Saving on property tax by claiming homestead exemption is not the only consideration for a home buyer , one can think of a beneficial law Tenancy by the Entirety cover as well for the protection of the ownership. So what is Tenancy by the Entirety ? Well, Some States in USA enacted law called – Tenancy by the Entirety or TBE to protect ownership of property by legally married couples.
Under TBE , the property ownership does not simply vests in each of the joint owners, but another symbolic owner -TBE unit which is a third, separate, person. Therefore, seizure of property by creditors having a judgment against one of the spouse is not fully possible because of TBE unit which is a third owner. However, if the creditor has obtained a judgment against both the spouses, seizure of property is possible.
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Joint Tenancy vs Tenancy by the Entirety
A tenancy by the entirety is similar to a joint tenancy, but there is one very important distinction. That is , in case of a joint tenancy with the right of survivorship , the ownership can be severed by one owner, but in case of Tenancy by the Entirety, neither spouse can sever the tenancy by the entirety by selling an interest in the property
States with Tenancy by the Entirety
| States | Law of Tenancyby the Entirety |
| Alaska | Protects both Personal Property & Real Estates |
| Arkansas | Protects both Personal Property & Real Estates |
| Delaware | Protects both Personal Property & Real Estates |
| District of Columbia | Protects both Personal Property & Real Estates |
| Florida | Protects both Personal Property & Real Estates |
| Hawaii | Protects both Personal Property & Real Estates |
| Illinois | Protects only Real Estates |
| Indiana | Protects only Real Estates |
| Kentucky | Protects only Real Estates |
| Maryland | Protects both Personal Property & Real Estates |
| Massachusetts | Protects both Personal Property & Real Estates |
| Michigan | Protects only Real Estates |
| Mississippi | Protects both Personal Property & Real Estates |
| Missouri | Protects both Personal Property & Real Estates |
| New Jersey | Protects both Personal Property & Real Estates |
| New York | Protects only Real Estates |
| North Carolina | Protects only Real Estates |
| Oklahoma | Protects both Personal Property & Real Estates |
| Oregon | Protects only Real Estates |
| Pennsylvania | Protects both Personal Property & Real Estates |
| Rhode Island | Protects both Personal Property & Real Estates |
| Tennessee | Protects both Personal Property & Real Estates |
| Vermont | Protects both Personal Property & Real Estates |
| Virginia | Protects both Personal Property & Real Estates |
| Wyoming | Protects both Personal Property & Real Estates |
Exceptions to TBE Protection
Not that every debts are covered under TBE. For example, IRS can attach a tax lien to one spouse’s interest in a property, even when the tax debt isn’t jointly owed. Another exception is when a Court is convinced by a creditor or judgment holder that TBE ownership was intentionally created in an attempt to defraud the creditor .
Termination of Tenancy by Entirety
A tenancy by the entirety or TBE may be terminated on account of
- Death of one spouse,
- Divorce (resulting in the parties becoming tenants in common) or
- Mutual agreement of the spouses
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