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Tenancy By The Entirety: What It Means And How It Works

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Published on March 21, 2022
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If you own a home with your spouse, you want to ensure your interest in the property is protected. That’s why some married couples choose tenancy by the entirety – an ownership structure that provides both spouses with an equal right to the property.

And if your spouse dies, the property is transferred directly to you without going through probate first. This article will explain how tenancy by the entirety works and the pros and cons of going this route.

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Tenancy By The Entirety Definition

Tenancy by the entirety is a type of property ownership only available to spouses. Under this type of ownership, both spouses jointly own the property as a single legal entity, where each spouse also has survivorship rights.

And tenancy by the entirety doesn’t mean both spouses have a 50/50 claim to the property –both individuals have a 100% stake in the home. Both individuals are named on the property deed and both spouses share ownership and control of the property.

How Tenancy By The Entirety Works

Tenancy by the entirety ownership is only available to married spouses, and it’s only available in about half of the 50 states. Under this arrangement, both spouses share an equal interest in the property.

This means one spouse cannot sell their share of the property without the other person's consent. And if one spouse dies while the property is under joint ownership, the surviving spouse becomes the home's sole owner.

However, tenancy by the entirety ownership would be severed in the event of a divorce. The divorced spouses can continue to own the property jointly, but the ownership structure would change to tenants in common.

Requirements For Tenancy By The Entirety Ownership

Here is a summary of the five requirements for tenancy by the entirety ownership:

  • Unity of marriage: Tenancy by the entirety is reserved solely for married couples, though some states also recognize domestic partnerships.
  • Unity of time: The married couple takes ownership of the property at the same time.
  • Unity of possession: Both spouses have joint ownership and control over the property.
  • Unity of title: Both spouses receive the title by the same deed.
  • Unity of interest: Both spouses have an equal interest in the property.

Benefits Of Tenancy By The Entirety

Here are some of the biggest benefits of tenancy by the entirety:

  • Liability protection: Creditors can’t put a lien against the property if only one spouse holds the debt. This only works if the debt is equally shared. So if one spouse is sued as a result of their personal debts, the property is shielded from creditors.
  • No need for probate: If one spouse passes away, the property is automatically transferred to the surviving spouse and there’s no need for probate.
  • Equal interest: In tenancy by the entirety, both spouses have an equal interest regardless of who purchased the property. This means one spouse can’t sell or transfer the property without the other person's permission.

Drawbacks Of Tenacity By Entirety

There are many advantages to tenancy by the entirety, but it can occasionally cause problems. Here are some of the downsides you should consider:

  • Canceled in the event of a divorce: Tenancy by the entirety is advantageous to married couples, but it’s canceled if the couple goes through a divorce. In that case, the ownership changes to tenants in common, which doesn’t have the same type of benefits.
  • Not available in all 50 states: Tenancy by the entirety may not be available where you live, and many states only recognize it for married couples.

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States That Allow Tenancy By The Entirety

At the time of this writing, tenancy by the entirety is only available in 25 states and Washington, D.C. Here are the states that allow it:

  • Alaska
  • Arkansas
  • Delaware
  • District of Columbia
  • 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

And each state may have slightly different rules regarding tenancy by the entirety. So, you’ll have to research what the laws are in your state.

Ending Tenancy By The Entirety

Tenancy by the entirety is beneficial to married couples, but it can end in certain situations. Let's look at some scenarios where tenancy by the entirety can end.

Death

If one spouse dies, tenancy by the entirety is automatically canceled. In this scenario, the surviving spouse becomes the sole owner of the property and there’s no need to go through probate.

Divorce

If a couple divorces, the condition of marriage is no longer met and tenancy by the entirety is canceled. If the couple continues to co-own the property, the ownership changes to tenants in common.

Express Or Implied Agreement

And finally, tenancy by the entirety can be canceled if both spouses agree to it. However, one spouse cannot end this arrangement on their own.

Tenancy By The Entirety Vs. Joint Tenancy

The main difference between tenancy by the entirety and joint tenancy is that the first is only available to married couples. Two or more people can be joint tenants, and they don’t have to be married or even related.

And in tenancy by the entirety, both individuals have a 100% interest in the property. In joint tenancy, everyone has a 50% interest in the property. And joint tenancy doesn’t offer the same legal protections from creditors.

Tenancy By The Entirety Vs. Tenancy In Common

If a married couple gets divorced, their ownership status changes to tenancy in common. With tenancy in common, there are no survivorship rights. If one individual passes away, the other person doesn’t automatically receive sole ownership of the property. Instead, ownership of the property will be given to the deceased’s heirs.

The Bottom Line

Tenancy by the entirety is often the best type of ownership structure for married couples who live in states that allow it. Just make sure you understand the terms and conditions of this type of ownership structure. If you’re ready to get preapproved for a mortgage, you can get started with Rocket Mortgage® today.

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Jamie Johnson

Jamie Johnson is a Kansas City-based freelance writer who writes about a variety of personal finance topics, including loans, building credit, and paying down debt. She currently writes for clients like the U.S. Chamber of Commerce, Business Insider, and Bankrate.