What do you think about enlisting your spouse’s name on the ownership deed as a co-owner, having the same rights to a property you just purchased as you do? If protecting your spouse’s interests is your goal, it shouldn’t be a problem. Property ownership comes in various forms and every one of them has distinct features. For couples, tenancy in its entirety vs. community property is the most common form of ownership, but then, some couples will insist on a joint tenancy. Whichever one you decide to settle for, ensure your spouse’s interest is not at stake. If you are wondering what tenancy in its entirety is, its benefits, disadvantages, and whether it’s suitable for you and your spouse, then, this post is for you.
Tenancy in Entirety Overview
Sam and Beverly are a married couple deciding to buy a house two years after their marriage. They both used their inheritance to purchase the house, and it was registered under joint tenancy. This means both had equal rights to the house as well as the right of survivorship. Three years down the line, Sam got into bad debt and the creditors are raining brimstone in demand for their money. Unknown to Beverly, her husband used their house as collateral for the loan he received from a lending firm.
When the situation became unbearable, the house was seized, and there was nothing Beverly could do to save her home, even as a part-owner. She ran into Emily, a childhood friend, and after narrating her ordeal, Emily wished she held the house in a tenancy in entirety rather than a joint tenancy. That was when she realized that, despite contributing 55% of the money used in buying the house, tenancy in its entirety was a better option for married couples.
So why would anyone even suggest tenancy in entirety in this case as a better option? What is tenancy in entirety by the way? Let’s see.
What is Tenancy in Entirety?
Tenants by Entirety (TBE) is a form of ownership that allows married couples to hold the title to a home in some states. It is a form of ownership in which each couple has an undivided stake in terms of ownership. Both have equal rights to inhabit and use it, and a right of survivorship in case a spouse passes away. This form of ownership is specifically for married couples. And both couples must agree in full before one partner can modify his or her ownership interest in the property. This means that each spouse is prohibited from selling their share of the property without the other spouse’s approval. It is the best form of ownership for couples.
Critical Features Of Tenancy in Entirety
This form of ownership is only available in 25 states as well as Washington, DC. Within these states, there are five features or rules that guide this form of ownership. You can see them as the various conditions that guide tenants in their entirety. These are as follows;
#1. Unity of Possession
Under unity of possession, both spouses have joint ownership and control of the property in question. This means major decisions on the property must be taken by the two owners.
#2. Unity of Interest
There is no superior interest in the property held by one spouse over the other.
#3. Unity of Title
The deed has the names of both spouses. This means the transfer of ownership is usually in both spouses’ names.
#4. Unity of Time
Both spouses must simultaneously acquire title to the property.
#5. Unity of Marriage
Although few states accept partnerships that will subsequently lead to marriage, most states only accept married couples under tenancy by the entirety. This means the ownership of an existing property can change to TBE once the marriage takes place.
Benefits and Disadvantages of Tenancy in Entirety
Like every other form of property ownership, tenancy in its entirety has its pros and cons. Let’s highlight some of them below.
Key Benefits
The following are the main benefits of ownership in its entirety.
#1. Liability Protection
In terms of liability protection, this is the major reason why couples choose this form of ownership. A spouse’s debt doesn’t affect the other, and therefore, there’s no claim on the house. The wife, as co-owner, receives protection against her husband’s creditors if he defaults on his debt.
#2. Survivorship Rights
When a spouse dies, their property rights are automatically transferred to the other spouse. This terminates the entirety of ownership and results in a tenancy in severalty.
#3. Equal Interest
This form of ownership conveys equal rights to the couple regardless of who foots the bill. This means that, without the consent of the other spouse, one spouse cannot sell or transfer the property.
Disadvantages of Tenancy in its Entirety
Tenancy by the totality has a lot of benefits, but it can also occasionally lead to issues. The following are the disadvantages of tenancy in its entirety:
#1. Not Available in Every State
One of the disadvantages of tenancy in its entirety is that it isn’t available in every state in the U.S. For instance, California law recognizes community property for couples, not tenants in their entirety.
#2. Exist as Long as the Marriage Last
This form of ownership lasts as long as the marriage is in place. In the event of divorce, it automatically terminates. This also doubles as one of the disadvantages of tenancy in its entirety,
States that Approve Tenants in Entirety
25 states in the United States approve tenants in their entirety. These states are as follows;
- 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
- Wyoming
What Happens to Tenants by Entirety After Death?
The surviving spouse becomes the sole owner of the property. This ends the entire tenancy, and they become tenants in severalty. This is because the couple has the right of survivorship as in joint tenancy. The right of survivorship transfers full ownership to the surviving spouse after the death of one spouse. But if both spouses die, the ownership rights go to anyone whom the property was willed to.
Tenancy in Entirety vs Joint Tenancy
In considering joint vs tenancy in its entirety, one thing is sure: both are forms of estate ownership. However, joint vs tenancy in its entirety has distinct features, and we can only buttress their distinct features through comparison.
Tenancy in Entirety vs. Joint Tenancy: Definition, Similarities & Differences
A joint tenancy is a form of ownership in which two or more people jointly own a piece of property, each having an equal number of rights and liabilities. Due to the right of survivorship created by this style of ownership, when one owner passes away, the remaining owners take over that owner’s stake. Interestingly, just about anyone can form a joint tenancy. This means that joint tenancy can be formed by families, friends, married couples, business partners, and so on. Tenants by Entirety (TBE) is a form of ownership that allows married couples to hold the title to a home in some states.
Similarities
Joint vs tenancy in its entirety has two key similarities. Firstly, both are forms of property ownership. Secondly, joint tenancy vs tenancy in its entirety means that you have the right of survivorship. Additional both are forms of ownership that require more than one owner.
Tenancy in Entirety vs Joint Tenancy: Differences
The major difference in the tenancy in entirety vs joint tenancy lies in the form of ownership.
| Forms Of Ownership | Tenancy in Entirety | Joint Tenancy |
| Owners Relationship | Married Couples | No specified relationship |
| Number of owners | Two | two and above |
| Right | A decision taken by one cannot affect the other | Decisions taken by one affect the other |
| Creditors Protection | If one owner is sued, the property is exempted from the claim | Property is vulnerable to claim if one owner is sued. |
Tenancy in Entirety Vs Community Property
Community property vs tenancy in its entirety is two different terms that depict a form of property ownership. Let’s see how these two relate to each other, their features, and so on.
Tenancy in Entirety Vs Community Property: Definition
Before we define what entirety tenancy vs community property is, the community property isn’t owned by a community in quotes. Neither does it belong to a particular group within society. On the contrary, community property refers to a couple’s assets.
What is Community Property?
Community property is a form of ownership specifically for couples. Within the states that practice it, any property a couple will acquire in the course of their marriage has a 50-50 ownership status. This means that ownership is split among the couple on a 50-50 ratio. Another interesting thing about this is that the 50-50 ownership applies to all forms of assets.
The state defines community property as one acquired by a married couple during their marriage. Unfortunately, it means there’s a claim on a spouse, and the other spouse’s assets can also be seized. But then, this will only take effect when there’s a civil judgment against one spouse.
Difference
While it’s true that tenancy in its entirety vs community property is both forms of ownership, there are distinct differences between them. Some of these are as follows;
- The first difference between community vs tenancy in its entirety is the number of states that practice each. In the United States, nine states are community property states, while 25 states are tenants in their entirety.
- Another striking difference in community vs tenancy in its entirety is the ownership style. The latter gives both spouses 100% ownership of assets, while the former gives 50% to each spouse.
- In the event of a claim on a spouse, the other spouse’s assets can also be seized.
Similarities
The following are some of the similarities between community property vs tenancy in its entirety.
- Both forms of ownership are only applicable in marriage.
- Both are also means of holding properties in one’s name.
- They are also practicable within the United States.
Can a Spouse Have a Separate Property in the Community Property States?
A spouse can. However, this is on the following basis; when the property was acquired before marriage, or assets received as gifts such as inherited properties.
What is tenancy by the entirety in North Carolina?
In North Carolina, married couples can only own real estate under a tenancy by the entirety arrangement. Wholesome ownership denotes that the marriage, not the individual marital partners, is the legal owner of the real estate.
What is Tennessee by entirety?
When a married couple owns real estate, the phrase “tenancy by the whole” denotes that 100% of the title immediately passes to the surviving spouse upon the death of the first spouse.
What is tenants by the entirety Massachusetts?
This form of joint ownership is only available to married couples. Tenants by the Entirety: A tenancy by the entirety confers a right of survivorship, making the surviving owner the sole owner of the property in the event of the death of either owner.
Which tenancy is best for married couples?
Owning a home as Tenants by the Entirety is the most popular ownership structure for married couples. A tenancy by the entirety is real estate ownership under the hypothetical presumption that a husband and wife are treated as one individual for legal purposes. They receive the property as one individual under this form of ownership.
Does Tennessee recognize tenants by the entirety?
Married couples are the only ones who can obtain ownership as tenancy by the entirety. A married couple is permitted to own property as tenants in Tennessee, including both real and personal property.
Is Tennessee a right-of-survivorship state?
The most typical type of joint ownership for non-spouses in Tennessee is joint tenancy with the right of survivorship.
Can one person sell a house with two names on the title?
Normally, for a property sale to proceed without involving the courts, both parties must agree if one party wants to sell the property. Continue reading to learn your legal options and what to do if you or your co-owner want to sell a property that you both own.
Should both husband and wife be on title?
The inclusion of both spouses on a mortgage is not required by law. If your spouse isn’t included as a co-borrower on your mortgage application, your lender usually won’t take their information into account when determining your eligibility for a loan. This may or may not be a good thing, depending on your spouse’s circumstances.
Final Thoughts
Even though the law approves this form of ownership for couples, any couple can always change it to another form of ownership that appeals best to them. But then, the purpose of tenants in their entirety is solely to protect the interests of both spouses in the event of liability claims. But just in case you do not want it, you can opt for tenancy in common, in severalty, or joint tenancy.
Tenancy in Entirety FAQs
What is a quasi community property?
Quasi-community property refers to property that a couple that is domiciled in California obtains while in California and that is situated in a common-law state is referred to as quasi-community property. This means the community ownership law only applies to community states and not common states.
How do i avoid tenants by entirety?
If you do not want your spouse to share ownership of your property, the best thing to do is to buy the property in a non-common-law state. Another way of avoiding community property ownership is simply by indicating the form of ownership you want.
What can terminate tenants by entirety?
Divorce, death, or gifting the house to another person.
After divorce, will my propert still counts as tenants in entirety?
Not really. Divorce already terminates the marriage agreement and this results in another form of ownership, which is tenancy in common.
