When two or more people purchase a piece of real estate together, they become co-owners of that property. Real property is defined, in legal terms, as land and anything growing on, affixed to, or built upon that land. Once the property has been purchased, the co-ownership between the parties comes with specific rights and duties as specified by the type of co-ownership that arises after the sale of real property.
Depending on the specific facts regarding the purchase of the property, there may be one of three types of co-ownership that can come into play:
- Joint Tenancy: In a joint tenancy, an estate or property is held jointly by two or more parties, with each share passing to the other(s) upon death;
- Tenancy in Common: A tenancy in common occurs when more than one person possesses one share of the property;
- Tenancy by the Entirety: A tenancy by entirety is a form of ownership that can ONLY exist between spouses.
- In a tenancy by the entirety, each party has a right of survivorship, and neither party can terminate that right without first obtaining the consent of the other party, generally in writing.
Each of the above types of property co-ownership has specific rights and legal duties that each party has and must meet. It is important to note that in the case of the type of ownership of a property being ambiguous, most courts typically rule that the property is owned as a tenancy in common.
Thus, in order for a tenancy by the entirety to be created, certain conditions must be met, including:
- That there is a valid marriage;
- The two spouses must acquire the property at the same time;
- The two spouses must acquire title by the same will or deed;
- The two spouses must have identical interests in the property; and
- The two spouses must have an equal right to possession of the property.
Once again, if any one of the above conditions is missing, most courts will presume that a tenancy in common has been formed instead of a tenancy by entirety. Importantly, tenancy by the entirety is only recognized in some form in 27 states and the District of Columbia. In fact, many states disfavor tenancy by the entirety as creditors of one spouse cannot levy against property that is held in tenancy by the entirety.
How Can I Terminate My Tenancy by the Entirety?
Ending a tenancy by the entirety typically occurs when any of the provisions that created the tenancy are broken. In general, terminating a tenancy by the entirety can be done in the following ways:
- Divorce or Annulment: If the couple divorces or annuls their marriage, then the tenancy by the entirety will be dissolved, as tenancy by the entirety requires a marriage.
- It is important to note that the terms of the divorce will dictate what happens to the property. However, in the case of there being no mention regarding the transfer of property, it will shift to a tenancy in common;
- Mutual Agreement: As mentioned above, both spouses can mutually agree to terminate the tenancy by the entirety and amend their property agreement to a different form of ownership.
- Once again, tenants by the entirety should only terminate their tenancy by the entirety in writing to avoid legal issues;
- Joint Conveyance: The two spouses can agree to convey title to the property to a third party, such as mutually agreeing to sell the property to a buyer; and/or
- Express or Implied Agreement: Two spouses can also agree to terminate the tenancy by the entirety by an expressed or implied agreement.
- In most cases, a tenancy in common will be formed unless the two parties agree to amend their property ownership into a valid joint tenancy.
What Happens When a Married Couple Who Owns a Property as Tenants by the Entirety Divorce?
As mentioned above, when a married couple who owns a property as tenants by the entirety divorces, the tenancy by the entirety will be dissolved upon the formal judgment that ends the divorce. Then, the terms of the divorce settlement will dictate what happens to the property that was owned as a tenancy by the entirety.
It is important to note that if the couple continues to co-own the property, then the type of property ownership will change to a tenancy in common unless they form a valid joint tenancy. Joint tenancy is essentially determined by the co-owners of a property expressing right of survivorship.
Right of survivorship refers to the right of joint tenants to claim the entire property as their own upon the death of the other joint tenant. Establishing joint tenancy requires the right phrasing on the title document or in the divorce decree.
A deed or divorce decree that establishes joint tenancy might read, “To Sam and Tiffany, as joint tenants, with the right of survivorship.” If that statement is included in the divorce decree, then George and Tiffany will continue to own the property as joint tenants of the property bequeathed to them.
Once again, if survivorship is not mentioned in the title document that is created in congruence with the divorce decree, many courts generally assume that a tenancy in common was intended.
However, a right to survivorship is not the only step in establishing a valid joint tenancy; all of the following must also be expressed in the agreement between the two parties:
- Unity of Interest: All parties must have an equal interest in real property, such as equal ownership share and vesting for the same duration;
- Unity of Time: Each tenant’s interest must be present at the same time;
- Unity of Possession: Each joint tenant must be allowed an equal right to occupy the entirety of the property; and
- Unity of Title: The interest of the joint tenant must arise from the same document, such as a deed or a will.
It is important to also note that state laws concerning community and separate property may also come into play when determining what happens upon a couple divorcing if a couple possesses a property by tenancy by the entirety.
As far as property ownership within a state, states are free to choose whether they are community property states or separate property states. In community property states, all property of a married person is classified as either community property or the separate property of one spouse.
Community property is a legal concept that states that all marital property is owned equally by both spouses and must be equitably divided equally between the divorcing spouses. Then, each spouse keeps their separate property. Community property states include:
- Arizona;
- California;
- Idaho;
- Louisiana;
- Nevada;
- New Mexico;
- Texas;
- Washington; and
- Wisconsin.
In all other states not listed above, the states will be considered to be non-community property states. In those states, the marital home as the primary residence is not automatically assumed to be owned equally by both parties. As such, the division of the property owned as a tenancy by the entirety will be determined by what is considered to be a fair and equitable division rather than assuming division by a 50/50 scheme.
Do I Need a Lawyer to Terminate My Tenancy by the Entirety?
As can be seen, terminating a tenancy by entirety requires a thorough knowledge of state laws regarding property ownership. As such, if you and your spouse are wishing to terminate a tenancy by the entirety, consulting with an experienced property lawyer may be in your best interests.
An experienced property lawyer who also serves as a real estate lawyer and divorce attorney will be able to help guide you through the termination process. Additionally, an attorney will ensure that a tenancy by the entirety was actually created in the first place. An attorney will also be able to help guide you through the divorce process if the tenancy by the entirety is being terminated as a result of going through the divorce process. Finally, an attorney can also represent your interests in court, as needed.
