Transfer on Death Deed for Residential Property
By Robert J. Lanzone
California law has been changed, effective January 1, 2016, to allow an owner of real property to create a “transfer on death” designation by a deed. This is a new law. California has, until this year, required real property to be transferred on death by probate (court proceeding), by joint tenancy deed, community property deed with right of survivorship or through a revocable or irrevocable trust.
Probate Code Section 5600 et seq. sets forth the provisions for a “Revocable Transfer on Death Deed.” It allows an owner of real property to execute and record a Transfer on Death Deed. The real property must be residential use – one to four (1-4) dwelling units. This includes condominium units. It also includes rental units. The basic form of the deed must be substantially in the form of the statutory form of deed provided in Probate Code Section 5642.
The deed must be recorded within 60 days of being executed (signed/notarized) or it is not effective. The transfer of real property is then effective on the death of the transferor. However, the transferor can revoke the gift prior to death by executing and recording a Revocation of Deed or a new Transfer on Death Deed.
Other provisions under the new Probate Code section:
- The transferor may transfer a partial ownership interest.
- On sale of the real property by the transferor, the gift is void and is of no effect.
- There is no requirement to tell a beneficiary about the gift.
- If a beneficiary dies before transferor, the gift is voided.
- A joint tenant must terminate his or her joint tenancy prior to creating a valid Transfer on Death Deed.
- If you have debts, or even liens on the real property, this form of transfer occurs subject to any debts. Same with taxes.
- If there is more than one beneficiary designated, they will take the property as tenants in common.
Please consider setting up an appointment if you believe your estate would benefit from this simple way to designate successors to real estate you may own in California.