Marriage creates a unique situation when it comes to buying and selling real estate in New York. Under New York law, a married couple may choose to own property as “tenants by the entirety.” This is similar but distinct from a joint tenancy, where two or more people co-own a property, and upon the death of any one owner, the survivors automatically inherit his or her interest. In a tenancy by the entirety, the law effectively treats the married couple as a single person owning the property. As the New York Court of Appeals has explained, this means when “one spouse dies, the surviving spouse takes the entire estate, not because of any right of survivorship, but because that spouse remains seized of the whole.”
Of course, a married couple is not obligated to keep their property as tenants by the entirety. They can choose to own property as tenants in common, which basically means each spouse maintains a separate legal interest in the property. A couple may also convert an existing tenancy by the entirety into a tenancy in common. This would be necessary, for instance, if the couple gets divorced.
But it is important to understand there must be some “definitive act” before the courts recognize the dissolution of a tenancy by the entirety. It is not enough for a couple to live apart and declare they are separated. There must be a judicial decree of divorce or separation.
Parents' “Separation” Does Not Entitle Daughter to Inherit
Here is a recent example of what can go wrong when a party incorrectly assumes a tenancy by the entirety has been dissolved. This case involved a house in Brooklyn owned by a married couple. The wife died in early 2013. Her will specified if the property “was held as tenants in common” at the time of her death, her interest would go to her daughter.
About nine months after his wife's death, the husband decided to sell the house. The daughter filed suit in Brooklyn Supreme Court, alleging she was a 50 percent owner of the property under the terms of her mother's will. She argued the husband and wife were “separated” at the time of her mother's death, thereby converting their ownership into a tenancy in common.
Although the Supreme Court denied the husband's motion to dismiss the daughter's complaint, theAppellate Division, Second Department, reversed and entered judgment for the husband. The Second Department noted “there was no allegation of a judicial decree of separation nor any agreement evincing an intent to alter the form of ownership,” and therefore no legal change to the tenancy by the entirety. The husband became sole owner of the property upon his wife's death.
Need Help Buying or Selling Real Estate?Sorting out property ownership is an important issue, not only for sellers but for buyers who need proof of clear title before completing a sale. That is why you should always work with an experienced New York real estate attorney even when dealing with a superficially simple transaction. Contact the offices of Waldhauser & Nisar, LLP, today if you would like to speak with an attorney right away.