Clearing Up The Confusion: Tenancy by the Entirety

I recently heard from a couple, who were about to close on a new home. Their closing attorney recommended the home be titled tenancy by the entirety but they were not familiar with this term and contacted me for definition. During our conversation, they explained that their last house was titled joint with rights of survivorship.

Whenever possible I recommend this form of home ownership. Tenancy by the entirety (TBE) is only available to married couples. Not all states have this form of ownership, as was the case with your previous home. Also, TBE is not available in states, which recognize community property.

There are three types of ownership of property held by two or more persons: tenancy by the entirety (TBE), joint tenancy (JT), and tenancy in common (TIC). A tenancy by the entirety can only be created by a married couple. In the majority of states a married couple is presumed to take title to property as tenants by the entirety, which is what your closing attorney suggested to you. Also, in a few states, same-sex couples that reside in a state, which recognizes same-sex marriage, may hold property as TBE.

From a legal perspective, both spouses have the right to enjoy the entire property; neither spouse can unilaterally end the tenancy; and the creditors of one spouse cannot force a sale of the property to collect on a debt. When one of the spouses dies, the survivor automatically receives title to the entire property without a probate court proceeding.

Any transfer of property held as TBE, or severance of a TBE interest, can only occur with the mutual consent of both parties. A tenancy by the entirety cannot be reduced to a joint tenancy or tenancy in common by a conveyance of property. Generally, a couple must divorce, obtain an annulment, or agree to amend the title to the property to extinguish a tenancy by the entirety.

In most states, a home, other real property, or assets held by spouses as tenants by the entirety are protected from the claims of each spouse’s separate creditors but are not protected from the claims of both spouses’ joint creditors. A Tenancy by the Entirety allows spouses to own property together as a single legal entity. Under a tenancy by the entirety, creditors of an individual spouse may not attach and sell the interest of a debtor spouse: only creditors of the couple may attach and sell the interest in the property owned by tenancy by the entirety.

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