What Is an Oregon Transfer-on-Death (TOD) Deed?
A deed is a legal instrument used to transfer real estate. An Oregon transfer-on-death deed—also called TOD deed or beneficiary deed—is a type of deed that allows an owner of Oregon real estate to designate a beneficiary to receive the property upon the owner’s death. When a property owner records a valid Oregon TOD deed, title to the real estate automatically transfers to the beneficiary when the owner dies.
The Oregon Legislature authorized TOD deeds by enacting Oregon’s version of the Uniform Real Property Transfer on Death Act (“URPTDA”).1 About half of U.S. states authorize TOD deeds in one form or another.
What Is the Purpose of an Oregon TOD Deed?
The principal advantage of an Oregon TOD deed is that it automatically transfers title to Oregon real estate directly to the designated beneficiary when the owner dies—without going through probate. Oregon’s URPTDA specifically declares that TOD deeds are “nontestamentary.” 2 Oregon real estate subject to a TOD deed therefore never becomes part of a deceased owner’s probate estate.
Bypassing probate is a popular estate planning objective because the probate process is often inefficient and expensive. Avoiding probate typically reduces the cost of administering an estate. With an Oregon TOD deed, the beneficiary also takes title to the real estate sooner after the owner’s death than if the owner devised the real estate by will. Further—because probate proceedings are public—avoiding probate has advantages for individuals who prefer keeping their affairs private.
What Types of Property Can Be Transferred Using an Oregon TOD Deed?
Oregon TOD deeds can transfer ownership interests in real estate located within the state of Oregon.3 Oregon TOD deeds are not effective to transfer assets other than real estate or real estate an Oregon resident owns in another state.
Oregon law authorizes TOD designations for certain other assets—such as securities and brokerage accounts4—but the URPTDA and Oregon TOD deeds are expressly limited to real estate.
What Is the Effect of an Oregon TOD Deed While the Owner Is Alive?
An Oregon TOD deed does not limit or otherwise affect the property owner’s rights or interests in the real estate while the owner is alive.5 A property owner who executes and records an Oregon TOD deed retains the right to sell, transfer, or mortgage the property as if the TOD deed did not exist.
Similarly, a TOD deed does not grant the beneficiary any vested rights in the real estate during the owner’s life.6 An Oregon TOD deed will not—while the owner remains living—expose a property to attachment by the beneficiary’s creditors or affect the beneficiary’s eligibility for means-tested government assistance programs.7
By contrast, a life estate deed creates an ownership interest that lasts for the lifetime of the life estate holder—or life tenant—and names a remainderman to receive title after the life tenant’s death.8 Because the remainder interest vests in the remainderman while the life tenant is alive, the life tenant’s rights to use or transfer the property are limited.
A property owner who records an Oregon TOD deed retains the power to revoke or amend the TOD deed until death—even if the deed states that it is irrevocable.9 Revocation effectively cancels the future transfer to the beneficiary.
An owner revokes an Oregon TOD deed by recording either a new TOD deed or an “instrument of revocation” that expressly revokes the prior TOD deed.10 Revocation is implied if the owner records a later TOD deed with provisions inconsistent with the terms of a previously recorded TOD deed.11
Additionally, an owner effectively revokes a TOD deed—in whole or in part—by recording a later deed conveying a property interest that otherwise would have been transferred under the TOD deed.12
Even if a property owner does not affirmatively revoke a TOD deed, the owner’s divorce may revoke an Oregon TOD deed by operation of law.13 An Oregon TOD deed recorded before the owner’s divorce is automatically revoked if the TOD deed names the former spouse as beneficiary—unless the deed expressly states that it survives a subsequent divorce.
What Is the Effect of an Oregon TOD Deed on the Death of an Owner?
Upon the property owner’s death, title to real estate subject to an Oregon TOD deed automatically transfers to the named beneficiary—with no need for probate.14 The beneficiary receives the property subject to any existing encumbrances—such as mortgages, judgments, or other liens—unless the encumbrance can be satisfied from assets in the owner’s probate estate.15 Similarly, a deceased owner’s estate may seek to satisfy certain creditor claims from real estate with a TOD deed—but only to the extent the deceased owner’s probate estate is insufficient to satisfy the claims.16
Can an Oregon TOD Deed Leave Property to Multiple Beneficiaries?
Yes, Oregon’s URPTDA authorizes property owners to designate more than one beneficiary in a TOD deed.17 Oregon law assumes that—when a TOD deed names more than one beneficiary—each beneficiary receives equal, undivided shares with no right of survivorship.18 A property owner can allocate beneficiaries’ shares differently by including different terms expressly within the TOD deed.19
Can Joint Owners Sign an Oregon TOD Deed?
Yes. Oregon’s URPTDA allows joint owners of real estate to execute a TOD deed.20 If joint owners are co-tenants—with separate ownership interests and no right of survivorship—an owner’s interest transfers to the TOD beneficiary upon that owner’s death.21 If owners are joint tenants or tenants by the entirety with a right of survivorship, surviving owners automatically receive the share of an owner who dies.22 Upon the death of the last remaining owner, the property transfers to the beneficiary under the terms of the TOD deed.23
When more than one owner signs a TOD deed—that is, more than one person designates a TOD beneficiary—one owner’s revocation of the TOD deed does not impede the TOD deed’s transfer of another owner’s interest.24
What Happens if the Beneficiary Named in an Oregon TOD Deed Dies Before the Owner?
Absent a TOD deed provision to the contrary, a TOD designation lapses if a named beneficiary does not outlive the property owner.25 A lapsed TOD designation fails to transfer the owner’s interest upon the owner’s death. A property subject to a lapsed TOD designation is likely to end up in the owner’s probate estate—defeating the purpose of recording a TOD deed.
Oregon’s URPTDA lets a property owner address a potential lapse by including alternate provisions within a TOD deed.26. One alternative is for the owner to name an “alternate beneficiary.” 27 If a primary TOD beneficiary predeceases the property owner, the alternate beneficiary receives the owner’s interest in the real estate.
If an Oregon TOD deed names two or more beneficiaries—one of whom predeceases the property owner—the default rule is that the deceased beneficiary’s interest is divided pro rata among surviving beneficiaries.
Example: An owner of Oregon real estate records a TOD deed naming his three adult children as equal beneficiaries. One child predeceases the owner. Under Oregon’s default rule, the predeceased beneficiary’s interest is divided equally between the two surviving children. Each surviving child receives a one-half interest in the real estate—rather than the one-third interest each would have received had all three beneficiaries survived the owner.
As with a last will and testament, adopting provisions addressing potential contingencies is usually better than relying on default rules under state law.
Must the Owner Notify the Beneficiaries of the Oregon TOD Deed?
Oregon’s TOD deed statute does not require that beneficiaries receive notice of a TOD deed.28 Oregon’s statute states that a properly executed TOD deed is effective regardless of whether a beneficiary receives notice or delivery of the TOD deed or accepts the deed during the property owner’s life.29 Oregon law also does not require consideration—or some form of compensation in exchange for the transferred interest—to create an effective Oregon TOD deed.30
A beneficiary has the right to disclaim—that is, refuse to accept—some or all of the interest transferred under an Oregon TOD deed.31
Can an Oregon TOD Deed Be Used When the Property Is Mortgaged?
Yes. Mortgage instruments frequently include due-on-sale clauses requiring an existing mortgage to be paid in full in the event the mortgaged property is transferred.32 However, under the federal Garn-St. Germain Depository Institutions Act, a mortgage holder cannot enforce a due-on-sale provision in response to “a transfer to a relative resulting from the death of a borrower.”33 In practical terms, that means recording an Oregon TOD deed does not ordinarily trigger acceleration of a mortgage loan.
A beneficiary who receives an interest in Oregon real estate through a TOD deed “takes the property subject to all conveyances, encumbrances, assignments, contracts, mortgages, liens and other interests to which the property is subject at the transferor’s death.”34 Therefore, a mortgage will still be attached to the property—and the underlying debt still outstanding—when the interest transfers to the TOD beneficiary.
Must an Oregon TOD Deed Be Recorded?
