Married couple James and Nina own their Virginia home as tenants by the entirety. James, without Nina's knowledge, executes a deed of trust on the property to secure a personal business loan. The lender later attempts to foreclose. Which statement BEST describes the legal effect of James's unilateral deed of trust in Virginia?
Correct Answer
A) The deed of trust is void as to Nina's interest; the lender can only reach James's survivorship interest, which terminates if Nina survives him.
Under Virginia's tenancy by the entirety doctrine, neither spouse can unilaterally encumber the entirety property in a way that binds the other spouse. James's unilateral deed of trust is void as to Nina's interest and cannot be enforced against the marital home while both spouses are alive and the tenancy by the entirety remains intact. However, James does have a survivorship interest — his contingent right to own the entire property if he survives Nina. Courts have recognized that a lender may reach this survivorship interest, meaning the lender's lien would become enforceable only if James survives Nina and the tenancy by the entirety converts to his sole ownership. The lien is essentially a cloud on James's contingent future interest.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Community property is a form of ownership recognized in certain states where property acquired during marriage is considered equally owned by both spouses, regardless of who earned the money or whose name is on the title.
Condominium ownership involves owning a unit of airspace within a multi-unit building plus an undivided interest in the common elements shared with other unit owners. Each unit is separately taxed and financed.
In a cooperative (co-op), the building is owned by a corporation, and residents purchase shares of stock in the corporation that entitle them to a proprietary lease on a specific unit. Residents are shareholders, not property owners.
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