Occupy This: Can an heir with an interest in a decedent’s real estate be surcharged for use and occupancy?

Christine and Kim never cared for their half-sister, Amy. Childhood skirmishes turned into adult conflicts, which faded into estrangement. Later in life, they remained connected only by their father, Richard. When Richard passed, Christine and Kim became appointed co-administrators of Richard’s estate. They sold his house, in which Amy was living both before and after Richard’s death, and sought to wind up the estate. They provided Amy with an informal accounting.[1] Upon reviewing the accounting, Amy was surprised to learn that the administrators sought to surcharge Amy for her use and occupancy of Richard’s house. Christine and Kim wanted to reduce Amy’s share by $230,000, which effectively eliminate Amy’s $250,000 inheritance.

The Occupying Co-tenant

Amy wasn’t sure whether the proposed surcharge was legitimate, so she hired Antonelli & Antonelli to help defend her interest in her father’s estate. The issue was whether Amy, an heir with an interest in the house, was liable for her use and occupancy of the property. Use and occupancy is essentially rent. The general rule is that where real property is owned by tenants in common, each co-tenant may occupy the property without being liable for use and occupancy[2] unless the occupying co-tenant interferes with the rights of the non-occupying co-tenants’ use of the property (also known as ouster).[3] Amy, Christine, and Kim became tenants in common by virtue of their status as heirs to their father’s estate.[4]

Amy presented this authority to the administrators, who countered with the argument that the general rule “applies only as between the tenants themselves and not as between a tenant and an administrator.”[5] They also claimed that Amy indeed interfered with their use of the property.

With the assistance of her attorneys, Amy stressed the weaknesses of the administrators’ counterargument: despite the parties’ relationship as tenant-and-administrator, they remained co-tenants, and therefore, the general rule remained applicable. In other words, the fact that Christine and Kim were administrators did not change the fact that they were co-tenants. Further, Christine and Kim could not produce substantial evidence that Amy interfered with their use of the property. Acknowledging the strength of Amy’s argument, Christine and Kim acquiesced to a settlement whereby Amy was able to recover nearly her entire $250,000.00 inheritance.

Ouster

In this case, the occupying co-tenant was able to obtain a favorable settlement without court intervention. However, where there is evidence that the occupying co-tenant “ousted” the other co-tenants, the occupying tenant has a greater challenge. Ouster, or interference with the rights of co-tenants to use the real property, can be established in different ways. “[I]t is not necessary to prove the party was set out by the shoulders. It may be inferred from circumstances.”[6] For example, obtaining title to the whole property through fraud (such as a forged deed) or undue influence establishes ouster.[7] Changing locks, refusing to provide access, and refusing to pay rent in the face of a demand for rent are all evidence of ouster. Further, where an estate fiduciary manages real property as estate property (e.g. paying expenses related to the management and upkeep of the property from assets of the decedent’s estate), a co-tenant in common may be liable for his use and occupancy.[8]

There is also authority indicating that where it is the fiduciary (executor/administrator/trustee) who occupies estate property, the fiduciary is placed in a conflict with her obligation to make the property income producing. In one case, the occupying-fiduciary was "required to pay a reasonable sum for the use and occupancy of the premises.”[9]