May, 2007
Tenancy by the Entirety
From the Desk of Wiley Fox, Chief Title Officer
The ownership of real estate can be held in many ways. The title can be held individually, jointly with others, in a corporation, limited liability company, partnership, or a trust. Each has its own characteristics, and care must be taken when determining how title to real estate should be held. When property is held jointly, a couple of concerns arise. The first would be the protection of the title, and the second is what happens if one of the owners die. Ownership held in a corporation, LLC, partnership or trust can shield the title from liens against the separate owners and the title may not be directly affected when there is a death of one of the parties. Considerable set up costs, annual fees and reports are associated with this type of ownership. They are used mainly in commercial operations and not for the average homestead property.
In 1990, the State of Illinois allowed tenancy by the entirety for the homestead of married parties. This created a more practical way for married couples to own their home. The deed of acquisition needed to recite that the parties were husband and wife, and state the title was to be held not as tenants in common nor as joint tenants but as tenants by the entirety. In 2002, the provision was amended and the deed merely needs to state that grantees are taking title as tenants by the entirety. Tenancy by the entirety is a form of co-ownership that carries a right of survivorship and immunity from the lien of judgments against only one of the spouses. This is ideal if the couple have separate professions or businesses. The death of one of the parties causes the title to vest entirely in the survivor. Termination of homestead causes the tenancy to change to joint tenancy. Upon the dissolution of the marriage, the tenancy becomes a tenancy in common.
Tenancy by the entirety differs from tenancy in common and joint tenancy in that it cannot be severed by the acts of one spouse alone. Any document relating to the real estate must be signed by both parties. In the same regard, most liens against only one of the parties are not enforceable against the real estate. An exception to that provision is Federal tax liens.
In providing a title report on property held in tenancy by the entirety, we will actually show all liens that appear in the public record whether they are against only one party or both. The reason for that is actions by the parties may in fact have terminated the tenancy by the entirety. It must be determined that the tenancy was created properly and the parties have remained continuously married, have continuously occupied the property as their homestead and are still living. If the tenancy by the entirety is severed, the liens become enforceable against the real estate. An affidavit can be submitted and if appropriate, the exceptions can be waived for the transaction.
Vacant land cannot be held as tenancy by the entirety. If a vacant lot is purchased for the construction of a homestead, after construction and occupancy, the land should be conveyed to themselves to create the tenancy by the entirety. An exception to that would be the purchase of the “lot next door” to add to an existing home site owned in tenancy by the entirety. Farm land that contains a homestead cannot be held in tenancy by the entirety. A reasonable amount of land surrounding the homestead should be separately conveyed to create the tenancy. Multi family housing units do not qualify. Extra parties holding title with the married couple disqualify it also. Only one parcel can be held as tenants by the entirety but a new parcel can be acquired as tenants by the entirety if the parties immediately occupy the new parcel. The original parcel would change to joint tenancy if no other action is taken.
