ten;uiLs out of possession may assert tlial maintenance expenses were not repairs, but improvemenLs, whieh are ordinarily not reimbursable. 'llie bottom

line is that the courts have the discretion to determine whether it's £air, under all of the circumstances, to charge the other tenants in eommon for the upkeep of the property. • What happens if my cotenant mortgages his interest, and it's foreclosed? The mortgage will encumber only the mortgagor's undivided interest, and only his interest ean be foreclosed. However, as a practical matter, the mortgagee, who becomes a cotenant, ean ask the court to partition the property, whieh means the entire parcel will be sold if it can't be physically subdivided. • Who gets my undivided interest when / die? If you leave a will or your interest is held in trust, your devisees or beneficiaries will inherit your undivided interest in the property. These persons will also be co-tenants; however, as among them, you may create a joint tenancy in your cotenancy interest only. If you die without a will or trust, your spouse and children, or other surviving heirs, as provided by law, will inherit your interest, as tenants in eommon with all of the other owners. • What if we can't meet the county's subdivision requirements, for example, because the property's too small to subdivide, or we ean'i agree on how to subdivide our interests? This is a £airly eommon situation in land-scarce Hawai'i, where many parcels owned by tenants in eommon are loo small to practically or economically subdivide. In such cases, the law provides for judicial partition. A commissioner in partition is appointed by the court to investigate the feasibility of physical partition at least among groups of co-tenanLs, if the property is too small to be partitioned individually. If partition in kind is not possible, even under these circumstances, then the court will order the eommissioner to sell the property, and the net proceeds will be divided among the individual co-tenants, after payment of certain fees.

1999 marks the 25th anniversary of the founding of the Native Hawaiian Legal Corporation. For 25 years, NHLC has served the Hawaiian people and communities through low cost orfree legal representation in the areas ofQuiet Title defense, Hawaiian Home Lands, and traditional and customary practices. As the only non-profit, puhlie interest law firm in the state specializing in the rights of Native Hawaiians, NHLC will he placing articles in Ka Wai Ola 0 OHA to keep the Native Hawaiian people better informed and prepared for the future. Some ofthe articles, like this one, will contain nuts and bolts information, while others will help explain legal or poliiieal developments that impact Native Hawaiiam. The intent of these articles like NHLC's broader mission is to empower Ka Po'e Hawai'i.

The questions posed beloiv are questions NHLC frequently encounters. Ttje reader should not equate the answers provided to legal advice. Ifyou have a speciflc situation irwolving land ownership, we urgeyou to seek legal assistance from a lawyer before making any decisions regatdingyour co-tenancy rights.

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