Florida’s housing market has consistently been at or near the top of the hottest markets during the last several years. Zillow named Tampa, Florida as the hottest city in the country for buying a home in 2022 with anticipated strong value growth, high job growth, high demand and fast- moving inventory. In addition, the demand for second homes has increased 87% from pre-pandemic levels according to real estate brokerage firm Redfin.
Married couples purchasing real estate in Florida may hold title as tenants in common, joint tenants with rights of survivorship or as tenants by the entirety (“TBE”). TBE, of course, is not recognized in New Hampshire. However, matters involving Florida real estate are already common given New Hampshire’s significant snowbird population, and current data suggests those numbers may increase. This article provides a refresher on ownership as tenants by the entirety and a summary of the advantages and disadvantages of TBE ownership.
Florida property (real and persons) held as tenants by the entirety must have six characteristics or “unities”:
(1) Unity of possession (both spouses must have joint ownership and control)
(2) Unity of interest (each spouse has an identical interest in the property)
(3) Unity of title (the interests in the real property must have originated in the same document)
(4) Unity of time (the interests must have commenced simultaneously)
(5) Survivorship (on the death of one spouse, the surviving spouse becomes the sole owner of the property)
(6) Unity of marriage (the parties must be married at the time the property was titled in their names)
First Nat’l Bank v. Hector Supply Co., 254 So.2d 777, 781 (Fla. 1971). Prior to the amendments to Florida Statute §689.11, it was not clear whether the conveyance of real property from one spouse to both spouses created a tenancy by the entirety. As a result, a straw man was commonly used. However, §689.11, as amended currently provides:
(1) …An estate by the entirety may be created by the action of the spouse holding title:
(a) Conveying to the other by a deed in which the purpose to create the estate is stated; or
(b) Conveying to both spouses.
Importantly, it is not necessary that the deed describe the owners as “husband and wife”, “a married couple” or “wife and wife” in order to establish ownership as tenants by the entirety, however, to avoid doubt, it is better practice to do so. Ramos v. Estate of Ramos, 329 So.2d 172, 173 (Fla. 3rd DCA 2021); see also Beal Bank SSB v. Almand and Associates, 780 So.2d 45 (Fla. 2001) (a seminal case on TBE holding that real and personal property owned jointly by husband and wife is presumed to be owned as tenancy by the entireties, unless the couple has expressly indicated a contrary intent). In addition, non-residents who own property in Florida may claim tenancy by the entirety protection. In re Cauley, 374 B.R. 311, 316 (Bankr. M.D. Fla. 2007) (recognizing that tenants by the entireties is a form of property ownership that applies to all property located in Florida regardless of the domicile of the owners).
There are several key advantages to tenancy by the entirety ownership. From an estate planning point of view, when one spouse dies, the property transfers to the surviving spouse outside of the estate administration. Also, tenancy by the entirety is a powerful shield against collection efforts from creditors where the creditor only holds a judgment against one of the spouses. There are a few exceptions to this rule for “super” creditors such the IRS, the FTC, the SEC or the Department of Justice. Interestingly, in the context of bankruptcy, a married New Hampshire couple may still be able to claim Florida real estate as exempt because federal bankruptcy law recognizes tenancy by the entireties as a creditor protection tool and the law of the state where the real estate is located governs.
While there are significant advantages to ownership as tenants by the entirety, certain situations limit those advantages. In the case of divorce, tenancy by the entireties immediately converts the ownership into tenants in common. This could be problematic if one spouse has creditor challenges as that person’s share of the property would immediately be subject to execution by the creditors. As mentioned above, tenancy by the entireties is a useful probate avoidance tool, however, similar to divorce, tenancy by the entirety ownership terminates at death and the property vests solely in the surviving spouse. The property could suddenly be exposed to the surviving spouse’s creditors. Also, tenancy by the entireties, like joint tenancy, might result in the accidental disinheritance of intended heirs. For example, surviving spouse remarries, deeds the real estate to the new spouse as TBE, and then dies first, the children from the first marriage would receive nothing from the real estate.
It is important to remember that Florida law also recognizes ownership as tenants by the entirety as to personal property. A thorough analysis of the case law on personal property is beyond the scope of this article, however common assets include stock certificates, LLC interest, vehicles, tax refunds. In this author’s experience, personal property is often vulnerable for objection to an ownership claim as tenants by the entirety. For example, some banks do not permit TBE accounts or the account owners may have checked the box for a “joint” account instead of a “TBE” account as it is common to think of bank accounts as joint or individual, not TBE. The Florida Supreme Court commented in Beal with regard to bank accounts, “the problems in proof are compounded by a lack of uniform documentation to assist the inquiry into what form of tenancy the married couple had intended to establish.” 780 So. 2d at 55. The same is true for titles to cars or boats and other assets.
The next time a file lands on your desk involving Florida real estate owned by a married couple, stop and take a close look at the deed. It may not be immediately evident that ownership is held as tenants by the entirety because of the presumption and lack of formal requirements to create the tenancy by the entireties. However, determining the status of the title may have an important impact on the issues under review in light of the advantages and disadvantages of TBE ownership.