Effective January 1, 2022, the California State Legislature enacted noteworthy changes to the state’s laws governing transfer-on-death deeds—also called TOD deeds. A California TOD deed is a legal document that conveys real estate to a designated beneficiary when the current owner dies.1 TOD deeds—which have become a popular tool in California estate planning—allow property owners to transfer real estate outside of probate.
The recent legislative amendment’s principal objective is to mitigate the risk of improperly procured TOD deeds by heightening execution requirements and requiring notice to heirs. The most immediately significant change is that two witnesses must now sign a California TOD deed.2 Both witnesses must be present at the same time and must either see the property owner sign the TOD deed or hear the owner acknowledge the signature.
Anyone generally competent to act as a witness can witness a California TOD deed.3 A TOD deed’s beneficiary, though, should not also be a witness, as California’s statute presumes that an interested witness improperly influenced the property owner to sign the deed.4
California’s newly enacted witness requirement complements the existing rule requiring TOD deeds to be signed, notarized, and dated.5 Only the property owner’s signature must be notarized. Notarization of witness signatures is unnecessary.
A California TOD deed must also be recorded with the county recorder of the county where the property is located.6 The amended statute requires recording within 60 days of a TOD deed’s notarization date—a minor change from the prior version’s recording deadline of 60 days after execution.
A major change to the TOD law is that a beneficiary now has a duty to provide notice of the TOD deed to the owner’s heirs upon the owner’s death.7 The notice—which the beneficiary serves with copies of the TOD deed and owner’s death certificate—briefly explains the TOD deed’s effects and informs heirs of their right to contest the transfer.8 Notice to heirs must be served by mail in a form substantially similar to the model outlined in Cal. Probate Code §5681(b).9 The beneficiary then records an affidavit verifying service of notice to the owner’s heirs.10
The legislative overhaul of California’s TOD deed law includes several more notable changes with potentially significant consequences.
- Sunset Date. California’s legislation that originally authorized TOD deeds in 2016 contained a sunset provision automatically repealing the TOD statute on January 1, 2022—unless extended before that date. The legislature’s recent revisions push back the statute’s sunset date ten years—or until January 1, 2032.11 California TOD deeds executed before January 1, 2032, will remain valid if the legislature allows the TOD statute to expire on January 1, 2032.
- Recording Deadline for Other Deeds and Liens. Other instruments affecting the real estate—such as liens or deeds—are only operative if recorded no later than 120 days after the beneficiary records the affidavit verifying notice to heirs.12 The owner’s date of death was the recording-date deadline under the prior version of the law. A lien not recorded in time does not survive the transfer, and an untimely recorded deed does not effectively convey the property.
- TOD Beneficiary Obligation for Estate Debts. Statutory amendments adjust the procedure and standards for determining a TOD beneficiary’s proportionate liability—if any—for debts owed by the owner’s estate.13
- Judicial Modification of TOD Deeds. New code sections allow a California court to modify a TOD deed to prevent the deed’s failure due to ambiguity or because a charitable beneficiary declines or is unable to accept the property.14
- Updated Definitions for Real Property and Beneficiary. Revisions to the definitions of real property and beneficiary clarify what kind of real estate a California TOD deed can transfer and to whom it may be transferred. Transferrable real estate includes most condominium interests and residential properties with four or fewer dwelling units.15 The revised statute expressly excludes interests in stock cooperatives and agricultural parcels exceeding 40 acres. The updated definition of beneficiary makes explicit that natural persons, trusts, and legal entities may all be TOD beneficiaries.16
DeedClaim updates our deed forms to stay current with statutory amendments. Our California TOD deed form reflects the current version of the law. California transfer-on-death deeds signed before January 1, 2022, and validly executed and recorded under the prior version of the statute remain effective.17
Legal References
- Cal. Prob. Code §5614(a).
- Cal. Prob. Code §5624(b).
- Cal. Prob. Code §5625(a).
- See Cal. Prob. Code §5625(c).
- Cal. Prob. Code §5624(a) and (c).
- See Cal. Prob. Code §5626.
- Cal. Prob. Code §5681(a).
- Cal. Prob. Code §5681(b).
- Cal. Prob. Code §5681(e); Cal. Prob. Code §1215.
- Cal. Prob. Code §5682(c)(1).
- Prob. Code §5600(c).
- See Prob. Code §5652(b), §5660; see also Cal. Prob. Code 5682(c)(1).
- See Prob Code §5674, §5677, §5678.
- See Prob. Code §5658, §5659.
- Prob. Code §5610(a).
- See Cal. Prob. Code §5608. The prior version of Cal. Prob. Code §5608 defined beneficiary as “a person named in a revocable transfer on death deed…” Trusts, corporations, LLCs, and other entities qualify as persons under the California Probate Code’s broader definition. See Cal. Prob. Code §56.
- See Cal. Prob. §5600(d).
Very interesting. I find the section on Recording Deadline for other Deeds and Liens confusing. What happens to the loan we owe on our home if our adult kids receive ownership of our home via a CA TOD? Must they file something with the lien holder in a certain number of days for the TOD to hold up? Thanks!
