Is Your Real Estate Protected from Creditors? The Answer Might be in Your Deed.

People can co-own real estate in Pennsylvania in a number of ways. Understanding the differences in these forms of ownership can help you make an informed decision when choosing how to deed your property.

Spouses Sharing Property Ownership
If you and your spouse plan on purchasing a home or other real property together, there are two deed options for co-ownership in Pennsylvania:

  • Tenancy by the entirety
  • Tenants in Common

While all of these types of tenancy will achieve the overall goal of sharing ownership, the specifics of each one vary.

Tenancy by the Entirety
In Pennsylvania, when a married couple jointly owns property, the deed is presumed to establish a unique form of ownership called “tenancy by the entirety” (TBE). This arrangement offers several advantages exclusively for married couples:

  1. Equal Ownership: Both spouses are named on the property deed and share equal rights to ownership. They can reside in and utilize the property jointly.
  2. Right of Survivorship: When one spouse passes away, the surviving spouse will automatically inherit complete ownership of the property.
  3. Protection from Creditors: Creditors cannot force the sale of the property to settle the unpaid debts of only one spouse.

However, if you acquired the property as tenants in common before marriage, you will remain tenants in common unless you re-deed the property to yourselves after getting married. Taking this step ensures that you continue to appreciate the benefits of tenancy by the entirety. Fortunately, adjusting the deed is a straightforward and cost-effective process. It is advisable to make this modification promptly to safeguard your interests as a married couple.

Tenancy in Common
If you have other family members or loved ones that you’d like to leave your interest in the property to them, a tenancy in common may be better suited. In this type of deed, your portion of the ownership will pass to whoever you choose upon your death through your Will. For example, if you would prefer that your adult child receive partial ownership of the family home rather than have full ownership pass to your spouse, then you can use a tenancy in common to fulfill this goal. It is imperative that your Will clearly states your intentions.

Joint Tenancy with Rights of Survivorship
Deeds may also name people as joint tenants with the right of survivorship, which means they own the real estate equally. When one person passes away, ownership will pass automatically to the surviving person or people.

Transferring Ownership After Marriage
If you own property prior to marriage and want your new spouse to jointly own that property, you have a couple of options for transferring and sharing ownership. The first option is executing a warranty deed. This type of deed is used in most scenarios when the title to real estate is transferred from one owner to another. It also guarantees that the property has a clear title, meaning there are no unpaid taxes, liens, or other claims on the property.

A second popular option among Pennsylvania homeowners is called a quitclaim deed. Quitclaims do not offer any guarantees about the title or claims on the property, but you can transfer ownership with them. These deeds often offer a simpler process than warranty deeds.

Finding the answers you need can be difficult since your needs and goals are unique. How you choose to deed your property is ultimately up to you, but if you are looking for additional assistance in making the best decision for your specific situation, consider getting personalized guidance from a real estate lawyer. Leo T. White has been serving real estate clients in Pennsylvania for nearly three decades, and his targeted knowledge and experience are invaluable in deed preparation and property transfers. Contact The Law Offices of Leo T. White, LLC, at (610) 579-9141 to schedule your consultation.