Underwriting Q&A | Are Transfer on Death Deeds effective mechanisms for transferring real property?

Question: Are Transfer on Death Deeds effective mechanisms for transferring real property?

Answer: Texas – Yes.  Through a recorded Transfer on Death Deed (“TODD”), a real property owner can designate a beneficiary or beneficiaries to automatically receive the property upon the owner’s death. The beneficiary has no interest in the real property during the owner’s lifetime and, therefore, the owner retains full authority to transfer or encumber the property until his/her death.  Effective September 1, 2015, the Texas legislature enacted the Texas Transfer on Death Deed Act as presented in SB 462. The legislative intent behind the Act is to create a statutory method for transferring real property without the expense of a probate proceeding.

Arizona – Yes. By signing and recording an Arizona Beneficiary Deed, an owner of an interest in real property located in Arizona may cause the owner’s interest in the real property to be conveyed to people or entities on the owner’s death. The interest in real property conveyed by a Beneficiary Deed does not take effect until the death of the owner, at which time that interest transfers automatically by law to the designated grantee(s) named in the Beneficiary Deed. This legislative mechanism passed as Arizona Revised Statutes Section 33-405, which created a new type of Arizona real property deed known as the Arizona beneficiary deed.

Florida – No. Florida law does not provide for real estate to be transferred with a Transfer-on-Death type of deed.

New Mexico – Yes.  The law in New Mexico allows the transfer of real property from the record owner to another person by utilizing a Transfer on Death Deed (TODD). This type of deed allows the owner to designate a beneficiary who will become the owner of the property automatically when the record owner dies.  There is then no need for that real property to go through probate.  This statute is found at Sections 45-6-401 through 45-6-417 NMSA 1978 (2014).