Case Law Summaries

Esteves v. Esteves

• Opinion Date: June 14, 2001
• Real Property Law
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TENANCY IN COMMON—When one tenant in common has been in sole possession of a property for a long time and demands contribution for operating and maintenance expenses in an accounting following its sale, fairness and equity dictate that the one seeking the contribution allow a corresponding credit for the value of the sole occupancy.

Parents and their son bought a house and took title as tenants in common with the parents owning a one-half interest and their son owning the other half. Each of the parties paid about one-third of the price of the house and they all took a mortgage loan for the remaining third. They then moved in and the son took on a considerable amount of work repairing and improving the house while he lived there with his parents. He moved out shortly thereafter and his parents lived there by themselves for about eighteen years until the house was sold. At no time did they rent out any portion of the house. Eventually, the house was sold. The parties were unable to agree on the distribution of the sales proceeds. They each took back their initial cash contributions and deposited the rest in escrow. The lower court found that the parents had made mortgage payments (including interest), made some capital expenditures, paid real estate taxes, and paid for insurance. It found that the son was obligated to reimburse his parents for one-half of those amounts. It also gave the son credit for labor furnished by the son in excess of the labor furnished by his parents. On the critical issue of a credit for the value of the parents’ occupancy of the house, the lower court stated: “I conclude there being no ouster of the [parents by their son] that there is no entitlement to the equivalent rent or rental value of the premises where the [parents] lived. The [son] could have continued to live there if he wanted to; he chose not to. And the law is clear that that being the case, he is not ... there being no ouster, he is not entitled to anything for the rental value or what the rental could have been to [his parents].” The Appellate Division noted that over the years there have been varying statements by New Jersey courts as to the rights and obligations of tenants in common respecting payments for maintenance of the parties’ property, and their rights and obligations respecting occupancy. Although those decisions, in the words of the Court, “may not always have been consistent,” it settled on the principle expounded in Baird v Moore, 50 N.J. Super. 156 (App. Div. 1958), as “[f]irst, as a general proposition, on a sale of commonly owned property, an owner who has paid less than his pro-rata share of operating and maintenance expenses of the property, must account to the co-owner who has contributed more than his pro-rata share, and that is true even if the former had been out of possession and the latter in possession of the property. Second, the fact that one tenant in common occupies the property and the other does not, imposes no obligation on the former to make any contribution to the latter. All tenants in common have a right to occupy all of the property and if one chooses not to do so, that does not give him the right to impose an ‘occupancy’ charge on the other. Third, notwithstanding those general rules, when on a final accounting following sale, the tenant who had been in sole possession of the property demands contribution toward operating and maintenance expenses from his co-owner, fairness and equity dictate that the one seeking that contribution allow a corresponding credit for the value of his sole occupancy of the premises. To reject such a credit and nonetheless require a contribution to operating and maintenance expenses from someone who (like the [son] here) had enjoyed none of the benefits of occupancy would be patently unfair.” Consequently, the Appellate Division ordered that the lower court should offset a credit against a reasonable value of the occupancy enjoyed by the parents over the approximately eighteen years while they, and not their son, occupied the property. The obligation to present the evidence of that value, which would normally be represented by the rental value of the property, rested on the son.

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