Oregon Authorizes Use of Transfer on Death Deeds

The Oregon Legislature recently passed a new law that allows an owner
of real property to name a person to receive the property upon the
owner’s death by signing a Transfer on Death Deed. The deed only becomes
effective to transfer the property at the owner’s death, so the owner
will continue to own the property during the owner’s life.  During the
owner’s lifetime, the owner can change the beneficiary or revoke the
deed.  The owner remains able to sell the property, in which event the
Transfer on Death Deed would automatically be revoked as to the property
that was sold.  For the deed to be effective, it must be designated as a
Transfer on Death Deed, it must identify a beneficiary by name, and it
must be recorded in the deed records of the County Clerk in the County
where the property is located before the owner’s death.

Use of a Transfer on Death Deed provides a simple and inexpensive way
for property to be transferred to a beneficiary after death without the
need for more expensive alternatives such as probate or through a
revocable trust.  Before using this type of deed, however, you should
consider the following.  First, it may be difficult for a person
receiving the property to sell it within 18 months of the owner’s
death.  The new law allows an 18 month period for interested parties to
commence a court proceeding to: (a) contest the capacity of the
transferor; or (b) determine whether a transfer on death deed or an
instrument revoking a transfer on death deed is void because it was
procured by fraud, duress or undue influence. During this 18 month
window it may be difficult to obtain title insurance from a title
company, and therefore difficult to sell the property during that
period.  Second, any encumbrance against the property, such as a
mortgage, will continue to be an encumbrance after the owner’s death, so
the transferee must continue to pay the mortgage, or risk the loss of
the property through foreclosure.

If you intend to use a Transfer on Death Deed, you should be careful
to use the correct form of deed.  Many states have similar statutes, but
use of a deed which is effective in another state may not be effective
in Oregon.  Also, the deed must be recorded in the county where the
property is located before your death.  It is not sufficient to sign the
deed and then file it away in a desk for someone to find after you
die.  It must be recorded.

“This advisory is published by Bryant, Lovlien & Jarvis, PC
to provide a summary of significant developments to our clients and the
community. It is intended to be informational and does not constitute
legal advice regarding any specific situation. This material may also be
considered attorney advertising under court rules of certain
jurisdictions.”

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