Tenancy by the Entirety

What Is Tenancy by the Entirety?

Tenancy by the entirety refers to a form of shared property ownership that is reserved only for married couples. A tenancy by the entirety permits spouses to jointly own property as a single legal entity. This means that each spouse has an equal and undivided interest in the property.

This form of legal ownership creates a right of survivorship so if one spouse dies, the surviving spouse automatically receives full title to the property.

How Tenancy by the Entirety Works

Tenancy by the entirety can only occur when the property owners are married to one another at the time they receive the title. This type of legal agreement doesn't apply to other partnerships, such as friends, siblings, parent-child relationships, or business associates.

Spouses who mutually own property through tenancy by the entirety are referred to as tenants by entirety. Each spouse legally has equal rights to ownership of the property in question. This allows them to inhabit and use the property as they see fit.

The condition of mutual ownership of the entire property means the spouses must be in agreement when making decisions about the property. For example, one spouse doesn't have the legal right to sell off or develop part of the property without the other’s consent.

There is no subdivision that separates the property into equal parts between the spouses. So, even if one spouse writes a will that grants an interest stake in the property to an heir, the power and rights of tenancy by the entirety creates a right of survivorship and invalidates and supersedes that aspect of the will.

States That Allow Tenancy by the Entirety

Each state has its own laws that govern tenancy by the entirety and how it may be applied. Though some states allow this form of ownership to exist for all types of property held by married couples, others only allow it to be exercised for real estate that is jointly owned by spouses. Some states also permit domestic partners to jointly own property through tenancy by the entirety.

Twenty-five states and Washington D.C. allow tenancy by the entirety. The states that permit it are: Alaska, Arkansas, Delaware, Florida, Hawaii, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, and Wyoming.

Other possible structures under which spouses can choose to jointly own property include tenancy in common (TIC) and joint tenancy.

How Is Tenancy by the Entirety Terminated?

Tenancy by the entirety can be terminated in one of several ways:

As mentioned above, a tenancy by the entirety creates a right of survivorship. In other words, when one spouse dies, that person's share in the property is automatically transferred to the surviving spouse. This eliminates the need for probate.

When a couple divorces, the parties become tenants in common (TIC). This means they both have ownership rights in the property and can bequeath their share of the property to anyone upon their death. Courts can order the sale of the property with the proceeds split between the divorcing couple or award full ownership to one party.

Rights of Tenants by Entirety

Tenancy by the entirety forbids one party from selling the property without the other party’s consent. Suppose a married couple purchases a house together through a tenancy by entirety arrangement. Because the couple purchased the property together, each would have a 100% ownership interest.

This status also protects the spouses against certain liens. Creditors who seek relief on delinquent debt cannot enter claims against any property that is under tenancy by the entirety unless the couple shares that debt. The property can only be attached by creditors to whom the married couple owes joint debts.

For example, if a borrower owes payments on a motorcycle they acquired only for themselves, the lender could not put a lien against a house the borrower owns with a spouse because the property is under tenancy by the entirety.

What Does Tenancy by the Entirety Mean?

Tenancy by the entirety is a type of property ownership that only applies to married couples. Spouses are treated as a single legal entity and mutually own the property. The consent of each is needed to sell or develop it. A tenancy by the entirety also creates a right of survivorship — when one spouse dies the surviving spouse gains full ownership of the property. About half of the U.S. states allow tenancy by entirety and some permit it for domestic partners too.

What Happens When a Couple Divorces?

If a couple divorces, they become tenants in common, which gives them both ownership rights in the property. A court can also order the sale of the property — the proceeds would be split between the ex-spouses — or grant full ownership to one spouse.

What Are the Benefits of Tenancy by the Entirety?

One major benefit of tenancy by the entirety is that creditors can’t place a lien on the property if only one spouse holds the debt. Also, because of the automatic survivorship rights this arrangement provides, there is no need for probate, which can be costly and time-consuming.