Recently, the state legislature revisited the original transfer on death deed statute and decided it was due for an update. So, on January 1, 2014, New Mexico joined with eleven other states to adopt the Uniform Real Property Transfer on Death Act (URPTODA), found at §§ 45-6-401 through 45-6-417 NMSA 1978 (2014). This revision of the law enhances and adds clarity to the state’s previous transfer on death statute.
New Mexico first codified nontestamentary (not part of a will) transfers of real property in 2001. This statute (§ 45-6-101.1) contained suggested text for a transfer on death deed form and set out the requirements for a lawful future transfer. It included the provision that to be effective, all original deeds, as well as any modifications and revocations, must be recorded during the owner’s lifetime (§ 45-6-101.1 C, E).
These instruments defined a potential future interest in real property and transferred title to one or more named beneficiaries ONLY after the death of the owner. Ownership was not conveyed at the time of execution, so there was no requirement for the grantee/beneficiary to offer consideration to the grantor/owner, nor was the grantor/owner obligated to notify the grantee/beneficiary of the intended transfer. It also included provisions related to changing or revoking the deed.
A transfer on death deed (TODD) under the new law still provides owners of real estate in New Mexico with a simple process for the non-probate transfer of that land. As in the earlier statute, by executing and recording a TODD during his/her natural life, owners of real property may designate one or more beneficiaries to receive title to the property upon the owner’s death, without the need to include it in the decedent’s probate estate. During the owner’s lifetime, however, the beneficiary has no interest in the property and the owner retains full power to use, transfer, or encumber the property at will, or even to revoke the deed outright (§ 45-6-411, 412).
To be valid, the TODD must meet three requirements (§ 45-6-409):
1) it must contain the essential elements and formalities of a properly recordable deed (such as a quitclaim or warranty deed);
2) it must state that the transfer to the designated beneficiary is to occur at the transferor’s death; and
3) it must be recorded before the transferor’s death in the public records with the clerk of the county where the property is located.
The transferor (owner) under a TODD must meet the same standards for capacity as someone who executes a will, but the deed is not affected by the terms of the deceased owner’s will (§ 45-6-407, 408). Even so, to prevent confusion during what is typically a difficult time, the transferor’s will and TODD should not contain conflicting information.
TODDs also provide a refusal option for beneficiaries. If the recipient is unable or unwilling to accept the transfer, Section 45-6-414 authorizes a beneficiary to disclaim all or part of his/her interest as provided by the Uniform Disclaimer of Property Interests Act [Chapter 45, Article 2, Part 11 NMSA 1978].
New Mexico’s version of the URPTODA sets out the rules and provides forms for both the deed and its revocation (§ 45-6-416, 417). The revised statutory forms contain specific language and include question and answer pages. The new TODD also adds an optional section to identify alternate beneficiaries in case the primary one declines the property. This is a useful addition because it reminds transferors to consider outcomes that differ from what they originally planned. As with the earlier version of the law, if no beneficiary accepts the transfer it becomes void and reverts back to the estate for probate distribution (§ 45-6-413).
The updated law does not change or remove requirements present in the old one; instead, it expands and clarifies the rules already in place. So, by incorporating provisions from the URPTODA into the already existing transfer on death deed statute, New Mexico is responding to the evolving needs of its real estate owners.