How Should Two (or More) People Own Property? (Part II)
How should a husband and wife own property? In Part II of this three part series, we will examine the pros and cons of owning property by a Tenancy by the Entirety.
Tenancy by The Entirety
A tenancy by the entirety is a form of ownership that is possible only between a husband and a wife. Any conveyance to a husband and wife by deed or will creates a tenancy by the entirety, unless it is made clear in the instrument that some other form of ownership is intended. Tenancy by the entirety is a form of ownership in which the incident of survivorship is still retained. When one spouse dies, the other spouse becomes the owner of the entire interest.
Two of the most common misconceptions about the tenancy by the entirety are (1) that a husband and wife have to hold property as tenants by the entirety and (2) that a marriage alone will convert prior owned property into tenancy by the entirety property. A man and woman who own property and then subsequently get married do not then automatically own the property as tenants by the entirety. They must record a new instrument of conveyance to create a tenancy by the entirety.
A tenancy by the entirety is similar to a joint tenancy with the right of survivorship, but with a few additional characteristics:
Whereas a joint tenancy with the right of survivorship can be severed by one owner, neither spouse can sever the tenancy by the entirety by selling an interest in the property. In fact, neither spouse may sell or encumber the property or any interest in it without the other spouse executing the deed, deed of trust, or other instrument.
A lien or judgment docketed against one spouse will not attach to property owned as tenants by the entirety because the property is not owned by the husband or the wife, but by the marital entity. However, a federal tax lien against one spouse will attach to that spouse’s interest in the property.
Ryan C. Hawkins is a partner at Ferguson, Hayes, Hawkins & DeMay, PLLC and a member of the Real Property Section of the North Carolina Bar Association.