Tenancy By The Entirety: Everything You Need To Know
When you’re buying property with another person, it helps to have some protections in place at the outset. Tenancy by the entirety provides several built-in privileges for married couples who buy property together.
About half of the states in the U.S. allow this arrangement and several conditions must be met for it to happen. Here’s what to know about tenancy by the entirety.
What Is Tenancy by the Entirety?
Tenancy by the entirety (TBE) is a type of property ownership that’s reserved specifically for married couples. It doesn’t apply to other types of relationships, such as relatives, friends or business partners. In the U.S., 25 states allow tenancy by the entirety along with Washington, D.C.
As a single legal entity, the married couple jointly owns the property and each person must give consent to sell or develop it. Each spouse also has a right of survivorship. This means that when one spouse dies, the other automatically gains full ownership of the property.
How Does Tenancy by the Entirety Work?
When a married couple buys property in a state that recognizes tenancy by the entirety, each person automatically gets a 100% stake in the home. Under the conditions of TBE, both individuals agree on decisions made about the property.
Rights of Tenants by the Entirety
In a TBE arrangement, both parties enjoy several rights, including:
- Equal ownership: Both individuals are listed on the property deed and have equal rights to ownership of the property, allowing them to live in and use the property.
- Equal interest in the property: Neither spouse can sell, gift or transfer their interest of the property without permission from the other.
- Right of survivorship: Allows a surviving spouse to automatically inherit property when the other spouse dies.
- Protection from creditors: If one spouse is sued for unpaid debt, the creditor can’t force a sale of the property to satisfy the unpaid debt.
Requirements for Tenancy by the Entirety
To be eligible for a tenancy by the entirety arrangement, the couple must meet each of the following requirements:
- Be legally married or registered domestic partners in some states.
- Take ownership of the property together and at the same time.
- Receive the title to the property by the same deed.
- Maintain equal interest in the property, which means one spouse can’t sell or transfer the property without the other person’s consent.
- Have joint control and ownership of the property, so each spouse has full rights to occupy and use it.
Terminating Tenancy by the Entirety
A tenancy by entirety can only be dissolved in any of the following cases:
- Agree to terminate: Both parties must agree to terminate the arrangement.
- Property is sold: If the title to the property is changed because the couple agrees to sell, it can be dissolved.
- Divorce: If the couple gets divorced or annuls their marriage, the agreement is void.
- Death: If one spouse dies, the surviving spouse automatically becomes the sole owner of the property. The property doesn’t need to go through probate, which is the legal process of transferring property and ownership after someone has died. The right of ownership bypasses any heirs of the deceased spouse. But when the surviving spouse dies, or both spouses die together, then the property will go through probate.
Pros and Cons of Tenancy by the Entirety
Tenancy by entirety provides many rights for married couples, including the right to survivorship and protection from creditors, but it does come with limitations. Here’s what to know about TBE if you live in a state that recognizes this type of arrangement.
Pros of Tenancy by the Entirety
- Right of survivorship: When one spouse dies, the other automatically inherits the property without it going through the probate process.
- Protection for the estate: Heirs of the deceased spouse won’t be able to make claims against the property.
- Limited asset protection: A creditor can’t put a lien against the property to satisfy personal debt if only one spouse holds the debt.
- Transfer of interest requires consent: This arrangement prevents one spouse from putting a lien on the home or selling their ownership to a third party without consent from the other spouse.
Cons of Tenancy by the Entirety
- Available only in certain states: Tenancy by the entirety is only available in 25 states and Washington, D.C., and it’s typically only recognized for married couples or domestic partners.
- Limited to some types of property: States may limit tenancy by the entirety to real estate and homestead properties.
- Limited creditor protection: While creditors can’t go after the property if only one spouse has debts, they may be able to force the sale of the property if the couple shares unpaid debt.
- Requires consent from both parties: Because each spouse has an equal stake in the property, they must agree to any decisions made about the home.
- Property eventually goes through probate: After the surviving spouse dies, the property will go through the probate process.
Tenancy by the Entirety States
Half of the states in the U.S., along with the District of Columbia, recognize tenancy by the entirety. But each state has its own set of rules that govern this type of property arrangement.
For example, some states only recognize tenancy by the entirety for real estate or homestead property. In addition, some states may still include “husband and wife” language, so same-sex couples might want to work with an attorney to draft new language for their title.
Here are the states that allow tenancy by the entirety, as of October 2022:
- District of Columbia
- New Jersey
- New York
- North Carolina
- Rhode Island