Legal Line Question: Tenancy by the Entirety, Co-op Stock Certificates and January 1, 1996
What is a Tenancy by the Entirety and what is the relevance of January 1, 1996 as it relates to co-op stock certificates?
A Tenancy by the Entirety (“TBTE”) is a form of ownership of real property that is only available for married spouses. In a TBTE, married couples are viewed as a single person to whom title to real property is vested, and each spouse owns an undivided 100% interest in the property. Each spouse in a TBTE has a right of survivorship, which means that upon the death of one spouse, the surviving spouse becomes the sole owner of the property by operation of law.
Technically speaking, a co-op purchase is a securities transaction rather than a real estate purchase, and therefore, a TBTE was not always available to married couples purchasing co-ops. However, on January 1, 1996 (the “Effective Date”), the New York Estate Power and Trust Law (the “Law”) was amended to permit married couples to hold title to co-op apartments as a TBTE. Under the Law, married couples who purchase co-ops after the Effective Date, and do not specify the form of ownership on the stock certificate, are presumed to own the co-op as a TBTE.
Important Tip: If a married couple owns a co-op that they purchased prior to January 1, 1996, the stock certificate should be examined to determine how the couple holds title to the shares. If the stock certificate does not indicate a TBTE and one spouse dies, the property will not pass to the surviving spouse by operation of law. Accordingly, the couple should speak to their legal counsel and evaluate the various forms of ownership, from an estate planning perspective, to determine whether they should amend the stock certificate to create a TBTE.
|Neil B. Garfinkel,
REBNY Broker Counsel
Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP