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
- 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).