The Basics of AB 139: Revocable Transfer on Death Deeds

Tue, 06/28/2016 - 8:50am

Effective January 1, 2016, AB 139 provides for a non-probate transfer of real property by use of a revocable Transfer on Death Deed (“RTOD” for short). Because of its recent adoption in the state, it is not possible to say how the RTOD will be regarded by title insurers. Below is some general information about an RTOD.

The grantor in an RTOD is known as a Transferor. The grantee is known as a Beneficiary. An RTOD takes effect only upon the death of the Transferor. During the life of the Transferor, an RTOD has no effect, and the Beneficiary holds no interest.

For an RTOD to be effective:

  • It must be substantially in the form prescribed by the bill.
  • It must be recorded within 60 days of execution.
  • The Transferor must die on or after January 1, 2016, but an RTOD may be executed and recorded prior to that date.
  • The property it describes must be a 1-4 family residence, condo or single tract of agricultural land of less than 40 acres improved with a single family residence.
  • The property it describes must not be vested in joint tenancy or community property with right of survivorship with another living person at the time of the Transferor's death. It may be effective if the other person predeceases the Transferor.
  • It must set out the Beneficiary by name. Multiple Beneficiaries may be named. Upon the death of the Transferor, multiple Beneficiaries take title in equal shares as tenants in common. If one of multiple beneficiaries dies before the Transferor, the deceased Beneficiary's interest passes to the others in equal shares. The Beneficiary takes title subject to all liens and encumbrances affecting the property at the death of the Transferor.

An RTOD can be revoked by:

  • The Transferor substantially in the form prescribed by the bill, recorded during the life of the Transferor.
  • A regular non-RTOD transfer.
  • Another RTOD executed later and recorded during the life of the Transferor. However, revocation of the later RTOD does not revive the earlier executed RTOD.
  • A court action under certain circumstances.

There are many other provisions in the bill that are not covered in this abstract. RTODs present a novel and unique circumstance for title insurers. Interested parties may wish to consult an attorney familiar with title insurance practices before relying on an RTOD in a context in which title insurance is required.

Tags: