TX Senate Bill 462

Legislation

State: Texas
Signed: June 17, 2015

Effective: September 01, 2015
Chapter: 841

Summary

Senate Bill 462 allows property to pass upon an owner's death by the signing and recording of a transfer on death deed that must be acknowledged before a Notary or notarial officer.

Affects

Adds a new Chapter 114 to Subtitle C, Title 2 of the Estates Code.

Changes

Permits the transfer of real property via a transfer on death deed.
Requires a transfer on death deed to conform to the formalities (e.g. acknowledgment, notarization) of a recordable deed.
Requires the transfer on death deed to be recorded prior to the grantor's death.
Provides that the transfer on death deed is nontestamentary (is not a "last will" and is not required to be probated as such).
Provides that the capacity required to make or revoke a transfer on death deed is the same as the capacity required to make a will.
Provides a form for a transfer on death deed and revocation of a transfer on death deed.

Analysis

According to the bill analysis, interested parties report that many low-income homeowners in Texas cannot afford a lawyer to prepare a will, or their heirs cannot afford a lawyer and court costs to probate a will. Property often passes by intestate succession, which can lead to a cloud on the title due to multiple family members co-owning the property. Consolidating ownership can be so costly and complicated that families abandon or otherwise lose their property. Possessing clear title to property offers many benefits, including the ability to sell or encumber the property, to use the property as collateral on a loan, or to qualify for property tax exemptions. A transfer on death (TOD) deed instrument provides an alternative to probate for real property and would enable property owners to affordably and efficiently pass clean title to real property from one generation to the next.

In order for a Transfer on Death Deed to be legally enforceable, the TOD deed must be executed according to all the “essential elements and formalities” (including acknowledgment before a Notary) of a recordable deed. In its official commentary on the Uniform Real Property Transfer on Death Act, upon which Senate Bill 462 is based, the Uniform Law Commission drafting committee explains the virtues of the requirement of acknowledgment before a Notary Public: “In the context of transfer on death deeds, the requirement of acknowledgment fulfills at least four functions. First, it cautions a transferor that he or she is performing an act with legal consequences. Such caution is important where, as here, the transferor does not experience the wrench of delivery because the transfer occurs at death. Second, acknowledgment helps to prevent fraud. Third, acknowledgment facilitates the recording of the deed. Fourth, acknowledgment enables the rule in Section 11 that a later acknowledged deed prevails over an earlier acknowledged deed.”

Notaries who notarize a Transfer on Death Deed should treat the document with the utmost care and be especially vigilant to check that the signer is competent and is signing the deed willingly.

Read Senate Bill 462.