[WSBARP] What was transferred.

Wed Nov 16 14:53:20 PST 2022

This is going to appear on some poor law student's exam....

Thanks for the analysis, Dwight!

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Dwight Bickel
Sent: Wednesday, November 16, 2022 1:50 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] What was transferred.

This deed does not contain the language required by statute to be considered a TODD, that it is not effective until the death of the Grantor. Therefore it cannot be a TODD and must be interpreted to intend to convey a presently vested ownership to the named grantee children.

I don't believe the extra reservation language would cause the conveyance to fail entirely. My conclusion then is that a valid future estate is now vested in those two people, as tenants in common, and the Grantor is vested with a normal life estate. The remaindermen are presently vested; that does not await the death of the life estate owner. But wait, what is the effect of the remaining language?

Perhaps the intent is for the Grantor to retain rights only to the life estate, but that's not what it says. A life estate owner can mortgage and even convey, as to that life estate, but cannot convey the remaindermen rights. A life estate owner can lease and occupy all possessory and income rights to the entire property. The remaindermen have no rights to occupy, to lease, or to receive any income during the life of the life estate owner.

That reservation language suggests an intent to withhold some rights that are normally conveyed to the remaindermen. Remaindermen have the right to mortgage or to convey their future rights to the possession of the land. This Grantor may intend to exercise control over those remaindermen rights. However, I do not know any authority that a grantor can restrict the ownership rights of the vested remaindermen. Restrictions against alienation are likely unenforceable. Nevertheless, the language cannot be disregarded either. Prior to the death of life estate owner, the remaindermen have a questionable interest that would be uninsurable for a mortgage or conveyance, without joinder of the life estate owner.

So, if this grantor wants to be able to convey 100% during lifetime, then (1) a quitclaim from vested remaindermen back to her will be required, then (2) a proper TODD will accomplish the goal that the grantor wants to be exercise all rights as the owner until death.

As another said, this should be fixed before the death of the Grantor. There is a risk that a title company might conclude that the deed is invalid from the time it was granted, thus failing to transfer to those children, and perhaps requiring a probate of the Grantor's estate upon that property. If there is an estate planning or other reason why a life estate is needed, this deed might fail entirely.

Dwight A. Bickel
Real Property Title Advisor
Washington Title Professional
Dwight at DwightBickel.com<mailto:Dwight at DwightBickel.com>
https:/dwightbickel.com
206-484-1976

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Jeff at bellanddavispllc.com<mailto:Jeff at bellanddavispllc.com>
Sent: Wednesday, November 16, 2022 9:46 AM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] What was transferred.

This has to be a law school question.  Mom transfers her real property to her children, reserving in herself a life estate.  The Bargain and Sale Deed goes onto to say:

"Further Reserving unto Grantor for Grantor's life the full power and right, in Grantor's absolute discretion, by her act and signature alone to sell, convey, lease, mortgage, encumber or otherwise to manage and dispose of the Property, or any portion thereof, and the proceeds therefrom, to the same extent and in the same manner that Grantor would enjoy if the Property were Grantor's sole and separate property."

Seems to me nothing was transferred; It seems like a weird type of transfer on death deed.  Your thoughts.

Jeff Davis

W. Jeff Davis
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