Couples Buying a Home Have Options
When buying a home the way your spouse is listed on the deed can impact your finances in cases of creditors seizing assets. If one member of the couple is being sued or has a judgement placed against them the difference is this:
One way you lose your home.
One way you keep your home.
It has been said that one of the goals of those pursuing the “American dream” is to own their own home. Few home buyers fully understand the legal formalities involved in buying a home. One formality is the deed to the property. At closing the buyers will receive a deed to the property which will be recorded in the county where they bought their home. Most home buyers and even many lawyers do not consider how the buying spouses should take title to the home.
How Spouses Are Normally Listed on the Deed
In Illinois and most states, the spouses will take frequently title as “joint tenants with a right of survivorship.” What this means is that if one spouse dies, title to the home will be vested in the surviving spouse. Property held in a joint tenancy with a right of survivorship is “non-probate” property, meaning title is vested in the surviving spouse without an estate having to be opened and a judge approving transfer of full title to the surviving spouse.
There is one problem with taking title by joint tenancy with a right of survivorship. That problem is that if one spouse has a judgment taken against him or her, the creditor can go to court and sever the joint tenancy if there is sufficient equity in the home to make worth the creditor’s effort. In other words, assume that you and your spouse have equity in a home in the amount of $100,000.00. If you had a judgment taken against you for $100,000.00, the creditor could go to court and get the court to sign the necessary orders so that the creditor could force you to sell your home.
How Bankruptcy Advocates Recommends Spouses Be Listed on the Deed
The problem of having a creditor being able to force you to sell your home is easily solved. In our practice we always have spouses take title to their home as “tenants by the entireties with right of survivorship.” Illinois, like most states, makes the option of taking title as tenants by the entireties available to spouses buying a home. Where title is taken as “tenants by the entireties,” a creditor of only one spouse cannot go to court and force the sale of the home.
Sometimes the question is asked if there are any advantages for spouses to take title as joint tenants with right of survivorship, and there answer is there are none. Every time spouses purchase real estate which will be their home, they should take title as tenants by the entireties.
Bottom Line: Here is One Way to Protect Your Home from Creditors
If you and your spouse are going to buy a home, make sure that the deed you receive uses the language “tenants by the entireties.” If you and your spouse already own a home, look at your deed and learn how you received title. If you did not take title as tenants by the entireties, we recommend that you go to your attorney and change the deed to tenants by the entireties. If you are being sued or a judgment has been taken against you, it is possible that it is too late for you to change the title to your home. You should arrange a meeting with a competent attorney and let that attorney advise you what to do if you do not own your property as tenants by the entireties. If you are not being sued, it is generally a good idea to change title to tenants by the entireties.
Of course, we at the Bankruptcy Advocates can help you protect your home. Call us and make an appointment if you think we can help you. Our initial consultation is free.