Deeds In Lieu Of Foreclosure: Who, What, When, Where, Why and How
Seller’s Delivery Of Defective Or Non-Conforming Equipment To Buyer/Borrower Did Not Impair Lender’s Rights In the Collateral

Unrecorded Deed Immediately Transferred Ownership

Lesson.  An unrecorded quitclaim deed executed and delivered during owner’s lifetime terminated a beneficiary’s interest under a “transfer on death” deed that had been executed previously.  An Indiana deed generally will effect a transfer regardless of whether it is recorded.

Case cite.  Robinson v. Robinson, 125 N.E.3d 1 (Ind. Ct. App. 2019).

Legal issue.  Whether subsequent, unrecorded quitclaim deed revoked a beneficial interest in real estate that previously had been created by a recorded transfer on death (TOD) deed.

Vital facts.  On October 24, 2014, Mom executed a TOD deed in which the fee simple title in her house would transfer, upon her death, to her kids Rea and Radley as tenants in common.  Mom recorded that deed on November 12, 2014.  Two years later, Mom executed and delivered a quitclaim deed of the house to Rea only, effective immediately.  However, this subsequent deed was not recorded until after Mom died.

Procedural history.  Radley filed a lawsuit seeking to enforce the TOD deed.  The trial court entered summary judgment in Radley’s favor and concluded that Radley and Rea owned the house as tenants in common.  Rea appealed.

Key rules.  Indiana has a statute called the Transfer on Death Property Act (ACT) at 32-17-14.  The Indiana Court of Appeals sliced and diced the Act in terms of its application to the Robinson dispute. 

The TOD deed was valid.  However, Section 19(a) of the Act provides, among other things, that a beneficiary of a TOD deed takes the owner’s interest in the property at the time of the owner’s death and subject to all conveyances made by the owner during the owner’s lifetime.

Indiana Code 32-21-1-15 controls quitclaim deeds.

In Indiana, generally “a party to a deed is bound by the instrument whether or not it is recorded.”

Holding.  The Indiana Court of Appeals reversed the trial court’s summary judgment for Radley and entered summary judgment for Rea.  “As a matter of law, Radley’s contingent interest in the real estate was extinguished before [Mom’s] death.” 

Policy/rationale.  If you have probate and estate issues under the Act, the Robinson opinion has a nice explanation of why the TOD deed did not hold up.  For purposes of mortgage servicing and title issues, the key takeaway is that, as to Radley (one of potential co-owners under the TOD deed), the quitclaim deed to Rea cut off Radley’s beneficial interest - even though the deed was never recorded.  The deed complied with Ind. Code 32-21-1-15.  Title passed.  The fact that the deed had not been recorded was immaterial to Radley’s claim to ownership.

Related posts. 

*Don’t Forget To Record The Deed

*Sampling Of Indiana Deed Law, And Judgment Lien Attachment Issues

*In Indiana, An Unrecorded Mortgage Has Priority Over A Subsequent Judgment Lien

I represent lenders, loan servicers, borrowers, and guarantors in foreclosure and real estate-related disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at [email protected]. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.