Michigan Tenants by the Entireties

Inquiry: Can creditors of either spouse attach attach property owned by the entireties”. I have read that real property owned by married couples in Michigan as “tenants by the entireties”, may be exempt from liens or judgments against an individual spouse. Judgments that were against both spouses could attach a property owned as “tenants by the entireties”, while a judgment against an individual spouse could not attach the property. I have also read articles that contradict this. Is it true that owning Michigan property as “tenants by the entireties” would provide some legal protection? If so, this seems very powerful. I would then think that a married couple should hold their home as “tenants by the entireties”, while ownership of things that might get you sued (cars) should be held individually.

Isn’t property held by a married couple in Michigan automatically “tenants by the entireties” and does not need to be specified as such on the deed. Even if it is true, several federal cases regarding property located in Michigan, seem to hinge on “tenants by the entireties” being explicitly mentioned in the deed, and since “tenants by the entireties” does not exist in all states and several other forms of joint ownership also exist, maybe tenants by the entireties should be explicitly mentioned in a deed, in case of federal action. Furthermore, if not defined in the deed, the type of ownership might be open to argument or interpretation by a lawyer or judge.

Response:Real property held by joint tenancy passes to the survivor of the joint tenant upon death. While creditors may attach the property of the individual owner during the lifetime of the joint tenants, this opportunity is extinguished upon the death of the debtor because the property passes immediately upon the debtor’s death to the surviving joint tenant. Property that is taken by the entireties is treated differently.

Michigan law provides that unless the conveyance explicitly indicated some other kind of tenancy was intended, a grant of real estate to husband and wife is deemed to have created a tenancy by the entireties versus a joint tenancy. DeYoung v Mesler, 373 Mich. 499 (1964), Butler v Butler, 122 Mich. App. 361, 332 N.W. 2d 488 (1983). Thus, if a married couple procures a loan together and each become obligated on the loan, the lender can attach property the couple holds by the entireties. Matter of Grosslight, 757 F.2d 773 (1985). This makes sense. The married couple procured the loan together and should each become obligated on the loan allowing their property can be attached to satisfy the loan. On the other hand, if one spouse, but not the other becomes obligated on a loan, the property that spouse owns by the entireties cannot be sold or encumbered to satisfy the debts of the other spouse. Entireties property cannot be involuntarily sold or encumbered for the debts of just one of the parties. Albinak v Kuhn, 149 F.2d 108 (1945). Note however that Federal tax liens are given special treatment and that if fraud is involved, the dynamic changes as creditors can attach property held by the entirety that was a part of a plan to hinder, delay or defraud creditors. MCL §566.221.

As to personal property, there has been some contention in the courts with regard to stocks and checks made payable to husband and wife for example. In situations where there may be an argument, creditor protection is most secured where entireties property is created as evidenced by the intent of the parties to create such a tenancy having documented the tenancy by noting the conveyance language “to H and W as Tenants by the Entireties”.

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