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.

Requirements of Tenancy by the Entirety

In order to become tenants by the entirety of a certain property such as joint brokerage account, the prospective tenants must be married at the time they come into ownership of the property. Specific requirements vary from state to state; some states extend tenancy by the entirety to domestic partners or common-law spouses.

The establishment of tenancy by the entirety differs across jurisdictions as well. In some states, any married couple that buys property is assumed to be tenants in the entirety. Some states may limit tenancy to entirety to real estate only, or only to homestead property.

Advantages and Disadvantages of Tenancy by the Entirety

The main advantage of a tenancy by the entirety is to protect the interests of a surviving spouse. When one tenant dies, there is no possibility that their partner will lose the property. There is no need for the property to go through probate, and no other heir can evict the surviving spouse. But a tenancy by the entirety only prevents the property from being probated if a single spouse dies. When the surviving spouse dies, the property must be probated as normal. The same is true if both spouses die together. However, tenancy by the entirety is not available in all states, and it is sometimes restricted to real estate only. Moreover, the couple must own equal shares and be in agreement about any decision covering a property. This can cause issues in some relationships. While tenancy by the entirety protects the property from claims against one spouse, it does not protect it from all claims. If there is a debt that both tenants are responsible for, the creditor can still make a claim against the property.

Tenancy by the Entirety vs. Joint Tenancy

A tenancy by the entirety is similar to a joint tenancy, where a property is co-owned by two or more people. In both types of tenancy, there is a right of survivorship: Upon the death of one owner, their share is automatically passed on to the other tenant, rather than being probated with their estate.

However, there are some differences. While tenants in the entirety are usually required to be a married couple, joint tenants can have any type of relationship: siblings, business partners, or even friends.

Moreover, while a tenancy by the entirety can only be terminated by mutual agreement (or the death of a spouse), a joint tenancy can unilaterally be ended by any one of the tenants: All they need to do is sell or transfer their share to another person, who then becomes a tenant in common.

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
• Wyoming

How Is Tenancy by the Entirety Terminated?

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

• Spouses mutually agree to end the arrangement
• When a spouse dies
• When a couple divorces

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.

Frequently Asked Questions

The Bottom Line

Tenancy by the entirety is a legal arrangement where a married couple shares equal ownership of a property, and ownership automatically passes to the survivor if their partner dies. This allows the survivor to avoid probate and protects the home from any claims against the other tenant. However, this form of co-ownership is only available in some states.