Yes, Oregon’s URPTDA expressly requires that, to be effective, a TOD deed “must be recorded before the transferor’s death” in the land records of the county in which the property is located.35 A TOD deed that is not recorded—or not recorded until after the owner’s death—is ineffective and will not allow the property to bypass probate.
Can an Oregon TOD Deed be Signed By an Agent Under a Power of Attorney?
An Oregon TOD deed may be signed by a property owner’s “lawful agent or attorney.”36 However, Oregon law requires a property owner to have the same mental capacity to create a TOD deed that is necessary to create a valid will.37 To create a valid Oregon will, a testator must be an adult and “of sound mind.”38 A property owner who lacks sufficient mental competency to create a valid will cannot execute a TOD deed—even through an agent acting under POA.
What are the Requirements for an Oregon TOD Deed?
An Oregon TOD deed must satisfy the essential elements for an ordinary deed, along with several requirements specific to TOD deeds.39 Every Oregon deed must be signed by a property owner of lawful age (or a lawful agent or attorney of the owner), acknowledged before a notary or other official, and satisfy certain other technical requirements.40].
Oregon TOD deeds must also:
- State that the transfer to the beneficiary is to occur upon the property owner’s death;
- Identify the beneficiary by name; and
- Be recorded in the land records of the county clerk’s office for the county where the property is located.41.
Notably, a deed that includes a TOD designation in favor of a class of beneficiaries does not operate to transfer the property automatically upon the owner’s death. TOD beneficiaries must be identified “by name.”42.
Example: A property owner records a TOD deed naming as beneficiaries “my two children.” The beneficiary designation is ineffective to transfer the property upon the owner’s death. The property owner should instead name as beneficiaries “my children, John Smith and Jane Jones.”
An Oregon TOD deed—like an Oregon will—must be made voluntarily of the property owner’s own free will. A TOD deed found to have been procured by “fraud, duress, or undue influence is void.”43
- O.R.S. § 93.948.
- O.R.S. § 93.957.
- O.R.S. § 93.953; O.R.S. § 93.949(5).
- See, e.g., O.R.S. § 59.575.
- O.R.S. § 93.967(1).
- O.R.S. § 93.967(5).
- O.R.S. § 93.967(3), (4), and (6).
- See O.R.S. § 93.150.
- O.R.S. § 93.955.
- O.R.S. § 93.965(1)(c).
- O.R.S. § 93.965(1)(c).
- O.R.S. § 93.965(1)(c)(C).
- O.R.S. § 93.981.
- O.R.S. § 93.969(1).
- O.R.S. § 93.967(2).
- O.R.S. § 93.973.
- O.R.S. § 93.953(1); O.R.S. § 93.969(1)(b).
- O.R.S. § 93.969(1)(b)(B).
- O.R.S. § 93.965(1).
- O.R.S. § 93.949(3); O.R.S. § 93.969(3).
- O.R.S. § 93.969(3).
- O.R.S. § 93.969(3)(a).
- O.R.S. § 93.969(3)(b).
- O.R.S. § 93.965(3).
- O.R.S. § 93.969(1)(a)(B).
- O.R.S. § 93.969(1) (“Except as otherwise provided in the [TOD] deed…”)
- O.R.S. § 93.953(2)(b).
- O.R.S. § 93.963(1).
- O.R.S. § 93.963(1).
- O.R.S. § 93.963(2).
- O.R.S. § 93.971; see also Oregon Disclaimer of Property Interests Act (O.R.S. § § 105.623 – 105.629).
- See 12 U.S.C. § 1701j-3(a) (“‘due-on-sale clause’ means a contract provision which authorizes a lender, at its option, to declare due and payable sums secured by the lender’s security instrument if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender’s prior written consent.”
- 12 USC 1701j-3(d)(5).
- O.R.S. § 93.969(2).
- O.R.S. § 93.961(1)(d) (emphasis added).
- O.R.S. § 93.010; O.R.S. § 93.961(a).
- O.R.S. § 93.959.
- O.R.S. § 112.225.
- O.R.S. § 93.961.
- O.R.S. § 93.010.
- O.R.S. § 93.961.
- O.R.S. § 93.961(1) and (2).
- O.R.S. § 93.959(2).