Bulletin: NY000708

On April 20, 2024, New York State adopted legislation that allows for so-called transfer-on-death deeds (“TODD”) as part of its 2025 Executive Budget. The TODD Law, which takes effect on July 19, 2024, is codified as a new Section 424 of the N.Y. Real Property Law.

Simply stated, the TODD Law allows the owners of real property to execute and record a deed during their lifetime automatically transferring their real estate to beneficiaries upon their death. By enacting the TODD Law, New York joined the majority of states in the U.S. that allow for some form of TODD.

The primary advantage of the TODD is that it allows an individual to avoid probate and specifically choose who will automatically inherit their property upon their death; however, be advised that the TODD applies only to real property, is subject to any mortgages, judgments, liens, etc. and the TODD does not give the beneficiary any control over or claim to the property while the transferor is still living.

There are several requirements needed to create a TODD. First, the transferor needs to complete a TODD form. This must be done in the presence of two witnesses. Additionally, the TODD needs to be acknowledged by a notary public and recorded before the transferor’s death in the public records in the county clerk’s office of the county where the property is located. This makes the TODD public. The capacity required to make a TODD is the same as the capacity required to make a will.

Once you record the TODD or revocation form, your TODD or revocation is effective. You do not need to deliver or notify your beneficiaries or anyone else.

The TODD form may be found in RPL Section 424 (15). Interestingly the TODD transfers property without a covenant or warranty of title even if the deed contains a contrary provision. The forms normally used when recording deeds are NOT required with a TODD.

The revocation form is found in RPL Section 424 (16), but in addition to this form be advised that there are other ways of revoking a TODD; an owner can complete a new TODD that disposes of the same property and record it in each county where the property is located or an owner may transfer the property to someone else during their lifetime by a recorded deed that expressly revokes the TODD. It is very important to note that a TODD may not be revoked by will. A beneficiary may renounce all or part of the beneficiary's interest in the same manner as if the interest was transferred in a will.

Of course there will be questions forthcoming with the adaption of this TODD, such as whether title insurance on a fee interest continues to cover the transferees; these questions and others will no doubt be forthcoming as this develops and various scenarios present themselves.

In the event you have any questions regarding the above, please contact Stewart Title Legal Department at 212-922-0050 and speak with any Underwriting Counsel.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com. 

Forms: TODD RPL464 Section 15 Statutory Form; TODD Revocation Form RPL464 Section 16