March 2011 • Volume 99 • Number 3 • Page 118
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Can civil partners hold property as tenants by the entirety?
The consensus among leading ISBA and other real estate practitioners appears to be "yes."
Now that Governor Quinn has signed the Religious Freedom Protection and Civil Union Act into law as PA 96-1513, lawyers across the state are considering the statute's effect on specific aspects of their practices.
Douglas M. Karlen, regional counsel for Chicago Title Insurance Company, said in an e-mail that his company had been debating whether parties who enter into a civil union under the new statute will be able to hold title to real estate as tenants by the entirety. Have other lawyers in the state reached a conclusion, he wondered?
Elaborating on the internal debate, Karlen said "The Civil Union law states that parties to a civil union stand in the same legal shoes as 'spouses,' 'family members,' and several other generic terms. In contrast, the tenancy by the entirety statute, 765 ILCS 1005/1c, uses more specific terms, such as 'husband and wife during coverture' and 'dissolution of marriage.'
"Our debate focuses on whether the purpose and language of the civil union law is so broad that the law encompasses tenancy by the entirety or whether the more specific terms reserve the estate of tenancy by the entirety to husband and wife - that is persons of the opposite sex married to each other."
Lawyers who handle real estate transactions in their practices considered Karlen's question. Those consulted agreed that civil union partners will be able to hold property as tenants by the entirety. The specific language needed to ensure that a conveyance to civil union partners is valid, however, remains unsettled.
Looking to the act's purpose
Illinois permits married couples to hold their homestead property as tenants by the entirety. 765 ILCS 1005/1c. Couples who do so may not dispose of their respective shares of their property unless both partners agree. As long as a couple owns their home as tenants by the entirety, creditors generally cannot force its sale to satisfy a judgment entered against only one spouse for his or her separate debt.
Chicago lawyer Ray Koenig III, the current vice-chair of ISBA's Trusts and Estates Section Council, parsed the new law to respond to Karlen's question.
Section 10 of the new statute, Koenig observed, provides that the term "party to a civil union" means and shall be included in any definition or use of the terms "spouse," "family," "immediate family," "dependent," "next of kin," and other terms that denote the spousal relationship, as those terms are used throughout the law. The tenancy by the entirety statute, in turn, uses the terms "husband and wife" and "marriage" to define who may take advantage of its provisions.
"Those terms are clearly 'terms that denote the spousal relationship,'" said Koenig, making the tenancy by the entirety statute one example of the laws referenced under section 10 of the civil union statute.
Koenig said section 20 of the new statute provides similarly specific and clear language: "A party to a civil union is entitled to the same legal obligations, responsibilities, protections, and benefits as are afforded or recognized by the law of Illinois to spouses, whether they derive from statute, administrative rule, policy, common law, or any other source of civil or criminal law." He reasons that "[b]ecause spouses are defined as husband and wife, and the phrase 'husband and wife' is used in section 1005/1c, civilly united partners have the same rights as a husband and wife under that section."
Koenig also pointed to legislative intent, as stated in section 5 of the new statute, as further supporting his conclusion. "This Act shall be liberally construed and applied to promote its underlying purposes, which are to provide…persons entering into a civil union with the obligations, responsibilities, protections, and benefits afforded or recognized by the law of Illinois to spouses."
Given the act's clearly stated purpose and its instruction to the courts to construe its provisions liberally, Koenig said courts will be required to recognize that partners in a civil union can own property as tenants by the entirety.
What are the magic words?
Northwest suburban lawyer Ralph J. Schumann, president of the Illinois Real Estate Lawyers Association, and Neil Goltermann, featured speaker at an IRELA meeting in early February, concurred with Koenig. Schumann, who authored Methods of Taking Title in IICLE's volume on real estate practice, said lawyers at recent meetings of both IRELA and ISBA's Real Estate Law Section Council had engaged in lively discussions about the new law but had expressed little doubt as to whether parties to civil unions will be able to hold property as tenants by the entirety.
But notwithstanding the 2002 amendment to the tenancy by the entirety statute (PA 92-136), which deleted the requirement that a husband and wife must be named and expressly identified in the instrument as "husband and wife," Schumann said lawyers are pondering what language will be necessary to ensure that a deed conveying property into tenancy by the entirety is effective for parties to a civil union. He suggests that referring to "John Smith and James Jones, partners to a civil union established pursuant to the Religious Freedom Protection and Civil Union Act," may be good practice.
Both Schumann and Goltermann recognized that different lawyers will have different approaches to drafting conveyance language. Goltermann, who assisted in drafting PA 96-1145, which permits married couples to hold their interests in their homesteads that are held in trust as tenants by the entirety, said, "You have to make the method of ownership apparent in the deed language. The point is to let creditors and the world know the grantees hold title as tenants by the entirety."
For his part, Karlen confirmed that his company will take the position that parties to a civil union may hold title to their residential real estate as tenants by the entirety.