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Own a house? Want to keep it? How you hold title can have real-world consequences!

Imagine a scenario, not too far-fetched, wherein a couple purchases their new home intending to live happily ever after.  Unfortunately, one partner comes to the relationship saddled with debts or is hit with a lawsuit judgment.  What happens with the new home if those debts aren't paid, and whether it may have to be used to pay them can have a lot to do with the form of ownership.  In Massachusetts, there are three ways for multiple parties to hold real estate in their names: as Tenants in Common; as Joint Tenants; and as Tenants by the Entirety.

Tenants by the Entirety

Tenancy by the Entirety is an ownership form that is reserved only for spouses, and provides the greatest protections over the other forms of ownership below.  Similar to Joint Tenancy (below), the spouses share a right of survivorship, meaning the surviving spouse automatically inherits the entire property and it cannot be redirected by a Will or intestacy laws.  But there are a number of unique benefits as well that make this the gold standard for married couples:

  • Creditors of only one spouse cannot collect against the real estate if it is your primary residence.  Has one spouse accumulated significant credit card debts?  Are they being sued?  Well, hopefully you have a Homestead recorded, but while a Homestead’s financial protection is limited, there is no monetary limit to the protection Tenancy by the Entirety affords to protect your home.

  • Neither spouse can sever the Tenancy by the Entirety by selling an interest in the property.  The only way to sever the ownership is by divorce, a jointly signed deed, or death.

  • Neither spouse can mortgage the property unless the other spouse signs on.

Joint Tenants

A Joint Tenancy with the right of survivorship allows two or more people to own some share of property (not necessarily an equal share), and gives the flexibility to sell, gift, mortgage, or otherwise deal with the real estate.  This is similar to a Tenancy in Common discussed below, but with one very significant difference:  the right of survivorship.  This means that when an owner dies, the other owner(s) automatically becomes owner of that share, irrespective of any Will or estate.  This is a handy feature, since for many people it accomplishes their goal of passing their interest to their partner or loved one, and does it without the need for any paperwork other than recording a death certificate at the Registry of Deeds.

Tenants in Common

Most common when buying business property, and often used when unmarried persons buy property together, as tenants in common two or more people own the same parcel of land in undivided interests.  The property can be dealt with just as in a Joint Tenancy, except that when a Tenant in Common dies, their interest does not pass to the other owner(s), but rather passes by Will or intestate succession to their heirs or devisees.

There can be any number of considerations as to why you would choose one form of ownership over another.  As you go through the process of purchasing real estate, it is important to discuss these with your lawyer to make sure you hold the property in a way that achieves your goals.

Martin Winstead