Bulletin: SLS2008017

Dear Associates:

This bulletin provides updated Company-policy information regarding the above-referenced topic. The United States Supreme Court, in United States v. Craft, 535 U.S. 274 (April 17, 2002), has ruled that a federal tax lien against one spouse will attach to that spouse's rights in property held as tenants by the entireties.

The Supreme Court considered Michigan law. Michigan law, like several states that have tenancy by the entireties, does not recognize attachment of a judgment lien to land held as tenants by entireties, if the judgment is only against one spouse. The court ruled that state law will not apply and that the federal tax lien will attach. Subsequent case law indicates that the implications of Craft may be extended to other types of federal judgment liens. See 18 U.S.C. § 3613(c); United States v. Godwin, 446 F. Supp. 2d 425, 427 (E.D.N.C. 2006) (holding that a restitution order is a lien in favor of the United States as if the liability of the person fined were a liability for a tax).

Company Policy:
If you are insuring on a current conveyance or mortgage by spouses who hold title as tenants by the entireties, joint tenants, cotenants with right of survivorship, or homestead, you must require a release or satisfaction or discharge of any outstanding federal tax lien or U.S. judgment lien against either spouse.

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