RENDERED: AUGUST 24, 2017
TO BE PUBLISHED
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ANNE M. TALLEY » _ APPELLANT
ON REVIEW FROM COURT OF A'PPEALS
V. CASE NO. 2014-CA-00590
FAYETTE CIRCUIT COURT NO. 13~CI-01952
DANIEL J. PAISLEY 1 APPELLEE
OPINION OF THE COURT BY JUSTICE VANMETER
AFFIRMING
A cotenant of real property, including one who holds as a joint tenant
with right of survivorship, is entitled to contribution from other cotenants with
respect to his or her payment of any liens, taxes or other encumbrances on the
property. Following Such contribution, any proceeds to the property are Sha.red
by the cotenants in proportion to their respective ownership interest in the
property The issue We resolve in this case is whether the Court of Appeals
erred in reversing .the Fayette Circuit Court’s judgment that Daniel Paisley and
Anne Talley Were to share equally in the proceeds of sale of their jointly owned
real property based on their respective ownership percentages and irrespective
of Paisley’s discharge of mortgage liens encumbering the property. We hold
that the Court of Appeals did not err and therefore remand this matter to the
trial court for further proceedings `
FACTUAL AND PROCEDURAL BACKGROUND.
Paisley and Talley never married, but cohabitated for fifteen years. In
2004, they purchased a tract of land on Lakewood Drive in Lexington in order
to build a residence together. At that time, Talley was married to someone else.
Paisley was divorced and owned another residence in his own name. Talley
also owned a residence, which she sold, and used the proceeds from that sale
($120,000) as the down payment for the Lakewood Drive.property. The parties
initially placed the Lakewood Drive property in Paisley’s name because Talley
was still legally married. Talley and her husband divorced in October 2006.
Soon after that divorce, the parties placed the Lakewood Drive property
in their joint names with right of survivorship. At that point, according to
Paisley, he had paid $109,942 in construction and loan costs, and Talley had
paid the initial down payment on the property. `Also in November 2006, two
mortgages were taken out on the property, one in the amount of $225,000 and
the other $250,000. Talley and Paisley were co-rnortgagors and co-rnakers of
the notes.
Paisley sold his residence in July 2007, and used $200,000 of the
proceeds to pay down the $250,000 mortgage on the Lakewood residence. In
December 2009, he paid off the balance of that mortgage _He also paid
$19,119 down on the $225,000 mortgage, and $3,052 to close a construction
loan in November 2006. From 2007 until March 2014, Paisley made all the
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mortgage payments in full. According to Paisley, he never demanded payment
from Talley because he believed she would have the funds to contribute her
share to the residence after her former husband paid her $350,000 as part of
their divorce settlement -
Paisley and Talley’s relationship eventually ended. Paisley moved out of
the Lakewood residence in January 2013, although he continued to make the
mortgage and insurance payments. He filed a complaint several months later,
pursuant to KRS 389A.O30, seeking to sell the residence and divide the equity
in proportion to the parties’ contributions, and specifying that Talley should be
solely responsible for the expenses associated with the house while she resided
there alone.
The house eventually sold for $715,000. The net equity in the residence
was $477,397`. Paisley proposed that these proceeds be divided based on the
parties"proportionate contribution and to reflect the fact that he had _
contributed more to the residence By his calculation, Talley had contributed
$120,000 and he had contributed $383,921. Therefore, Paisley proposed to
receive $369,500 from the proceeds, and for Talley to receive $ 106,500.1
Following a bench trial, the trial court found that the parties did not have
an agreement regarding disposition of the property in the event their
relationship ended, and ordered the equity in the residence to be divided
equally between them. The trial court found the evidence insufficient to rebut
1 The parties’ total contribution was $503,921. Of this Paisley contributed
76 .2% (333,92 1 /503,92 1), and Talley contributed 23 .8% (120,000/503,92 1).
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a presumption of equality and accordingly divided the sale proceeds equally.
The trial court largely based its decision on its finding that the parties never
had an agreement, written or verbal, about division of the Lakewood property if
- their relationship ended, The court emphasized that if it had found that such
an agreement existed and considered the contributions of the parties as Paisley
requested, it_ would be required to consider both parties’ contributions relative
to the specific facts of this case. The trial court cited no case law in support of
its terse legal conclusion.
Paisl'ey appealed to the Court of Appeals, which reversed the trial court’s
decision. The Court of Appeals declined to disturb the trial court’s finding that
the parties had no agreement about what would happen to the property if their
relationship ended, since the parties’ testimony supported that iinding.
