Texas "Transfer on Death Deed" Inches Closer to Becoming a Reality

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

The proposed "Texas Real Property Transfer on Death Act" was passed by the Texas Senate on April 9, 2015, and appears poised to be passed by the Texas House (if time doesn't run out before the end of the 84th Legislative Session).  

This legislation, sponsored primarily by Rep. Jessica Farrar (Houston's 148th District) seeks to establish a Transfer of Death deed instrument in Texas. According to the bill analysis, the proposal is a response to the common scenario where a Texas real estate owner passes away intestate (without a will), and their property passes by intestate succession to certain categories of heirs defined by statute. 

This can lead to a cloud on the title due to multiple family members co-owning the property.  Sometimes these heirs are not on good terms, are not in contact, or are otherwise incapable of having common ownership of the inherited property.  This seems to be a particularly frequent problem for low-income homeowners in Texas who cannot afford a lawyer to prepare a will, or whose heirs cannot afford to probate a will after the death.  In such instances, consolidating ownership can be so costly and complicated that families abandon or otherwise lose their property. 

The legislation suggests that the newly-conceived transfer on death (TOD) deed instrument would allow heirs to efficiently obtain clear title to property, and serve as an alternative to probate for real property insofar as a TOD deed would be considered as a "will substitute" for real property (thereby 

allowing a property owner to transfer real property to a named beneficiary upon the owner's death without the need for the beneficiary to go through probate).

If successful, the "Texas Real Property Transfer on Death Act" would be added as a new Chapter 114 of the Texas Estates Code, effective September 1, 2015.