03.29.2017 Spouses who hold property as tenants by the entirety
Note: This article was originally published in the August 2015 issue of Hampton Roads REALTOR® magazine. Read the issue here.
Virginia is one of approximately 24 states that allow married couples to hold title to real estate as tenants by the entirety. Most REALTORS have probably seen deeds that grant property to married couples “as tenants by the entirety with the right of survivorship as at common law.” In fact, most REALTORS who are married homeowners probably own their property as tenants by the entirety with their spouses.
Some of the primary advantages to married couples in holding property as tenants by the entirety are, first, during the marriage neither spouse can convey or dispose of the property held as tenants by the entirety by his or her sole act. Second, no creditor of only one spouse can attach or lien property held by both spouses as tenants by the entirety. Third, when one spouse holding property as a tenant by the entirety dies, ownership of the property passes to the other spouse in fee simple without going through the estate of the deceased spouse.
Those advantages have been recognized and explained in decisions by the Virginia Supreme Court since at least 1825. Recently, however, the Supreme Court found an aspect of tenancy by the entirety that it had not yet decided. Specifically, in the case of Evans v. Evans, decided on June 4, 2015, the Supreme Court addressed the question of whether a deed signed by one spouse to convey his or her ownership interest in property held as tenants by the entirety to the other spouse is a valid conveyance.
The Evans case stemmed from a 1976 deed from Douglas E. Evans to Wanda S. Evans, his wife. In 1973, the Evanses took title to real estate located at 605 Fairway Drive in the town of Bluefield, Virginia. The Evanses took title as tenants by the entirety with the right of survivorship. On December 27, 1976, Douglas Evans signed a general warranty deed conveying to Wanda Evans all of his interest in the Fairway Drive property in consideration of love and affection and $10.00 cash in hand paid. Douglas was listed as the sole grantor in the 1976 deed, and the deed named Wanda as the only grantee. For reasons that do not appear in the opinion, the 1976 deed was not recorded in the land records until April 11, 1979. In addition, nothing in the record indicated that Wanda had accepted physical delivery of the 1976 deed, or that she was the one who recorded it in 1979.
After the 1979 recordation of the deed, no action took place with respect to title to the property until 1993, when Wanda created a trust and signed a deed conveying all of her interest in the Fairway Drive property to herself as trustee of the trust. According to the trust, upon Wanda’s death, her husband Douglas would have a life estate in the Fairway Drive property, and upon Douglas’ death, the Fairway Drive property would go to their son William Evans. Wanda and Douglas Evans also had two other sons, named Lloyd and Wayne, but Wanda’s trust did not provide that any assets of the trust, including the Fairway Drive property, would go to either Lloyd or Wayne.
Wanda died on April 18, 1994, and in 1995 Wayne, who had been excluded from any assets of the trust, attacked the life estate left to his father, Douglas, and the remainder left to his brother William. Wayne asserted that the 1976 deed from Douglas Evans to Wanda Evans was invalid, because neither spouse can sever a tenancy by the entirety or convey or dispose of any part of it by his or her sole act. That applies even if one of the tenants by the entirety conveys his entire interest to the other. Because the 1976 conveyance from Douglas to Wanda was ineffective, her 1993 conveyance to the trust was ineffective, and the life estate she left to Douglas and the remainder she left to William were invalid as well.
Wayne’s initial attack on the title was dismissed, and Douglas lived in the Fairway Drive property until he died on March 12, 2012. In November of 2012, William, as the trustee of Wanda’s trust, filed a quiet title action for the Fairway Drive property to verify that he held title to that property, instead of his brothers Wayne or Lloyd. In that action, Wayne and Lloyd again asserted that the 1976 deed was ineffective to convey Douglas’ interest to Wanda, since it was not signed by both Douglas and Wanda as grantors. They argued that both tenants by the entirety must join as grantors in a deed to convey any interest in property, even if the conveyance is to one of them individually. The Circuit Court of Tazewell County agreed with Wayne and Lloyd, and William appealed to the Virginia Supreme Court.
The Supreme Court began its analysis with a review of the long history of cases involving tenancy by the entirety. It noted that most of those cases involved mortgages or security interests or claims of title made by third parties, not one of the spouses. As such, the question of whether a deed signed by one spouse to convey his or her ownership in property held as tenants by the entirety to the other spouse had never been decided in Virginia. After examining the case history, the court concluded that the best practice is still for both spouses to join as grantors in a deed to one of them separately, but refused to hold that both spouses must join as grantors in that deed for it to be effective. Specifically, the court held that where sufficient evidence exists of the intent of the grantor-spouse to transfer all of his or her interest to the other spouse and, likewise, of the voluntary acceptance of the transfer by the grantee-spouse, then mutual consent to the conveyance is proved. In Virginia, voluntary acceptance by the grantee of a deed is implied because the conveyance is presumed to be beneficial to the grantee, but no person can be forced to take property against his will. While acceptance on the part of the grantee is implied, therefore, the grantee can refuse to accept the deed by some act of renunciation, dissent, disagreement or disclaimer.
In the case of transfers between tenants by the entirety, however, the court went further and stated that implied acceptance of the deed will not suffice, and the consent of the grantee-spouse must be affirmative in order to indicate mutual consent. In this case, the unilateral execution of the 1976 deed by Douglas plainly indicated his intent to convey his tenancy by the entirety ownership interest in the Fairway Drive property to Wanda. Still, nothing indicated how, when or to whom Douglas delivered the deed, nor did any evidence reveal who recorded it three years later in 1979. As of 1979, therefore, there was only an implied delivery to and acceptance of the deed by Wanda, which was insufficient under the court’s newly announced rule of an affirmative acceptance by the grantee-spouse.
On the other hand, the court noted that Wanda’s execution of the 1993 deed conveying the Fairway Drive property to her trust, as her own separate property, clearly evidenced her affirmative intent to accept the 1976 deed, and her consent to the dissolution of the tenancy by the entirety. Because the 1993 deed specifically referred to the 1976 deed as the source of her title, it removed any doubt that Wanda believed that she was anything other than the sole owner of the Fairway Drive property. Wanda’s affirmative acceptance of the 1976 deed made that deed valid, which in turn rendered her 1993 deed to the trust valid, meaning that both the life estate to Douglas and the conveyance to William were valid as well.
In the Evans case, the Supreme Court answered a question that has vexed some real estate attorneys for many years. It may also have validated hundreds of conveyances between spouses who formerly held their property as tenants by the entirety (and possibly simplified the question of who is entitled to list property that was initially held as tenants by the entirety). Nevertheless, as the court noted, the best practice is still to have both spouses join as grantors in any conveyance to just one of the spouses.