Does the state you are working in recognize tenancy by the Entireities?
A well-rounded petroleum landman should be very familiar with Tenancy by the Entireties vs Joint Tenancy. In addition, does the state you are working in still recognize Tenancy by the Entireties? The petroleum landman should know how the Tenancy by the Entireties effects the oil and gas lease.
Tenancy by the Entireties has been abolished by statute in many states. In states where the Tenancy by Entireties is recognized, it can exist only between a husband and wife. In some states a Tenancy by the Entireties is created by a Deed or other conveyance to two people who are in fact husband and wife, whether or not the Deed described them as husband and wife, and whether or not the Deed states that they take possession as Tenants by the Entireties.
The Rule is different in Oklahoma and Utah, where the parties must not only be husband and wife, but the Tenancy by the Entireties must be specified in the Deed or conveyance.
Tenancy by the Entireties is similar to the Joint Tenancy in that the fact of the husband-and-wife relationship which creates the Tenancy by the Entireties, and in most states where it is recognized, the Entireties will result by conveyance to husband and wife, unless the conveyance itself specifies some other type of Tenancy such as Tenancy in Common or Joint Tenancy.
The surviving Tenant owns the entire interest upon the death of the deceased Tenant. No Title passes to the Heirs or Devisees of the deceased Tenant by the Entireties by reason of Will or law of Decent and Distribution.
Remember that the main difference between the Tenancy by the Entireties and a Joint Tenancy is a Joint tenancy can have two or more joint tenants. There is no legal limit to the number of co-owners in a joint tenancy, as long as all joint tenants have equal shares of ownership.
As far as how the Tenancy effects the oil and gas lease, the Tenancy by the Entireties is considered as one Tenancy vested in both owners, and neither one of them owns a separate interest. Therefore, as a result of this theory, neither the husband nor the wife can separately convey, lease, or encumber the interest. Deeds or leases by one are nullities, instead of resulting in a severance of the Tenancy, as in the case of Joint Tenants.
The Tenancy by the Entireties is subject to the debts of both husband and wife, but not to the separate indebtedness of either. Creditors cannot reach any part of the Tenancy by the Entireties unless the indebtedness is created by both the husband and wife. Therefore, a careful check of any loans against the property of the Tenancy needs to be done.
When checking the title, pay careful attention to any final divorce decrees. Ordinarily, divorce will result in termination of the Tenancy by the Entireties, and the husband and wife then become Tenants in Common. This is true unless a property settlement agreement approved by the court provides otherwise. Legal separation can affect the Tenancy as well. You will have to carefully read the Separation Agreement or what was filed with the court to determine how the parties are bound by the Tenancy by the Entireties, if at all. Normally, it’s been my practice, that the only way the Tenancy can be dissolved is through a legal divorce, but, as stated, you would need to carefully read the divorce decree to determine the final outcome as to the property held in the Tenancy.
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