Bulletin: CA2023006

Dear Associates:

On August 17, 2022, we issued an amended Bulletin CA2016001 [Revised 8-17-22] regarding Revocable Transfer on Death Deeds (TOD Deed). That bulletin dealt with the provisions of the 2016 Act and the 2021 Act. We also issued CA2017003 [Revised 10-8-19; 11-20-19; 4-20-23] containing guidance in connection with insuring transactions involving a TOD Deed under the 2016 Act. Now that the 2021 Act has been in place for a year, we have had the opportunity to address a few of the underwriting issues relating to TOD Deeds executed on or after January 1, 2022. Accordingly, this bulletin is intended to provide underwriting guidelines in connection with the issuance of title insurance following the death of a Transferor under the 2021 Act, together with any subsequent changes to the 2021 Act.

Establish the validity and statutory compliance of a TOD Deed under the 2021 Act.

1. Confirm that the TOD Deed was executed on or after January 1, 2022.
2. Confirm that the Transferor was the fee owner of the real property and that the Transferor had not subsequently recorded a document transferring title to the real property.
3. Confirm that the real property is improved with a 1 to 4 family residential dwelling, a condominium unit, or agricultural land that is not greater than 40 acres in size.
4. Confirm that the Transferor had the capacity to contract as you would for any other deed that you are insuring or in the chain of title.
5. Confirm that there are no revocations of the TOD Deed of record, including any multiple or subsequent TOD Deeds of record.
6. Confirm that the property was not held in Joint Tenancy or as Community Property with Right of Survivorship.
7. Confirm that the TOD Deed was recorded within 60 days after the date it was acknowledged before a notary.
8. Confirm that the TOD Deed was signed by two witnesses and that the named Beneficiary in the TOD Deed is not one of the two witnesses.
9. The failure to record the "Common Questions About the Use of This Form" has no effect on the effectiveness of the TOD Deed.
10. Treat the TOD Deed as any uninsured deed in the chain of title.

Establish the death of the Transferor and the transfer to the Transferee under the 2021 Act.

1. Upon the death of the Transferor, the Transferee must send each of the Transferor's legal heirs a Notice of Revocable Transfer on Death Deed along with a copy of the TOD Deed and death certificate.
2. The Transferee must record the Affidavit of Death of Transferor, which should include a declaration that notice was served upon the Transferor's heirs as required under Probate Code Section 5681 unless a separate affidavit was previously recorded. This can be accomplished by recording an "Affidavit - Death of Transferor Under Revocable Transfer on Death Deed and Affidavit - Notice of Revocable Transfer on Death Deed" (click here).
3. The Transferee must have filed a change in ownership statement pursuant to Revenue and Taxation Code Section 480.
4. Confirm that the Transferor did not receive Medi-Cal benefits at the time of death.
5. Confirm that there is no estate tax presently due and owing, and there will not be any estate tax due and owing in the future.
6. Confirm that there will not be any probate or administration of the Transferor's estate.

Time periods and other important matters associated with the 2021 Act.

1. An action contesting the validity of a TOD Deed may be filed prior to the Transferor's death by the Transferor's conservator or guardian.
2. An action contesting the validity of a TOD Deed may be filed at any time by the Transferor's personal representative or other interested person.
3. You cannot close any transaction before you are able to confirm that there is no proceeding or lis pendens filed or recorded within 120 days after the affidavit disclosing service of the statutory notice to the Transferor's heirs is recorded.  A lis pendens may be recorded in connection with an action contesting the validity of a TOD Deed. Anyone bringing an action and filing a lis pendens within 120 days after the affidavit disclosing service of the statutory notice to the Transferor's heirs is recorded will protect their rights pending resolution of the action. An action and lis pendens may be brought and filed after 120 days from the recording of the affidavit described herein, but a purchaser or lender for value and in good faith may have certain protections if their interest was acquired after the 120 days and before commencement of an action and recordation of the lis pendens.
4. Confirm that no party with an interest in the property recorded their interest within 120 days after the affidavit disclosing service of the statutory notice to the Transferor's heirs was recorded in the Public Records.
5. To affirm statutory compliance, Stewart Title Guaranty Company (STGC) will require an "Affidavit of Beneficiary to Revocable Transfer on Death Deed signed on or after January 1, 2022" (click here) to be completed, signed, and notarized by all Beneficiaries not less than 120 days after the affidavit disclosing service of the statutory notice to the Transferor's heirs is recorded.
6. If a TOD Deed records on or before 60 days after the date it was acknowledged before a notary public and another instrument purports to dispose of the same property, the relative priority between the instruments is based upon execution date and not on date of recording, such that if the other instrument makes a revocable disposition of the property, then the later executed TOD Deed or the other instrument is the operative instrument. However, if the other instrument makes an irrevocable disposition of the property, the other instrument and not the TOD Deed is the operative instrument.
7. The Revocation of the TOD Deed must be signed by two witnesses and recorded prior to the Transferor's death.
8. A Beneficiary may contest the validity of a Revocation of a TOD Deed after the Transferor's death.

If the TOD Deed was executed prior to January 1, 2022, refer to bulletin CA2017003 [Revised 10-8-19; 11-20-19; 4-20-23] for underwriting guidelines following the death of the Transferor under the 2016 Act. Pursuant to this bulletin and other related bulletins, the issuance of any title policy in connection with or in reliance upon a TOD Deed or Revocation in the chain of title, must be submitted to an STGC underwriter for approval.

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

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.