I recently represented a couple at a closing of the purchase of a cooperative apartment. My clients are legally married but have different last names. The attorney, representing the Cooperative Corporation who was issuing the new proprietary lease and stock certificate (evidencing ownership of the apartment) presented the stock certificate for review and the proprietary lease for signature. Upon review, the documents indicated that title was being taken by my clients as “Joint Tenants with the Rights of Survivorship”. I requested that ownership to the apartment be taken as “Tenants-By-The-Entirety”. Both forms of title, upon the death of an owner, provide the surviving owner the absolute right to receive title to the entire apartment. The coop attorney was annoyed that I was requesting that he make this change. After unsuccessfully bluffing that there was a “recent change in the law” he questioned the significance of a married couple taking title to a coop apartment as Tenants-By-The-Entirety rather than Joint Tenants with the Rights of Survivorship.
Under a Tenancy-By-The-Entirety, married spouses (and who remain married) are viewed as a single person each owning an undivided 100% ownership (and a right of survivorship) that cannot be diminished by the other tenant or a creditor. What this means is while a creditor of one Tenant-By-The Entirety can obtain a lien on that spouse’s interest in the apartment, the lien will only survive if that particular spouse is the surviving spouse. If the debtor/tenant dies prior to his or her spouse, the creditor’s interest in the apartment is extinguished and the surviving spouse takes the apartment free of all liens. Married couples who take title as “Tenants-By-the-Entirety” prevent creditors from reaching, attaching and possibly selling the joint marital property. Similarly, New York cases have held that a receiver in bankruptcy cannot reach or sever ownership when it is by the entirety.
A Joint Tenancy with the Right of Survivorship is subject to actions of the Bankruptcy Court, the possible attachment and sale of a joint tenant’s interest. A joint tenant can transfer their ownership interest without the other tenant’s consent, which may interfere with any estate planning in place.
Tenants-By-the-Entirety who divorce automatically change their ownership to Tenants In Common.
Joint Tenants with the Rights of Survivorship who wish to change title in an apartment to a Tenancy-By-the-Entirety may have to get permission of the Coop and any lender using the apartment as collateral.