For most couples, one of the joys of marriage is buying a house. For some, it’s the thought that real estate acts as an investment that increases in value. There’s also the anticipation that memories will be created in the home. Furthermore, you feel secure in knowing there is the proverbial roof over your head. As you’re getting ready to close, your attorney mentions the words “tenancy by the entirety,” but you aren’t actually listening carefully.
The years fly by and you find yourself enjoying your home. Fortunately, your marriage is good. At some point, your spouse takes out a substantial loan in his or her name. The money could be to fund a startup company. One of the financing conditions is a personal guarantee. However, the business venture doesn’t work out.
Regrettably, there are no funds to repay the loan. Ultimately, a judgment is filed against your spouse. Your name was not on the finance documents, so you were not named in the lawsuit. Nevertheless, you are worried. Does this mean you could potentially lose your family home? Here’s where you’ll want to pay attention to the meaning of “tenancy by the entirety.”
Tenancy by the Entirety: What it Means
Let’s first start off with the statutory language regarding “tenancy by the entirety” in New Jersey. It is found at NJSA 46:3-17.2, which includes the following:
- Tenancy by the entirety is available to married couples alone
- Title or deed to personal or real property refers to parties as husband and wife
- Option to purchase refers to couple as husband and wife
- Transfer of property from one spouse to another contains language referencing husband and wife
Incidentally, the law further discusses property interests regarding married couples. According to NJSA 46:3-17.3, when married couples purchase property together there is a presumption of tenancy by the entirety. The only exception is when legal documents reference a tenancy in common or joint tenancy.
All things considered, tenancy by the entirety applies to real estate acquisitions made by married couples. Why are there advantages?
Tenancy by the Entirety: The Advantages
More than likely, you’ve heard tales of debt acquired during the marriage. Most of the time they are with regards to couples looking to divorce. A family law attorney can tell you what is subject to equitable distribution in those cases.
In the meantime, let’s return to our original scenario. The bad debt was in your spouse’s name. You are happily married and are just concerned that a lien can be placed on your property. Actually, your concerns are understandable.
The doctrine of tenancy by the entirety offers protection. If your name is not on money judgment against your spouse, the creditor has no right to your home. None in your lifetime that is.
If your spouse passes away before you, tenancy by the entirety means the house is now yours. This means that any right the creditor hoped to assert died with your spouse.
Although it might seem confusing, you may want to take a look at Newman v. Chase, 359 A. 2d 474 – NJ: Supreme Court 1976. In this matter, the plaintiff purchased Arthur Chase’s share in property from a bankruptcy trustee. Newman was hoping to sell his share of the house when Mr. Chase died. The court ruled against the split, citing tenancy by the entirety.
At any rate, there’s an important note for consideration. If you die first, the house passes to your spouse. In that case, the creditor may assert a lien. Now, you understand what we meant when we said the creditor has no rights in your lifetime.
The doctrine of tenancy by the entirety may raise legal questions that apply to your situation. Have concerns? Contact the Law Offices of Lawrence M. Centanni to see how we can help you.