Bulletin: MU2014004

Date:
August 19, 2014
To:
All Alaska and Washington Issuing Offices
RE:
UNDERWRITING - Transfer on Death Deeds

Dear Associates:

Washington and Alaska recently joined a growing number of states that have passed legislation authorizing Transfer on Death deeds. Washington’s statute took effect June 12, 2014, and Alaska’s became effective July 21, 2014. The statutes are similar and, for the most part, follow the Uniform Real Property Transfer on Death Act. There are some minor variances, which will be noted below.

A transfer on death deed allows an owner of property to pass title to one or more designated beneficiaries upon the owner’s death and is a mechanism for avoiding probate. The beneficiary has no interest in the property while the grantor is alive and the beneficiary’s creditors cannot attach the property during the grantor’s life. At the grantor’s death, the property passes to the beneficiary automatically.

To be valid, a transfer on death deed must have the requisite formalities of a deed, contain a statement that the transfer is effective on the death of the grantor and must be recorded before the grantor’s death in the county where the property is located. The beneficiary must be alive at the grantor’s death for the transfer to be effective and the beneficiary may decline the transfer. A transfer on death deed does not affect the grantor’s creditors or liens that arise upon the grantor’s death, such as estate taxes or medical care reimbursement liens. The grantor may also convey or encumber the property.

A transfer on death deed is revocable by the grantor. Revocation may be done in a later recorded transfer by death deed, a written revocation, or an inter vivos deed. The revocation must expressly revoke the transfer on death deed, be acknowledged after the deed being revoked and be recorded before the grantor’s death in the county where the property is located. A transfer on death deed may not be revoked by a will.

The beneficiary takes the property subject to all encumbrances, liens, interests, deeds of trust or mortgages, claims, including estate taxes or any interest that the property was subject to at the grantor’s death. This includes creditor claims which must be asserted during the applicable claims period.

In Alaska, the statute provides that a party contesting a transfer on death deed must bring an action no later than twelve months after the transferor’s death. Also, the beneficiary must be specified by name and cannot be a class designation, such as “the living children of my sister”. The Washington statute does not contain these provisions.

The following underwriting guidelines apply to transfer on death deeds:

1)   If title to the property is still held in the grantor’s name and the grantor is alive, disclose the transfer on death deed on Schedule B, Section II as a Note, rather than a special exception. This note will not appear on the loan or owner’s policy issued at the close of the transaction.

2)   If the grantor has conveyed the property to a third party, the transfer on death deed is automatically revoked and it is not necessary to disclose this document on your report. The same is true if the transfer on death deed is revoked by a written, recorded revocation.

3)   If you are notified from a source other than a recorded death certificate that the transferor has died, show the transfer on death deed as an exception in your report and include a sub-paragraph calling for a certified copy of the death certificate. Do not insure through the transfer on death deed until the certified copy is obtained and recorded.

4)     Contact your underwriter if you are asked to insure a sale or refinance of property subject to a transfer on death deed. Depending on the circumstances, such as a very recent death of the grantor or questions regarding revocation, we may require a probate.

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.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None