For all of you real estate agents and lenders doing business in Southern Indiana, it is imperative that you make yourself aware of tenancy by the entirety. The text below is meant to act as a primer or guide to make you familiar with tenancy by the entirety. Remember, Indiana recognizes tenancy by the entirety, while Kentucky does not. If you have other questions, you may e-mail Pitt & Frank at mbearden@pittandfrank.com.
1. Tenancy by the Entirety, Generally: A tenancy by the entirety is a form of concurrent ownership that can be created only between husband and wife, holding as one person or one entity. The tenancy by the entirety is similar to a joint tenancy in that the surviving spouse has a right of survivorship.
2. Marital Unit Treated as One Person: In a tenancy by the entirety, the husband and wife are considered to be one person or one unit. As such, they do not take the estate in equal shares, but rather both, holding as one unit, are seised.
3. Severance by One Tenant Impossible: Although the tenancy by the entirety resembles the joint tenancy, it is unlike the joint tenancy in that severance of the tenancy by one tenant (an individual spouse) is not possible. Neither tenant acting alone can destroy or disrupt the nature of the tenancy as can be done in a typical joint tenancy. In other words, an individual spouse cannot convey his or her interest individually. The interest must be conveyed by the marital unit.
4. Creation of Tenancy by the Entirety: In Indiana, where a conveyance in unclear, it is presumed that a conveyance to a husband and wife creates a tenancy by the entirety. However, it is always better that specific language setting out a tenancy by the entirety be included in the vesting instrument.
5. Creditor’s Rights: Since the property is held by the marital unit, an individual tenant’s creditor cannot seize that tenant’s interest and force sale. Only a creditor of the marital unit may do so.
6. Divorce: A divorce terminates the unity of husband and wife and, therefore, the tenancy by the entirety. In Indiana, the tenancy by the entirety is converted into a tenancy in common.
