United States v. Craft

Sandra Craft and her husband owned their Michigan home as tenants by the entirety, and in 1988 the IRS attached a federal tax lien to the property over Mr. Craft's unpaid income taxes. The couple executed a quitclaim deed transferring Mr. Craft's interest to Mrs. Craft for one dollar, but when Mrs. Craft later tried to sell the home, she found the lien still attached; the IRS agreed to release it and allow the sale only if half the net proceeds were held in escrow pending resolution of the government's interest. Mrs. Craft sued to quiet title to the escrowed funds; the district court ruled the government was entitled to half the proceeds, but the Sixth Circuit reversed, holding that under Michigan law Mr. Craft had no separate interest in the entirety property that a tax lien could attach to.