by: Adrienne M. Henning

When taking title to real property in Indiana, the avenue with the most protection is when a husband and wife take title as tenants by the entireties.  The concept of tenants by the entireties originated in common law where a husband and wife were considered one person.  In Indiana, the concept of tenants by the entireties has been codified and an important protection.

Tenants by entireties is a legal fiction in which a married couple are viewed as one entity for the purposes of owning real estate.   Specifically, Indiana Code § 32-17-3 -1(b) states that, “… a contract described in subsection (a) creates an estate by the entireties in the husband and wife.  The interest of neither party is severable during the marriage.”  In other words, one spouse cannot convey the property without the other.  The Indiana Court of Appeals addressed this issue in Beneficial Mortgage Co. of Indiana v. Powers 550 N.E.2d 793 (1990).  In that case, the husband, Donald Powers, had forged his wife’s signatures.  Wife, Constance, disavowed the mortgages and notes.  When Beneficial Mortgage Co. of Indiana (“Beneficial”) attempted to foreclose the liens, the trial court found in favor of the wife and the Court of Appeals upheld the trial court’s judgment.  The Court of Appeals specifically held that Beneficial did not attempt to confirm Constance’s participation and Beneficial was unable to recover the outstanding amounts under the mortgages executed by Donald. 

Likewise, no lien can attach to the property if the lien only relates to one spouse.  In Mid-West Federal Savings Bank v. Kerlin 672 N.E.2d 82, the Court held a judgment did not attach to the property.  In that case, creditor James and Glenna Kerlin had obtained a judgment against Joe Holland on November 18, 1993.  At the time of judgment Joe owned real property with his wife.  The Hollands defaulted on their mortgage and a foreclosure action was initiated by Mid-West Federal Savings Bank on March 15, 1994.  The Hollands filed for divorce and Joe Holland acquired sole ownership on March 17, 1994.  In that case, the Court of Appeals held that the judgment lien did not attach to the real property owned by the Hollands until March 15, 1994.  Mid-West Federal Savings Bank was not required to name the Kerlins in the foreclosure action as the lien did not attach to the property at the time the foreclosure action was filed.  The lien did not attach because the Hollands, at the time the foreclosure was filed, still owned the property as tenants by entireties.

                Indiana Courts have, as recently as 2008, confirmed that there is no special language required to create tenancy by the entireties between a husband and wife (Ramer v. Smith 896 N.E.2d 563).  Likewise, Indiana Code § 32-17-3 -1 does not outline specific language required to create the special protection afforded by this legal fiction.

                Creditors looking to pursue remedies against real property will need to evaluate ownership to determine enforceability against real property.  If inconsistencies exist, it could impact whether a creditor has a valid lien.  Our firm’s Indiana attorneys can guide you through this assessment, and assist with title claims or curative actions when problems arise.

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