Important differences exist between tenants by the entirety (TBE) and joint tenants with rights of survivorship (JTWROS). Both are co-owners of the property, but with many different rights and protections against creditors, depending on which way the title is held. One right is the same—that of survivorship.
- A surviving spouse or co-owner immediately becomes the sole owner of the property when the other spouse or co-owner dies.
- Tenants by the entirety are allowed only between spouses. The property is protected from any debts incurred by a spouse who dies.
- If two unmarried people buy property and then wed, in most states the deed does not automatically convert to tenants by entirety when they marry.
- Joint tenants with right of survivorship is a form of ownership where property automatically passes to the other owner(s) when one dies.
Rights of Survivorship
Survivorship rights are automatic in the case of tenants by the entirety. They are provided for by deed in cases of joint tenancy.
However, an exception exists when the second spouse or the last tenant dies—or when both spouses or all tenants—die in a common event. The property must be probated to pass to a living beneficiary or heir unless the survivor made other arrangements, such as placing their interest in the property in a living trust.
Tenancies by the Entirety Held by Spouses
Tenancies by the entirety (TBE) are allowed only between husbands and wives. Each owns an equal share.
A bill was introduced in the House in 2019 to officially change the terms "husband" and "wife" to "spouse" to accommodate same-sex marriages and avoid confusion in the interpretation of the statutes. It has yet to advance to the Senate. A similar measure introduced in 2017 was not enacted, either.
For the time being, same-sex couples should create TBE deeds with the utmost care and professional help. Doing so will ensure the deed is recognized as intended in their state. Some additional language might be required. Not all states recognize TBE deeds, but some recognize them between civil union partners.
In most states, a deed does not automatically convert to tenants by the entirety when two buy property as individuals and then marry.
A new deed must usually be signed and recorded after marriage to take advantage of this ownership status and convert the old deed to a TBE deed. A TBE deed does automatically convert to a tenancy in common in the event of a divorce.
Other TBE Provisions and Protections
Neither spouse can terminate the tenancy or sell or transfer their ownership interest without the consent and permission of the other.
A TBE treats both spouses as a single legal entity. The property is typically exempt from judgments obtained against one spouse for their sole debts or liabilities unless the other spouse agrees otherwise.
The property is vulnerable to joint debts that result in judgments, however—those that are contracted for and legally assumed by both spouses. But judgment holders can't otherwise seize property from an innocent spouse who is not legally responsible.
An exception to this rule exists with tax debts. The Internal Revenue Service can indeed attach a tax lien to one spouse's interest in a property, even when the tax debt isn't jointly owed. And a creditor or judgment holder can attempt to convince a court to overturn TBE ownership if it was intentionally created in an attempt to defraud them out of what they are owed.
Depending on state law, this type of ownership might also be used for bank accounts and investment accounts in some areas.
States That Recognize TBEs
As of 2022, the following jurisdictions recognize tenancies by the entirety in some form:
- Alaska: For real estate only
- District of Columbia
- Illinois: For homestead property only. Spouses cannot hold their homestead in any other form of ownership.
- Indiana: For real estate only
- Kentucky: For real estate only
- New Jersey
- New York: For real estate only
- North Carolina: For real estate only
- Ohio: Only for deeds entered between 1972 and 1985
- Oregon: For real estate only
- Rhode Island: For real estate only
Joint Tenants With Rights of Survivorship
A joint tenancy with rights of survivorship (JTWROS) is a type of joint ownership in which two or more people hold title to an asset. They might be related or unrelated. Each tenant has an equal ownership interest in the property. For example, two tenants would each have a 50% interest, and four tenants would each have a 25% interest. These divisions would remain even if one of the tenants were to pay all—or most—of the property costs.
Regardless of their ownership interests, all tenants are entitled to the use, possession, and enjoyment of the entire property.
The surviving owner or owners immediately become the new owners of the property when one owner dies. Similar to property held in a TBE, it passes outside probate. It doesn't go to the deceased owner's heirs-at-law or beneficiaries under the terms of a will or living trust.
Each tenant has the right to sell or transfer their share of the property to someone else. Such a sale effectively nullifies survivorship rights because the ownership status automatically converts to tenants in common. Tenants-in-common ownership does not carry survivorship rights.
JTWROS ownership can be used with bank and investment accounts, stocks, bonds, business interests, and real estate. It's not the typical default form of holding the title when an asset is held by two or more people. Tenants in common is more common.
A Big Difference: Judgment Creditors
Joint tenants are not considered a single legal entity, as tenants by the entirety are. A judgment creditor—the party that has proved its debt and may use the judicial process to collect it—can force the property to liquidate to satisfy the judgment. It does this by filing a proceeding for "partition" with the court when one joint owner is successfully sued.
However, the tenants who are not parties to the lawsuit or the debt must be compensated for their shares of the property. They would not lose their investments unless they were co-signers on the debt or defendants in the lawsuit.