Tenancy by the Entirety

Terms:

Tenancy by the Entirety:
An interest in property that can be held only between a husband and wife in which each party has a right of survivorship over the property and which neither party can terminate without the consent of the other.

A tenancy by the entirety is a form of concurrent ownership that can only exist between a husband and wife. The tenancy by the entirety requires the same four unities as the joint tenancy. It is a sort of “super” joint tenancy. A tenancy by the entirety exists as though the husband and wife own the property as one person.

Creating a Tenancy by the Entirety:
Any conveyance to a husband and wife that preserves the four unities presumptively creates a tenancy by the entirety. However, a conveyance to a husband and wife need not necessarily create a tenancy by the entirety. If the intent of the donor is to create a joint tenancy or a tenancy-in-common between the husband and wife, this intent can override the presumption that such a transfer creates a tenancy by the entirety. For example:

June and Ward Cleaver are husband and wife. Eddie Conveys Blackacre to “June and Ward Cleaver.” June and Ward take Blackacre as tenants by the entirety, in spite of the normal presumption that a conveyance to two people creates a tenancy-in-common, because June and Ward are husband and wife. However, if Eddie conveys Blackacre “to “June and Ward Cleaver as joint tenants,” then June and Ward would be joint tenants in Blackacre.

If a conveyance is made to two people who are not husband and wife “as tenants by the entirety,” the conveyance will fail as a tenancy by the entirety. Some jurisdictions will consider the conveyance to create a joint tenancy because a joint tenancy is closer to a tenancy by the entirety than is a tenancy in common. However, other jurisdictions will consider the conveyance a tenancy in common, in keeping with the general rule that a conveyance to two or more people who are not husband and wife presumptively creates a tenancy in common.

Maintaining and Breaking up a Tenancy by the Entirety:
The key legal feature of the tenancy by the entirety is that neither party may alone break up the tenancy. In other words, neither party may sell his or her share of the property without the other’s permission. In addition, neither party may demand a partition of the property without the other’s consent. For example:

June and Ward Cleaver own Blackacre as tenants by the entirety. If Ward tries to sell his share to Wally without June’s permission, the sale is invalid and the property simply remains with June and Ward.

An important feature of the tenancy by the entirety is that, since neither party may convey the property without the other’s permission, the property is also immune from claims of the creditors of either party. For example:

June and Ward Cleaver own Blackacre as tenants by the entirety. In one trip to Las Vegas, Ward racks up $500,000 in gambling debts. When the debt collectors come to collect their debts, they cannot take Blackacre, because this would be considered a conveyance from Ward to the debt collectors. Since this cannot be done without June’s consent, the collectors may not take any interest in Blackacre.

The problem that this creates is that no bank would give a mortgage loan on property that cannot be collected as collateral. Of course, the simple solution would be to have both spouses sign the mortgage loan agreement. Then, the creditors would have access to the property. Still, many states have modified the traditional rule regarding the tenancy by the entirety to solve this problem. These states allow a spouse to mortgage his or her share of the property. If the mortgage is foreclosed on, the bank would then be able to take the share of the property owned by the debtor spouse. Of course, the tenancy would then revert to a tenancy-in-common. (The bank could not have a tenancy by the entirety with one of the spouses.)

Finally, a divorce automatically breaks up a tenancy by the entirety.

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