Thanks for the comment. We are not able to provide legal advice applying the law to an individual’s specific situation. In general, Section 5652(b) of California’s revocable TOD deed law says that property transferred under a TOD deed transfers “subject to any limitation on the transferor’s interest that is of record…including, but not limited to, a lien, encumbrance, easement, lease, or other instrument affecting the transferor’s interest, whether recorded before or after recordation of the revocable transfer on death deed.” In other words, a mortgage in place at the owner’s death remains on the property after the owner’s death.
If you have legal questions about your specific circumstances or the requirements of agreements with creditors, you may wish to consult with a California attorney.
In reading the article, it states there must be two witnesses. The beneficiary cannot be a witness, nor the one signing over the TOD correct? So could this be contested within the courts?
Thanks for the comment. Cal. Prob. Code §5624 requires a TOD deed to be (i) dated and signed by the property owner (the “transferor”), (ii) signed by two witnesses “who were present at the same time” and see the transferor sign the deed or acknowledge an earlier signature on the deed, and (iii) notarized. An individual who is “generally competent to be a witness” can witness a TOD deed. A TOD deed witnessed by an “interested person” (such as the beneficiary) is not automatically invalid. However, California law presumes that–when a TOD deed is witnessed by a beneficiary–the beneficiary “procured the [TOD deed] by duress, menace, fraud, or undue influence.” Cal. Prob. Code §5625.
Cal. Prob. Code §5690 authorizes a court action contesting the validity of a real estate transfer under a TOD deed. The personal representative of the transferor’s estate or another “interested person” can bring the action contesting a TOD deed transfer. The action can be brought in the county with jurisdiction for proceedings dealing with administration of the transferor’s estate.
Are a husband and wife who own community property use this form to designate a beneficiary?
California’s TOD deed law has special rules for jointly owned property. The rules depend on whether co-owners own the property with survivorship rights. If co-owners have a right of survivorship, a co-owner’s survivorship rights take precedence over a beneficiary designation in a TOD deed.
The question-and-answer section of California Probate Code § 5642 describes a TOD deed’s effect on real estate owned as community property with right of survivorship like this: “If you are the first joint tenant or spouse to die, the deed is VOID and has no effect. The property transfers to your joint tenant or surviving spouse and not according to this deed. If you are the last joint tenant or spouse to die, the deed takes effect and controls the ownership of your property when you die.”
The statute’s Q&A goes on to note that a California TOD deed “does NOT transfer the share of a co-owner of the property. Any co-owner who wants to name a TOD beneficiary must complete and RECORD a SEPARATE deed.” Thus, co-owner spouses who want to use California TOD deeds must each complete and record a separate deed.
This is confusing: “a beneficiary now has a duty to provide notice of the TOD deed to the owner’s heirs upon the owner’s death” What if beneficiaries are your children, and hence heirs? Whom do they provide notice to?
California Probate Code § 5681 requires a beneficiary to “serve notice on the transferor’s heirs, along with a copy of the revocable transfer on death deed and a copy of the transferor’s death certificate.” If a TOD deed names more than one beneficiary, only one beneficiary needs to send the notice–per Section 5681(f). Subsection (b) of the same statute then provides a suggested form for the notice to heirs.
For purposes of the notice requirement, a beneficiary should rely on a court’s determination of the owner’s heirs, if the beneficiary has notice of a determination. If the beneficiary is not aware of a court determination of the owner’s heirs, “the beneficiary shall have discretion to make a good faith determination, by any reasonable means, of the heirs of the transferor.”
Subsection (g)(1) goes on to say that a beneficiary who fails to serve the required notice on an heir who is not a beneficiary and whose identity is known to the beneficiary is liable for damages the failure causes to the heir–unless the beneficiary “made a reasonably diligent effort” to provide the notice. A “reasonably diligent effort” means delivering notice as described in Section 1215 at the heir’s last address actually known to the beneficiary.
If you have legal questions about how the law affects your specific circumstances, you may wish to consult with a California attorney.
Hello,
the 2-witness provision and notification of heirs came about in the revision of 1 Jan 2022. I signed my TOD deed before that date which did not require either. What is the impact of this? Do I now have to go back and do this all over again with the witnesses? And to execute the TOD provision one day, is it required to notify the heirs even that that was not needed under the prior law?
Thank you
The recent amendments revised California Probate Code 5600 to add Subdivision (d). Subdivision (d) says, “The revisions made by the act that added this subdivision do not apply to a revocable transfer on death deed or revocation form that was signed before January 1, 2022.”
We are not a law firm and cannot provide legal advice. If you or anyone named in a TOD deed have legal questions about how the law affects your specific circumstances, you may wish to consult with a California attorney.
This is very good information. Thanks! I have a question regarding
“a beneficiary now has a duty to provide notice of the TOD deed to the owner’s heirs upon the owner’s death”
What all heirs are listed as beneficiaries? Do they have to provide notice to each other, or does this invalidate the need for notification?
Thanks for any information you can provide.
Thanks for the comment. The revised notice provisions mentioned in the article are included in California Probate Code § 5681. Because we are not a law firm, there are laws that prevent us from answering legal questions or providing legal advice. If you have legal questions about how the law affects your specific circumstances, you may wish to consult with a California attorney. If you are looking for a less expensive option, you might also try out https://www.avvo.com/ask-a-lawyer, which allows you to post questions that attorneys may answer.