Bulletin: CO2014001

Dear Associates: 

In July 2004, the Colorado Legislature enacted House Bill 1048 concerning Beneficiary Deeds. This law, which became effective August 4, 2004, establishes Part Four to Article 15 of Title 15 of the Colorado Revised Statutes (Sections 15-15-401, et seq). This Bulletin describes the Beneficiary Deed and provides Underwriting Guidelines relating to insuring property affected by a Beneficiary Deed.

The Beneficiary Deed

This law creates the beneficiary deed ("Beneficiary Deed") as an alternative to a Will to make a real property conveyance effective upon the death of the grantor-owner. Title to real property may be transferred on the death of an owner by recording in the real property records in the County where the real property is located, prior to the owner's death, a Beneficiary Deed signed by the owner, as grantor ("Grantor Owner"), designating a grantee beneficiary ("Grantee-Beneficiary") of the interest. The Beneficiary Deed may designate a Successor Grantee-Beneficiary to receive the interest in the real property if the primary Grantee-Beneficiary does not survive the Grantor Owner. C.R.S. 15-15-404 provides a template for the Beneficiary Deed.

The Beneficiary Deed is only effective upon the death of the Grantor Owner. The Deed need not be supported by consideration, nor does the effectiveness of a Beneficiary Deed depend on a Grantee-Beneficiary's signature, consent, agreement, or notice. During the Grantor Owner's lifetime, the Grantee-Beneficiary has no right or interest in the real property that is subject of the Beneficiary Deed.

Transfer of Title upon Death of Grantor Owner

Title to the real property transferred by a Beneficiary Deed shall vest in the designated Grantee-Beneficiary only on the death of the Grantor Owner. Proof of death of the Grantor Owner shall be established by recordation of a certified copy of the death certificate and Supplemental Affidavit. The Grantee-Beneficiary takes title to the Grantor Owner's interest in the real property subject to all conveyances, encumbrances, assignments, contracts, mortgages, liens, and other interests affecting title to the real property. A person having an interest in the decedent's real property, which is not recorded in the records of the office of the county clerk and recorder at the time of death of the Grantor Owner, has four months after the Grantor Owner's death to record evidence of their interest. A Grantee-Beneficiary may refuse to accept all or any part of the real property interest described in a Beneficiary Deed.

Joint Tenancy

A joint tenant may use a Beneficiary Deed, without severing the joint tenancy, to transfer his interest in the real property. However, title shall only vest in the designated Grantee-Beneficiary if the joint tenant grantor is the last to die of all of the joint tenants. If the joint tenant grantor is not the last joint tenant to die, the Beneficiary Deed shall have no effect.

Revocation of Beneficiary Deed

The Grantor Owner can revoke the Beneficiary Deed by executing a revocation prior to his/her death. The revocation must describe the real property affected and must be recorded in the real property records in the County where the real property is located prior to the death of the Grantor Owner. In addition, any subsequent Beneficiary Deed revokes all prior Beneficiary Deeds in their entirety, even if the subsequent Beneficiary Deed fails to convey the entire Grantor Owner's interest in the real property. Section 2 of  C.R.S. 15-15-405 states that the joinder, signature, consent, agreement of, or notice to, either the original or new Grantee-Beneficiary is not required for the revocation to be effective. The most recently executed Beneficiary Deed or Revocation that has been recorded prior to the Grantor Owner's death shall control regardless of the order of recording. C.R.S. 15-15-405 provides for a template of the revocation document.

Underwriting Guidelines:

A. BENEFICIARY DEED OF RECORD DURING GRANTOR OWNERS LIFETIME:

1. If a "Beneficiary Deed" appears in the chain of title, the Beneficiary Deed should be shown as an exception in Schedule B of the title commitment. The Exception should read substantially as follows:

The interest of [state name of grantee(s)] created by Beneficiary Deed from [state name of grantor(s)] recorded _______________, 20__, under Reception No. ____________ under the provisions of C.R.S. 15-15-401, et seq.

2. If you are issuing a Loan Policy, the exception for the Beneficiary Deed shall be shown in Schedule B, Part II.

3. You may rely on one of the following to remove the Exception for a Beneficiary Deed:

a. A properly executed and recorded transfer to a third party purchaser by all of the Grantor Owners under the Beneficiary Deed.

b. The recording of an instrument revoking the Beneficiary Deed by all the original Grantor Owners under the Beneficiary Deed.

B. BENEFICIARY DEED OF RECORD - GRANTOR OWNER DECEASED:

Because a person having an unrecorded interest in the decedent's real property  has four months after the Grantor Owner's death to record evidence of their interest, you may not insure title to the property prior to the expiration of 4 months from the death of the Grantor Owner.

1. Four months after the death of the Grantor Owner, you may rely on a Beneficiary Deed to pass title to and insure the named Grantee-Beneficiary if you confirm all of the following:

a. There is no other recorded Beneficiary Deed signed and recorded by the Grantor Owner of the Beneficiary Deed in their lifetime.

b. The record does not disclose a "Revocation of Beneficiary Deed" signed and recorded by the Grantor Owner of the Beneficiary Deed in their lifetime.

c. Evidence of the death of the original grantor(s) under the Beneficiary Deed by recording a certified copy of the death certificate and a supplemental affidavit in conformance with C.R.S. 15-15-413 and 38-31-102.

d. If multiple grantors appeared on the Beneficiary Deed, you must determine that all the original Grantor Owners have passed away.

e. If the property was held in joint tenancy, the grantor of the Beneficiary Deed must be the last to die of all of the joint tenants.

f. The following must be contained in Schedule B requirements of the commitment:

Evidence satisfactory to the Company that the Estate of [state name of decedent Grantor Owner(s)], deceased, is not subject to the Federal Estate Tax, pursuant to the Internal Revenue Code, 26 U.S.C. Sec. 6324(a).

g. The following exception must be contained in Schedule B of the commitment and policy:

Any claim of the Department of Health Care Policy and Financing for Recovery of Medical Assistance Payments Pursuant to C.R.S. 25.5-4-301 or 25.5-4-302 by reason of the death of the decedent named below who was a former owner of said land under "Beneficiary Deed" recorded ______________________. Decedent: [state name of decedent Grantor Owner(s)].

2. Four months after the death of the Grantor Owner, you may rely on a Beneficiary Deed to pass title to and insure a bona fide purchaser or lender of the named grantee-beneficiary if:

a. The matters described in "a" through "e" of paragraph "B.1." above have been completed or satisfied.

b. The estate requirement set forth in B.1.f. must be contained in Schedule B requirements of the commitment.

Please note that to determine ownership or vesting of property you must review a copy of the deeds in the chain of title to make sure it is not a Beneficiary Deed. As a reminder, the preparation of a deed by an issuing office is not authorized by Stewart Title Guaranty Company.

If there is any concern related to the execution of the Beneficiary Deed or the Grantor Owner’s competency or capacity at the time of execution, please contact your Stewart Title Guaranty Company underwriting personnel.

This memorandum is intended to provide general information on statutes affecting title insurance in Colorado. As additional issues or questions arise regarding specific procedures to be followed in each case, please do not hesitate to contact your Stewart Title Guaranty Company underwriting personnel. 

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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