Tennessee Business Litigation Lawyers Blog
A recent opinion of the Court of Appeals of Tennessee provides a good roadmap of the law for joint owners of land involved in partition cases where there are claims that the proceeds from the sale of the property should not be divided equally because of rental value received by a joint owner and because of repair and maintenance paid by a joint owner.
Here are the basic facts:
- Four siblings inherited a home (“Home”)
- One sibling, Janella, lived at the Home with the parents before they passed and before the four children became joint tenants
- After the parents died, Janella continued to reside at the Home
- The siblings agreed that Janella would continue to reside at the Home, would maintain it, and have repairs made in preparation for its sale
- Email correspondence established that all agreed that each sibling would contribute to the repairs and maintenance
- All four siblings had some personal items at the Home
- Janella informed her siblings that the necessary repairs would cost $48,000, but refused the requests of her siblings to provide more detailed information about the quotes and estimates
- Janella began setting deadlines for her siblings to remove their personal property from the Home before she discarded the same
- Janella stopped communicating with her siblings
- One sibling went to the Home to remove her items and had to call the police to gain entry because Janella refused to allow her to enter the Home
The siblings filed a partition action. The trial court found that there had been an ouster. It held that Janella owed, to her siblings, three fourths of the rental value of the Home during the time she resided there. It also held that the siblings owed Janella $60,000 for repairs, maintenance and taxes which she had paid towards the Home.
Janella appealed the trial court’s decision that she owed her siblings rent. Her siblings appealed the trial court’s decision that they owed Janella the $60,000. The Court of Appeals of Tennessee affirmed the trial court’s decision on both rulings.
A very helpful part of the decision is the court of appeals review of the basics of Tennessee partition law, those being:
- All joint tenants have an equal right to possession of and entry onto jointly owned property
- A co-tenant who has improved the property is entitled to compensation, but only in an amount by which she has enhanced the value of the property
- Co-tenants must share equally in the payment of encumbrances against the property, such as mortgage loans
- Co-tenants must contribute equally to necessary repairs and maintenance
- Unless there is an agreement to the contrary, a co-tenant who manages the property is not entitled to compensation for her services
- A co-tenant must share equally any profits received from the property
- A co-tenant who possessed the property and ousted her co-tenants is liable for fair rental value
The court pointed out that an ouster does not require a showing of “aggression,” but that it takes something more than a co-owner occupying the property and refusing to pay rent. It requires, a “positive and unequivocal act that must by its nature put the other cotenants on notice that they are excluded from the possession.” In this case, the court of appeals found that Janella’s conduct was enough to establish ouster.
Although there was proof in the record that Janella had indeed paid $60,000 for repairs, maintenance and taxes, the majority of which was for repairs, there was no proof as to how much the repairs enhanced the value of the Home. So, given that Tennessee law only allows compensation to the extent that the repairs enhanced the value of the Home, how did the court of appeals manage to affirm the trial court’s award to Janella of $60,000? Answer: It relied on the trial court’s ability to exercise its discretion to do equity.
I disagree with the court of appeals affirmance of the trial court’s award of $60,000 when there was no proof, at all, of the dollar value by which the repairs enhanced the value of the Home. After all, one principle of equity is that, while courts have wide discretion in the exercise of their equitable powers, nevertheless, “equity must follow the law.” The law was crystal clear.
For every Tennessee lawyer who handles partition cases, this case is a reminder of how much leeway trial courts have in allocating the proceeds from jointly owned property according to what they determine are the equities of the particular cases before them.