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Tenancy By The Entirety

Tenancy by the Entirety (TBE) is a form of real estate ownership that is available only to married couples, and in some jurisdictions, to couples in a civil union or domestic partnership. It is commonly used in the real estate investment industry, as well as in personal home ownership, to provide an extra layer of protection and flexibility to couples. Here’s a breakdown of its characteristics:

  1. Unity of Ownership: In a Tenancy by the Entirety, each spouse owns an undivided interest in the entire property. Neither spouse owns a specific share; instead, each has an equal right to enjoy the entire property.
  2. Right of Survivorship: Similar to joint tenancy, Tenancy by the Entirety includes the right of survivorship. This means that if one spouse dies, the surviving spouse automatically becomes the sole owner of the property, bypassing probate.
  3. Creditor Protection: One significant benefit of TBE is its protection against creditors. Creditors of one spouse cannot force the sale of a property held as Tenancy by the Entirety to satisfy debts unless both spouses are liable.
  4. Mutual Consent for Transactions: Both parties must agree to sell, transfer, or encumber the property. One spouse cannot act unilaterally, offering protection to each spouse’s interest.
  5. Severance of Tenancy: The TBE can be terminated by mutual agreement, divorce, or death. In the case of divorce, the tenancy automatically converts to a tenancy in common unless otherwise stipulated in the divorce decree.

Application in Real Estate Investments:

  • Risk Mitigation: Investors, particularly those who are married, may choose this form of ownership as a risk mitigation strategy to protect the property from the claims of individual creditors.
  • Estate Planning: It can also be a tool for estate planning, ensuring that the property passes smoothly to the surviving spouse without going through probate.
  • Joint Decision Making: Ensures that investment decisions regarding the property are made jointly, preventing unilateral decisions that may affect the property’s value or ownership status.

Knowing the legal provisions of the jurisdiction in which the property is located is crucial, as the rules governing Tenancy by the Entirety may vary. Additionally, it is essential to consider the couple’s financial situation and investment strategy to determine whether Tenancy by the Entirety is the most suitable form of ownership.