However, it held that as a matter of law, Paisley was entitled to be
proportionater reimbursed by Talley for payments he made during their joint
tenancy. As a result, the Court of Appeals remanded the case to the trial court
to determine the amount to which he is entitled. Talley petitioned this Court
for discretionary review, which we granted.
ANALYSIS.
In an appeal from a bench trial without a jury, the trial court’s findings
of fact “shall not be set aside unless clearly erroneous, and due regard shall be
given to the opportunity of the trial judge to judge the credibility of the
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witnesses.” CR2 52.01. “If the trial judge’s findings of fact in the underlying
action are not clearly erroneous, i.e., are supported by substantial evidence,
then the appellate court’s role is confined to determining whether those facts
support the trial judge’s legal conclusion.” Commomaealth v. Deloney, 20
S.W.3d 471, 473 - 74 (Ky. 2000). However, while deferential to the lower
court’s factual findings, appellate review of legal determinations and
conclusions from a bench trial is de novo. Sawyer v. Beller, 384 S.W.3d 107,
110 (Ky. 2012).
Property held jointly with right of survivorship “is an estate held by two
or more people who (in the case where the estate is held by only two) are not
husband and wife. Each is jointly entitled to the enjoyment of the estate so
long as all live; however, the interest of a joint tenant, at his or her death,
passes to the survivor.” Sanderson v. Saxon, 834 S.W.2d 676, 678 (Ky. 1992)
(citations omitted). With respect to the sale or division of property held in joint
tenancy, KRS3 389A.030(4) provides that “[i]f a sale of all or any part of the real
estate shall be ordered, the [trial] court shall refer the matter to the master
commissioner or appoint a commissioner to conduct a public sale and convey
the property upon terms of sale and disposition of the net proceeds as may
have been determined by the court.”
Talley argues that property held in joint tenancy is presumed to be held
equally and, therefore, equal division of the sale proceeds is appropriate in this
2 Kentucky Rules of Civil Procedure.
3 Kentucky Revised Statutes.
instance. She asserts that to hold otherwise would afford those holding
property jointly with the same rights as'~those vested in married couples with
respect to considering contribution in the division of proceeds from the sale of
jointly-owned property, thereby destroying the joint tenancy presumption of
equality. Talley further asserts that even if Paisley could rebut the
presumption of equality by clear and convincing evidence, he waived any right
to contribution or intended his contributions to Talley to be a gift. She .
maintains that since 2007, Paisley knew he had invested more than she had in
the residence, but nonetheless agreed to continue to hold the property jointly,
evidenced by the parties’ reaffirmation of their joint tenancy agreement in 2012
when they refinanced their home. Talley argues the Court of Appeals neglected
to consider defenses to contribution such as waiver and gift.
Under Kentucky law, joint tenants are entitled to proportionate
reimbursement for the payment of liens and other encumbrances on the
property. The general rule is that “one joint tenant is entitled to contribution
from his cotenant for liens and encumbrances paid by him, including
mortgages, taxes, and ground rent.” Larmon v. Larmon, 173 Ky. 477, 191 S.W.
110, 113 (1917) (footnotes omitted).
[O]ne who pays a joint debt is entitled to contribution
from his co-obligors and . . . a tenant who relieves
common property from a lien is subrogated to the lien
on his cotenant’s share for the excess he has paid over
his proportionate share. We think this rule applies
with equal force to a joint tenancy with survivorship. .
. . as between each other each was liable for one~half
of the indebtedness, and if either paid the entire lien
indebtedness, he was entitled to contribution to the
extent of one-half of the indebtedness as against the
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other, and was subrogated to the original lien upon his
cotenant’s interest to that extent as in other cases of
cotenancy.
Petty v. Petty, 220 Ky. 569, 295 S.W.863, 864 (1927).
Furthermore, an agreement between the joint tenants for this type of
reimbursement is not required:
Equitable contribution between co-owners of
undivided interests in real estate has often been
recognized and enforced, even without a contract
between the parties to that effect. If one such joint
owner at his own expense discharges a lien upon the
joint property, or is compelled, in order to protect his
own interest therein, to pay out his own money to
acquire outstanding title for the common benefit, he
may enforce contribution in equity from the other joint
owners in proportion to their interests.
`Bishop v. woyord, 218 Ky. 657, 291 s.w. 1049, 1052 (1927) (citaaons omitted).
The record reflects that Paisley did not expressly or implicitly waive any
right to contribution, or intend his contributions to be a gift to Talley. While at 7
no point did the parties agree, expressly or otherwise, as to division of the
proceeds from the sale of the property, this oversight appears due to the fact
that the parties did not anticipate or contemplate the demise of their
relationship or the division of the .Lal