[WSBAPT] Transfer on Death Deed results in uninsured real property

[Eric Nelsen]

Okay, so now I had to go and read the opinion. Fortunately it's short.
https://law.justia.com/cases/federal/appellate-courts/ca8/20-1147/20-1147-2021-02-05.html

Nick-re the distinction in WA requiring recording of the death certificate, I think that's just for notice purposes and not actually a requirement to pass title. As I read RCW 64.80.100(1)(a)<https://app.leg.wa.gov/RCW/default.aspx?cite=64.80.100>, title ownership transfers instantly at death (subject to estate debts as with any other non-probate asset), same as in MN.

I notice that the insurance policy language definitely mattered in this case, and the policy would have covered a surviving spouse or other relative residing at the property, because "insured" was defined as "you, and, if residents of your household...your relatives." The policy didn't cover in this instance because the heir was a niece who did not reside at the property.

The policy also covered as "insured" "the person having proper temporary custody of the property until appointment and qualification of a legal representative." And again the policy didn't cover because the TODD meant that the niece didn't have "temporary custody" but was the new and final owner. Maybe this clause, if in a WA policy, would cover an intestate inheritance between the date of death and the time an Administrator was appointed?

Sincerely,

Eric

Eric C. Nelsen
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Eric Nelsen
Sent: Friday, May 7, 2021 7:29 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Transfer on Death Deed results in uninsured real property

Thanks Nick! I wonder--same result merely from immediate vesting in intestate heirs under RCW 11.04.250? That's an immediate transfer as well, just not formalized by a deed.
Eric Nelsen
Sayre Law Offices, PLLC
206-625-0092

On May 7, 2021 3:10 PM, Nicholas Pleasants <nick at pleasantslaw.com<mailto:nick at pleasantslaw.com>> wrote:
Hi All,
Some food for thought on this rainy Friday afternoon. I learned that State Farm made some caselaw in the 8th Circuit regarding Transfer on Death Deeds. I've attached the case for your reference, it is Dawn Strope-Robinson v. State Farm Fire and Casualty, No. 20-1147 (8th Cir. 2021). Here are the basic facts:
State  Farm  Fire  and  Casualty  Company  issued  a  homeowner's  insurance  contract  to  David  Strope  for  his  house  in  Orr,  Minnesota.  On  August  10,  2017,  Strope executed a transfer on death deed to convey the property to his niece, Dawn Strope-Robinson.  The  transfer  on  death  deed  was  then  recorded  on  August  11.  Strope died  on  August  14. Six  days later,  Strope's  ex-wife  intentionally  set  the house on fire, damaging the home and personal property inside.
The holding is that the house was not insured because it immediately vested to the niece, and she was not a named insured on Uncle's policy. A possible point of distinction from the Minnesota statute is that Washington would require the recording of the death certificate with a REETA to change the property tax over to the beneficiary. But this is rather scary to think that the home could become uninsured at any moment because the grantor died, and beneficiary, who may or may not even be aware of the Transfer on Death Deed, would need to immediately purchase insurance.
I've used Transfer on Death Deeds from time to time, especially in non-taxable estates with one or a few heirs that get along and want to be able to sell the house without probate. But if this holding were binding on the 9th Circuit, I would not be inclined to have clients use this technique until we come up with a work around for the insurance problem.
I know insurance for a decedent's estate can be tricky in general, especially if the policy is up for renewal shortly after death. Something we should explore to better protect the beneficiaries.
Best,
Nick

Nicholas Pleasants
Owner

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