Ah! So You’re buying a house? You’ll want to consider Tenancy by the Entirety!

Posted by on Dec 6, 2012 in Uncategorized | 0 comments

Ah! So You’re buying a house? You’ll want to consider Tenancy by the Entirety!

“Ah, so you’re buying a house?  You’ll want to consider Tenancy by the Entirety!”

Definition from http://www.law.cornell.edu/wex/tenancy_by_the_entirety:  Tenancy by the entirety is a type of shared ownership of property recognized in most states, available only to married couples. Much like in a joint tenancy, a husband and wife who own property as tenants by the entirety each own an undivided interest in the property, each have full rights to occupy and use it and have a right of survivorship. Tenants by the entirety also cannot transfer their interest in the property without the consent of the other spouse.

This is something you need to consider especially if one of you, or both of you, are entering your marriage with a lot of debt.  Now USED to be that mostly people who couldn’t manage their money or were lazy, ended up in debt.  Now, though, sad to say,  many young people, the majority of whom are responsible, hard working individuals,  go to college and maybe grad school after, and rack up a considerable amount of debt paying their tuition expenses.  After college they TRY to get jobs, but that’s proving difficult in this market.  So say that is your situation.  You finally DO land something (Congratulations!)  and then you and your Significant Other decide that the time is ripe.  You want to get married and buy a small house, start a family— all that stuff that your parents, and your grandparents did when they were young.   Except that you know that all that other baggage that goes along with getting married (the house, the kids) is probably out of reach, if you still have that debt hanging over you.  The clock is ticking.  How many years before you are really and truly financially stable enough to buy a house and start a family?

Now here you might be duped into believing that the debt that you accumulate before you marry is yours alone. “We can go ahead and buy the house—I’ve got a job, so I’ll just continue to pay off my college loan and make contributions to the mortgage.” WAIT A MINUTE!  Even if Suze Orman claims that pre-marital debt is yours alone, it’s just not true–or so I have learned from talking with lawyers, basically my daughter and my son-in-law (and yes, they DO have jobs, but not without a great deal of effort—we’re talking major tension going to interviews, sending out resumes, making connections, etc.)

OK.  So, suppose you, the one with the college debt marries Mr. Wonderful.  You buy a house, which you own by tenancy in common or joint tenancy (which we will not discuss here, because I’m not sure what the differences are). Now say that you lose your job or you get sick and can’t work—you get the idea—let’s not get too morbid here.  Anyway, you can’t make your college loan payments.  Well, you incurred that debt before you married, so it’s not Mr. Wonderful’s responsibility to make the payments, right?  Well, yes and no.   Your creditor (the US government) will come after you.  And, if you can’t pay, then your creditor will go after your house, in which you have half interest.  That means your husband will have to make the loan payments for you, or run the risk of your creditor, dum, de dum dum, the going after your house!   Yikes! So now Mr. Wonderful not only has an out-of-work wife, he has no place to live, either (and, sadly, neither do you).   Could happen, unless….

You have been wise enough to buy your home by tenancy of the entirety.  Then, neither of you own the house (in legal terms).  It is owned by an imaginary third party. I don’t know, call her Aunt Gerty.  Now your home is safe from those smarmy college creditors, Mr. Wonderful is saved from having to make your college loan payments,  and you can live snug as a bug from the time you sign the mortgage papers until however long you intend to keep your home.  Just remember to make those mortgage payments! But,  that’s a whole other topic……..
Congratulations on your engagement.  Your wedding preacher



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