What's in a Tenancy?

Whether purchasing property in Massachusetts or New Hampshire, great care should be taken when deciding how multiple persons should hold title to a property. In Massachusetts and New Hampshire,there are 2 similar ways that multiple persons can take title.

1. Tenancy in Common is the default, in which each owner, referred to as a tenant in common, is regarded by the law as each owning separate and distinct shares which may differ in size. This form of ownership is common where the co-owners are not married or have contributed different amounts to the acquisition of the property. Tenants in common have no right of survivorship, meaning that if one owner dies, that owner's interest in the property will pass by inheritance to that owner's devisees or heirs, either by will, or by intestate succession.

2. Joint Tenancy with Right of Survivorship or JTWROS is the other type of estate in both Massachusetts and New Hampshire. It means that if one owner dies, that owner's interest in the property will automatically pass to the remaining owner or owners. The deceased tenant's property interest simply evaporates by operation of law, and cannot be inherited by his heirs (which means it avoids going through probate). Under this type of ownership, the last owner living takes all.

It is important to note, however, that creditors' claims against the deceased tenant's estate may, under certain circumstances, be satisfied by the portion of ownership previously owned by the deceased, but now owned by the survivor or survivors. In other words, the deceased's liabilities can sometimes remain attached to the property.

This form of ownership is common between husband and wife, and parent and child, and in any other situation where parties want absolute ownership to immediately pass to the survivor. For bank and brokerage accounts held in this fashion, the acronym JTWROS is commonly appended to the account name as evidence of the owners' intent.

In order to create this type joint ownership, the party or parties seeking to create it must use specific language indicating that intent. For example, if Faye wishes to convey property for Bob and Ron to share as joint tenants with right of survivorship, Faye must state in the deed that the property is being conveyed "to Bob and Ron, as joint tenants with right of survivorship".

3. In Massachusetts, there is also one other form of tenancy that exists. It is called Tenants by the Entirety. Tenancy by the entirety is a type of concurrent estate available only to married couples, wherein ownership of the property is treated as though the husband and wife are a single legal person. Like a JTWROS, the tenancy by the entirety also encompasses a right of survivorship, so if one spouse dies, the entire interest in the property passes to the surviving spouse, without going through probate.

In order for a tenancy by the entirety to be created, in some jurisdictions the party or parties seeking to create it must specify in the deed that the property is being conveyed to the couple "as tenants by the entirety". However, unlike a JTWROS, neither party in a tenancy by the entirety has a unilateral right to sever the tenancy by the entirety - if it is to be undone, or if any part of the property is to be conveyed to another person, this must be carried out by both husband and wife. A divorce breaks the unity of marriage, leaving the default tenancy, which is tenancy in common. Benefits include the ability to shield property from creditors of only one spouse, as well as the ability to partially shield property where only one spouse is filing a petition for bankruptcy relief.

posted by Attorney Pete Smith @ 6:47 AM