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Tenancy by entirety: What is it?

Couple hugging outside of light blue family home with a white railing leading up the front steps
MoMo Productions/Getty Images
Couple hugging outside of light blue family home with a white railing leading up the front steps
MoMo Productions/Getty Images

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If you purchase a home, you own it. But if you buy a home with someone else, you need to determine how to legally split ownership between both of you. This is where tenancy by entirety is crucial: It’s a way for married couples to own a property together, rather than the property being owned by just one spouse.

What is tenancy by entirety?

Tenancy by entirety (also called tenancy by the entirety) is a method of house title by which a married couple or legal domestic partners hold equal interest in a piece of real estate. In other words, it means both spouses can own their home together, equally. It also provides survivorship rights, meaning that if one spouse passes away, full legal ownership transfers directly to the other.

Unlike splitting ownership 50/50, tenants by entirety both own 100 percent of the home. “Under tenancy by entirety, both spouses own an undivided interest of 100 percent of the property,” says Eric Klein, principal attorney of Klein Law Group, a Boca Raton, Florida–based law firm. This includes providing protection against creditors as well: “If either spouse dies, the surviving spouse will inherit full ownership of the asset, and the property will be protected from creditors of either spouse,” Klein says. So if one spouse incurred debt before dying, the other spouse does not have to worry about losing the home should creditors try to demand payment.

Common elements of tenancy by entirety

While rules can vary slightly from state to state, the requirements for tenancy by entirety are typically:

  • The couple must be married or, in some states, domestic partners
  • They must take ownership of the property at the same time and on the same deed
  • They must have equal interest in the property
  • They must have equal control over the property

Which states observe tenancy by entirety?

Tenancy by entirety isn’t possible nationwide. It’s observed in 25 states and Washington, D.C. The states allowing tenancy by entirety, including D.C., are:

  • 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

The split in where it is allowed and where it is not can make which side of a state line you’re on very important. For example, if you’re buying a home in North Carolina, you can use tenancy by entirety. But if you’re buying in South Carolina, you can’t.

How it compares to other types of ownership

There are many ways to own a home with a spouse or someone else, so it’s important to consider whether tenancy by entirety is the best choice for you.

Tenancy by entirety vs. joint tenancy

Joint tenancy, like tenancy by entirety, allows multiple people to own a property together with equal rights. It can also confer survivorship rights, letting the remaining owners retain the property even if one of the joint tenants dies.

One major difference, though, is that joint tenancy allows for more than two people to own the property and doesn’t require that the parties involved be married. So the joint tenants could be family members, business partners or anyone really.

Another difference: Unlike tenancy by entirety, which provides both parties 100 percent ownership, ownership is evenly split under joint tenancy. Joint tenants are considered to be legally separate entities, while tenants by entirety are viewed as a single legal unit.

Tenancy by entirety vs. tenancy in common

Tenancy in common allows multiple people to share ownership in a property in a similar way to tenancy by entirety. However, tenants in common do not necessarily have equal interest in the property. For example, one tenant in common can own 70 percent of a home while another owns 30 percent, though both have a right to occupy and use it.

Tenancy in common also does not confer survivorship rights. When one tenant dies, they are free to leave their portion of the property to an heir through their will.

Pros and cons

Before a couple chooses to own a home as tenants by entirety, it’s important to consider the pros and cons. Once you and your real estate agent have found a promising property, you should also consult a real estate attorney to get advice for your specific situation.

Pros

  • Protection from liability: If only one spouse is in debt, the home is still protected, because creditors can’t place a lien on the home and impact the non-debtor spouse.
  • Survivorship rights: If one spouse passes away, the other spouse retains full ownership rights. There’s no need to go through probate.
  • Equal ownership: Both spouses own 100 percent of the property, which means one spouse can’t sell or make changes to the home’s title without the other’s permission.

Cons

  • Only available to married couples: Friends and relatives can’t own a home as tenants by entirety. It is for married couples or legal domestic partners only. That also means that tenancy by entirety ends if a couple gets divorced.
  • Only available in some states: Tenancy by entirety is available in 25 states and Washington, D.C. For example, you could use tenancy by entirety to buy a house in Florida, but not in its neighboring states of Georgia or Alabama.

Terminating tenancy by entirety

Tenancy by entirety can be ended in three ways:

  1. Agreement: If both spouses agree to end a tenancy by entirety, they can do so. It cannot be ended by just one of the tenants.
  2. Divorce: Since it is only available to married couples, divorce dissolves a tenancy by entirety.
  3. Death: When one spouse dies, the surviving spouse retains full ownership of the property and the tenancy by entirety comes to an end.

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Written by
TJ Porter
Contributing writer
TJ Porter is a contributing writer for Bankrate. TJ writes about a range of subjects, from budgeting tips to bank account reviews.
Edited by
Senior real estate editor