Understanding the Law of Tenancy by the Entirety When a Marital Home is Owned by a Husband and Wife

Recently, our associate prepared a memo about executing a creditor’s judgment upon a tenancy by the entirety.  As a result, I read a few of the cases he cited in his memo.  These cases offered a great discussion regarding the laws on tenancy by the entirety that I believe you will find interesting.

What is a Tenancy by the Entirety?  (Hint:  It’s Not a Rental)

A tenancy by the entirety involves the ownership of a personal residence by a husband and wife.  The nature of a tenancy by the entirety is well established under New Jersey law.  It is an undivided legal ownership interest in the marital home for the joint lives of each spouse while married subject to the right of survivorship upon the death of the first spouse.  So what does this mean?  Simply, it means that a spouse’s right of survivorship is not transferable by either spouse while both are alive and married.  Each spouse has a life estate for their joint lives that is not subject to execution by a judgment creditor.  It is well settled that a tenancy by the entirety in a marital residence cannot be broken up at the request of a judgment creditor of one spouse.  And although a judgment creditor may be entitled to an accounting of rents during the non-debtor spouse’s exclusive occupancy, that right must be offset by a fair contribution to the mortgage, tax, insurance, and maintenance expenses incurred by the non-debtor spouse – usually a wash.  Consequently, the value of one spouse’s interest in the tenancy by the entirety during the marriage is ordinarily limited to the survivorship right and is regarded as having nominal value only. 

So What Happens if the Spouses Divorce?

Upon divorce, the tenancy by the entirety, by operation of law, a tenancy in common and the interests of each spouse is one-half and can be seized and sold by a creditor.

It is only upon death or divorce that the property attains a value to creditors or New Jersey and its Medicaid then can collect on.

Contact me personally today to discuss your New Jersey real estate or elder law matter.  I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns.  You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County NJ Real Estate & Elder Law Attorney

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