If you buy a house, you own it. But if you buy a home with someone else, you’ll need to decide how to legally divide ownership between the two of you. This is where tenancy becomes absolutely critical: it’s a way for spouses to own property jointly, rather than the property being owned by one spouse alone.

What is a tenant by the entirety?

Tenant in full (also tenant in of Full) is a method of home ownership in which married couples or legal domestic partners share an equal interest in real estate. In other words, both spouses can own the house equally. It also provides rights of survivorship, meaning that if one spouse dies, full legal ownership passes directly to the other.

Unlike a 50/50 ownership split, tenants both fully own 100 percent of the home. “Generally, under a tenancy agreement, both spouses have a 100 percent undivided interest in the property,” says Eric Klein, principal attorney at Klein Law Group, a Boca Raton, Florida, law firm. That includes protection from creditors: “If both spouses die, the surviving spouse inherits full ownership of the property, and the property is protected from both spouses’ creditors,” says Klein. So if one spouse goes into debt before they die, the other spouse won’t have to worry about losing the home if creditors try to demand payment.

All the usual things of renting

While laws may vary slightly from state to state, general tenancy requirements typically include:

• The couple must be married or, in some states, domestic partners
• They must own the property at the same time and in the same act
• They should have equal interest in the property
• They should have equal control over the property

Which states fully enforce leases?

Leasing is not entirely possible nationwide. States that allow rent-to-own in 25 states and Washington, DC, including:

The division between what’s allowed and what’s not makes it very important which state line you’re on. For example, if you are buying a home in North Carolina, you can use a lease by the entirety. But if you’re shopping in South Carolina, you can’t.

How does it compare to other types of ownership?

There are many ways to own a home with a spouse or significant other, so it’s important to consider whether a full lease is the best option for you.

Tenancy in full with a joint tenant

A joint tenancy, like a tenancy by the entirety, allows multiple people to own property together with equal rights. It can also provide rights of survivorship, allowing the other co-tenants to retain possession of the property even if one of the joint tenants dies.

One major difference, however, is that a joint tenancy allows more than two people to occupy the property and does not require the participants to be married. So joint tenants can be family members, business partners or anyone.

Another difference: unlike a tenancy by the entirety, which gives both parties 100 percent ownership, ownership is split equally between the joint tenants. Tenants in common are considered legally separate entities, tenants by the entirety are considered a single legal entity.

The tenancy is fully shared with the tenant

A joint tenancy allows multiple people to share ownership in a property similar to a tenancy. However, joint tenants do not necessarily have an equal interest in the property. For example, one joint tenant may own 70 percent of the house and the other 30 percent, even though both have rights to use and enjoy it.

Joint tenancy also does not confer rights of survivorship. When a tenant dies, they are free to leave a portion of the property to an heir at will.

Advantages and disadvantages

Before a couple chooses to own a home outright as a renter, it’s important to consider the pros and cons. Once you and your real estate agent have found a promising property, you should also consult a real estate attorney for advice specific to your situation.

advantage

• Protection from liability; If only one spouse is in debt, the home is still protected because creditors cannot foreclose on the home and affect the non-debtor spouse.
• Rights of Survival: If one spouse dies, the other spouse retains full ownership rights. No need to go through the testing process.
• Equal Ownership: Both spouses own 100 percent of the property, which means that one spouse cannot sell or change ownership of the home without their consent.

Cons

• Available to couples only: Friends and relatives cannot own a house outright as tenants. For married couples or legal domestic partners only. This means that if the couple divorces, the tenancy ends completely.
• Only available in some states: Rent-to-own is available in 25 states and Washington, D.C. For example, you can use rent-to-own to buy a home in Florida, but not in neighboring Georgia or Alabama.
  

Complete termination of the tenancy agreement

A tenancy can be fully terminated in three ways:

1. Agreement: If both spouses agree to end the tenancy altogether, they can do so. Can’t end with just one of the tenants.
2. Definition: As it is only available to married couples, divorce completely dissolves the tenancy agreement.
3. Death: When one spouse dies, the surviving spouse takes full ownership of the property and the tenancy is terminated.

Questions to be asked

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  What happens when a couple ends up in a tenancy agreement?

  A tenancy is only valid for a married couple, and ends if the couple divorces. The terms of the divorce agreement determine how the ownership of the house will be divided between the parties.

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  What are the disadvantages of fully renting?

  Tenancy agreements are only available to married couples, or in some cases legal domestic partners, and are only available in certain states. If you are single or live in a state that is completely unfamiliar with tenancy agreements, you will need to choose a different ownership method.

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  When is a tenant fully compatible with other types of home ownership?

  A tenancy by the entirety is best suited for couples who want to divide ownership of their home equally. There are few disadvantages to spouses when compared to other methods of acquiring your home.

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  Is a tenant completely optional in every state?

  No. Renter Full is currently available in 25 states and Washington, D.C. A full list of the 25 states is available above.