Understand Your Vehicle of Ownership: Part 4

Welcome back for part 4 of the series titled Understand Your Vehicle of Ownership. This represents part 4 of my 4 part series.

As a reminder, when two or more people take title to land, this is referred to as a “concurrent estate.” You, as purchaser, will soon be acquiring title to land. If you are acquiring title with additional people, you should be aware of some basic facts regarding the tenancies that are available to you. The estate vehicle you choose is extremely important. What follows is a presentment and explanation of the basics of the concurrent estates. An understanding of these estates will allow you to choose the proper tenancy for your situation.

Reputation First Title Agency is not a law firm, and this article is not to be construed as offering legal advice. The purpose of this article is simply to offer necessary information. This information can be used in discussing your options with your attorney. Once you and your attorney have decided on a tenancy that is proper for your situation, the deed to your land can be drafted properly and, most importantly, the deed will satisfy your intentions.

The four basic concurrent estates are 1) the tenancy in common; 2) the joint tenancy; 3) the joint tenancy with full rights of survivorship; and 4) the tenancy by the entirety. My writing today will cover the fourth of these, the tenancy by the entirety.

#4: The Tenancy By The Entirety

The tenancy by the entirety can only be created in a husband and wife. At common law, and still today, the wife and husband are considered one unit; hence the term entirety.

Examples Creating a Valid Tenancy By The Entirety.

Grantees: Bill Smith and Mary Smith, husband and wife.

Grantees: Bill Smith and Mary Smith, his wife.

Grantees: Bill Smith and Mary Smith, as tenants by the entirety.

Grantees: Mary Smith and Bill Smith, her husband.

There are no magic words necessary to create a tenancy by the entirety. The only requirement is for the conveyance to properly indicate the marital status of the grantees therein. It is unnecessary to recite Bill Smith and Mary Smith, husband and wife, as tenants by the entirety. This phrase is duplicative.

The tenancy by the entirety, the joint tenancy, and the joint tenancy with full rights of survivorship all offer the element of survivorship. However, the big difference between the tenancy by the entirety and the joint tenancy estates is that of severance. Joint tenancy estates may be severed by the conveyance of a co-owner to a third party. Conversely, a tenancy by the entirety cannot be severed by the unilateral action of only one spouse attempting to convey to a third party. A discussion of severability follows.

Severance of the Tenancy By The Entirety.

Example: Blackacre is owned by Bill Smith and Mary Smith, husband and wife.

Subsequently, Mary Smith attempts to deed her interest to Dave Phillips, a third party.

This conveyance would be invalid. Mary cannot unilaterally sever the tenancy by the entirety. For Dave Phillips to acquire legal ownership, Bill Smith and Mary Smith, as husband and wife, would have to convey.

*There is one exception to this rule: one spouse, acting alone, may convey its interest to the other spouse, thereby destroying the tenancy by the entirety. In fact, this is a very common occurrence.

Example: Blackacre is owned by Bill Smith and Mary Smith, husband and wife.

Subsequently, Mary Smith deeds her interest to Bill Smith.

Resulting State of Title: Bill Smith.

Either spouse may freely convey its interest to the other.

Nuance. 

Remember our discussion of dower at the beginning of this cluster. A wife is entitled to dower in which her husband is seized of an estate of inheritance. When the tenancy by the entirety is destroyed by a conveyance from wife to husband, the inchoate dower interest of the wife will immediately attach. Here’s how it works.

Original State of Title: Bill Smith and Mary Smith, husband and wife.

Subsequent Conveyance: Mary Smith to Bill Smith.

Resulting State of Title: Bill Smith.

*The inchoate dower interest of Mary Smith will now attach. Remember, a woman cannot hold both a fee simple interest and a dower interest at the same time. Mary’s conveyance to Bill both destroyed her fee simple interest and created her inchoate dower interest.

Caution: Do not ever confuse a tenancy by the entirety with dower. When the wife is on title with the husband, she owns a fee simple interest in the land. If the wife is not on title with the husband, she holds an inchoate right of dower. Where there is a tenancy by the entirety there is no dower, and where there is dower there is no tenancy by the entirety.

Death of a spouse severs the tenancy by the entirety. When a spouse dies, the remaining spouse survives to the interest of the decedent. View the following example.

Original State of Title: Mark Thompson and Marge Thompson, husband and wife.

Subsequently, Mark Thompson dies.

Resulting State of Title: Marge Thompson, survivor of herself and her deceased husband, Mark Thompson.

You may be wondering how someone can survive themselves. Remember that with a tenancy by the entirety, the spouses are considered to be one unit owning the whole. This verbiage simply indicates a continuation of the whole by the surviving spouse. The surviving spouse will then hold title in fee simple absolute.

Finally, divorce severs the tenancy by the entirety. In Michigan, a final judgment of divorce renders the parties tenants in common. Typically, a judgment of divorce will award blackacre to one spouse or the other. However, if the judgment fails to do so, the tenancy will convert to a tenancy in common.

The tenancy by the entirety is not a complicated estate. Whether the transaction is a sale or finance transaction, both spouses must act in concert. Unilateral action of one spouse is invalid. Compare this to the complications that can be created by the severance of a joint tenancy or particularly a joint tenancy with full rights of survivorship.

Conclusion:

Thanks for reading. I hope this writing gives you an opportunity to make an educated decision as to the way in which your title will be held with others. It is very important to choose a proper estate vehicle. Choosing poorly can lead to results that the parties never intended. And remember, this writing is not designed to offer legal advice. It is being offered for informational purposes only. Please consult with your attorney before deciding on your tenancy.

Congratulations on your purchase!

Dave Phillips~Chief Title Examiner/Reputation First Title Agency

Please visit my blog at the link below for more title related topics.

http://davidphillipsmichigan.blogspot.com/

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