Joint ownership is the type of ownership that is the answer to all the drawbacks found in sole ownership. Be it the issues with the quantum of funds needed to purchase, fix, modify or renovate a house, or the disposition of a house to legal heirs or beneficiaries, or the earmarking of shares in property and interests therein, benefits of joint ownership are found to cover all these aspects of property matters.

Three different types of joint ownership are commonly known. They are- Tenancy in Common, Joint Tenancy and Tenancy by the entirety. While they are a part of the overall concept of Joint or Co-ownership, they have certain differences that affect the rights of co-owners to enjoy, transfer and dispose of the property. This article seeks to explain the topic of Tenancy by the entirety and state some advantages and disadvantages of this concept.

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What is the main purpose of tenancy by the entirety?

Tenancy by the entirety is a type of co-ownership where a legally married couple forms a joint or co-ownership to purchase a residential property. This type of co-ownership also governs the rights and obligations of a married couple in such an arrangement.

  • The main purpose of this commonly seen type of co-ownership is to allow legal couples to possess joint property rights that can be exercised equally over the property as a whole instead of owning and exercising rights on sub-divisions of the property as individual owners of their respective shares.
  • Tenancy by the entirety allows for undivided interests in property i.e. the husband and wife are seen as one owner when their ownership rights are taken in respect to the property.
  • As such, any decision regarding the joint property requires a mutual decision-making process to be undertaken for exercising property rights.

What does tenancy by the entirety mean?

When a legally married husband and wife purchase property and the couple receives the title to the property, a tenancy by the entirety is created. This type of co-ownership vests mutual ownership rights in the couple in the property. As such, the co-owners have equal ownership rights in the property. The right to transfer property or a share in the property is limited. A share in the property and the interests therein cannot be transferred to third parties under this type of co-ownership. A share in property can only be transferred by one spouse to another. The disposal of the also requires the mutual consent of both the spouses.

What happens to tenants by the entirety after death or divorce?

A tenancy by the entirety may be dissolved by the death of a spouse, by the couple getting divorced or by a mutual agreement between the husband and wife.

  • On the death of a spouse, his/her share in the property and interest therein is automatically transferred to the surviving spouse because tenancy by the entirety comes with survivorship rights.
  • In the case of a divorce, the tenancy by the entirety is converted to a tenancy in common with no survivorship rights. The former husband and wife have to seek a legal partition of property by agreement or by going to court to seek the dissolution of the joint ownership. After enforcing the agreement or receiving such a court order, the joint ownership stands dissolved.
  • A tenancy by the entirety may be dissolved by mutual agreement of the spouses where the tenancy by the entirety may be converted to a tenancy in common sole ownership and joint tenancy.

Does tenancy by entirety protect from creditors?

 Tenancy by entirety creates joint ownership rights in a joint property that is owned by both husband and wife.

  • As such, if a husband or wife has incurred debts separately, the creditor can move in on the liable spouse’s individual property or assets for satisfaction of the debt.
  • However, property ownership under tenancy by the entirety is of joint ownership nature and hence, joint ownership cannot be used to satisfy individual spouse’s debts.
  • Thus, joint ownership under tenancy by entirety protects the legally married couple who own the property jointly. This protection is against claims of creditors regarding the debts incurred by an individual spouse.
  • However, if the couple incurs a joint debt from a creditor, such an outstanding debt can be satisfied by seizing the joint property if the dues remain unpaid.

Which states allow Tenancy by the Entirety?

In India, the Union Government derives power from the Union List present in the VIIth Schedule of the Constitution of India. The List has subjects upon which the Indian Parliament can legislate and make laws.

  • There are subjects related to property in the Union List that only the Centre can legislate on. Thus, the laws made as a result of this exercise are applicable and operational in all the States and Union Territories of India.
  • Tenancy by the entirety is allowed in all the States and Union Territories of India due to the national nature and scope of the Transfer of Property Act, 1882. Other Acts like the Registration Act, 1908 also affirm this fact.

Conclusion

 Tenancy by the entirety is a very useful concept that helps legally married couples to own and enjoy property jointly. Ownership rights like the right to use the property, right to earn income from the property, right to transfer the property to others (right of disposal) and right to enforce property rights are enjoyed by both the spouses, however together. The right to transfer is however restricted to transferring shares in the property only from one spouse to the other spouse.

This type of co-ownership also provides limited protection against creditors’ claims. And complete ownership of the property automatically vests in the surviving spouse in case of death of a spouse. There are certain drawbacks also, however, with every decision concerning the property requiring the mutual consent or approval of both the spouses. This concept is made for legally married couples to enjoy ownership of the property to the greatest possible extent without legal obstacles.