Must the marital status of a husband and wife be recited on the face of a deed in Virginia in order to create a valid tenancy by the entirety?
Ideally, the creation of a tenancy by the entirety in Virginia includes three elements in the granting clause of the document creating or evidencing the transfer of title: (1) the marital status of the parties as husband and wife; (2) the language “as tenants by the entirety” or the term “tenancy by the entirety”; and (3) language of survivorship such as “with the common-law right of survivorship” or “with the right of survivorship as at common-law”. (Apart from the language, the tenancy itself requires five unities of time, title, interest, marriage and possession, as discussed below). Thus a typical clause might state the property is conveyed to John Doe and Mary Doe, husband and wife, as tenants by the entirety with the common-law right of survivorship.
What happens when one of these elements is missing? Does a tenancy by the entirety exist, such that the property is protected from the creditors of either spouse alone, or is the property vulnerable because the husband and wife hold title as joint tenants or tenants in common?
There appears to be a split of authority in case law between the courts in the Eastern and Western Districts of Virginia when the marital status is missing. In Sampath, 314 B.R. 73 (Bankr. E.D.Va.,2004), a Chapter 7 bankruptcy debtor claimed as exempt as a tenancy by the entirety property, his interest in a condominium unit owned by him, his wife, and their child as joint tenants with the common-law right of survivorship. The Trustee objected on the ground that debtor’s marital status was not recited in the deed. The Sampath opinion centered heavily on the common law principle that property owned by husband and wife with right of survivorship was deemed to be held as a tenancy by the entirety. See 41 Am.Jur.2d, Husband and Wife, § 31 (2004). Under Virginia law, if husband and wife hold property in a tenancy by the entirety, the joint property is immune to the claims of a creditor of one spouse alone, as explained more fully in answer to the question, “Is my Virginia real estate vulnerable to creditors when I divorce?”. Only joint creditors may subject the property to a lien or judgment.
Sampath also relies on Allen v. Parkey, 154 Va. 739, 149 S.E. 615 (1929). In Allen, the court found that a conveyance to a husband and wife during marriage with language of survivorship created a tenancy by the entirety even though the exact language of “tenancy by the entirety” was never used in the deed. Sampath agreed with the Allen court and held that a parties’ marriage was sufficient to create a tenancy by the entirety without any reference to the marriage made in the document purporting to give title.
The holding in Sampath by the United States Bankruptcy Court for the Eastern District of Virginia contrasts with the U.S. District Court for the Western District Court of Virginia in Wolfe v. Sprouse, 183 B.R. 739 (W.D.Va.1995), an appeal of a bankruptcy court decision. In Wolfe, the district court reversed the bankruptcy court judge and held that two promissory notes payable to the debtor and his spouse, “or the survivor” were not held as tenants by the entirety property because “the language of the [instrument] … lack[ed] even the hint of a marital relationship.” The court noted that five unities must exist to create a tenancy by the entirety: the unities of interest, title, time, marriage, and possession. In this case, as distinguished from the Allen case, the language indicating the unity of marriage was wholly absent from the instrument.
You should consult with your Virginia bankruptcy lawyer to discuss whether property held by you and your spouse, husband or wife, may be exempt in bankruptcy.