One of the key family law concepts in New Jersey is that of a “tenancy by the entirety.” This is a fancy, legal way of describing property jointly owned by a married couple. In other words, if you and your spouse hold title to your home as tenants by the entirety, that means you effectively own the property as a single legal entity.

Among other things, this means that one spouse cannot dispose of the property without the consent of the other. A 1988 amendment to New Jersey statutory law confirmed this principle, stating that neither spouse can “sever, alienate, or otherwise affect their interest in the tenancy by entirety” unless both spouses consent. This rule also means that a creditor of one spouse cannot attach a lien to, or force the sale of, a property held by both spouses as tenants by the entirety.

The reason for this is simple: If one spouse irresponsibly runs up a large amount of debt without the other's knowledge, it would be patently unfair for the creditor to force the sale of the marital home, leaving the innocent spouse effectively homeless.

Appellate Division Bars Third-Party Creditors from Attempting to Sell Jointly Owned Property

In the past, New Jersey courts reserved the right to force a sale or “partition” of a property held as tenants by the entirety under certain principles of equity law. According to a 1976 New Jersey Supreme Court decision, such remedies were “not automatically available” to creditors, but could be ordered on a case-by-case basis. But this decision predated the 1988 statute.

Recently, the Appellate Division of the Superior Court of New Jersey clarified that the 1988 law controls, and that a third-party creditor of one spouse may not force the sale of real property of property owned as tenants by the entirety by both spouses. This particular case did not involve a marital home, however, but rather an undeveloped tract of 30 acres in Mansfield, New Jersey.

The husband in this case owed a significant amount of money to his relatives. The relatives sued to collect the debt, which led to a settlement and a civil judgment of $225,000. When the husband subsequently failed to pay the judgment, the relatives began looking for assets they could seize, which led them to the Mansfield property.

The relatives asked for a partition and sale–basically, severing the tenancy by the entirety and selling off the husband's 50-percent interest in the property to pay off the judgment. A Superior Court judge denied the relatives' request, citing the 1988 statute “now disallows such a remedy.”

The Appellate Division agreed and dismissed the relatives' appeal. Although the statute as written only states that “neither spouse” may unilaterally take actions to sever or affect the joint tenancy, the Appellate Division said this rule also “applies to a situation where, as here, one spouse's failure to pay his personal debts to third-party creditors has resulted in a money judgment entered against him alone.”

Need Advice from a New Jersey Family Law Attorney?

The Appellate Division's ruling reaffirms the importance of legal protections for innocent spouses in the context of civil law. If you have any questions or concerns about how a judgment involving you or your spouse may affect your marital property, an experienced New Jersey family law attorney can help. Contact us today to schedule an appointment.