Real Property Law (RPL) Section 424 became effective on July 19, 2024, authorizing the use of a Transfer on Death Deed (TODD) in New York State.
Title underwriters in New York State are starting to provide guidance on how they want to handle underwriting questions with regard to a TODD found of record. Initial review of said guidelines are summarized below.
This memo provides guidance on underwriting issues and requirements when a TODD appears in the chain of title.
When a Beneficiary under a TODD will convey, and the Transferor has died:
If the conveyance is to occur within 18 months of the Transferor’s date of death, obtain as much information as possible regarding the solvency of the Transferor’s estate before issuing a report.
This is based on RPL §424(14):
If the Transferor’s estate is insufficient to satisfy allowed claims or a statutory allowance to a surviving spouse or child, liability may be enforced against the real property transferred under the TODD.
In other words, a “clawback” of the TODD is possible if there are not enough estate assets to satisfy debts, claims, or a right of election. The risk exists during the 18 months following the Transferor’s death.
Additional Considerations:
If you are satisfied with the estate’s solvency, also consider:
- Was the Beneficiary a non-family member, to the exclusion of family members?
- Was the Beneficiary a family member, to the exclusion of other family members?
- A copy of the will of the decedent may be required to confirm there is no devise in contraction to the TODD.
- Was the Beneficiary in a confidential or fiduciary relationship with the Transferor?
- Is there any evidence of mental incapacity or diminished capacity on the part of the Transferor?
- Is the attorney who prepared the TODD willing to provide an affidavit or letter outlining the circumstances surrounding the execution of the deed?
We will keep you informed as other guidelines are established on this matter. Please contact our office with any questions regarding this emerging situation.