The Pros And Cons Of Tenancy By Entirety
As with any type of ownership, buying a house with TBE has its advantages and disadvantages. Here are a few to consider.
Pros Of TBE
Married couples who are buying a house might choose tenancy by entirety thanks to the several advantages it provides.
Limited Asset Protection
Tenancy by entirety provides limited asset protection. Creditors can’t use the property as collateral to satisfy a debt. This applies even in the event that one of the spouses dies – under this type of ownership, the property will remain protected from claims against the deceased spouse’s estate.
Protects Each Spouse’s Ownership
TBE also prevents one spouse from putting a lien on the home or selling their ownership to a third party. It also provides the right of survivorship between spouses. That means if one spouse passes away, the other spouse becomes the sole owner of the home. The deceased spouse’s interest is not passed on to heirs.
Cons Of TBE
While TBE offers several benefits, there are also some potential drawbacks.
Potential To Cause Tension
Since both spouses have equal, full ownership of the home, they must agree on all property decisions, which can cause issues within the relationship.
No Protection Against Joint Debt
While protection from creditors is an advantage, it’s important to remember that it protects the property only if the debt or judgment to satisfy is from one spouse. If the married couple shares the debt, the protection no longer applies. And if one spouse dies and the surviving spouse has debt or judgments to satisfy, they’re no longer protected since they’re the sole owner of the property.
There Are Limitations
Another disadvantage of TBE is that it’s not available in all states – and in the states it’s recognized, some limits exist. For example, some states only recognize TBE for real estate or homestead property. Some states only recognize it for married couples or – even more limited – for “husbands and wives.” It’s important for same-sex couples to work with a real estate attorney to learn more about how they can adjust the language of their contract to include both partners.
