Deed Transfers and the New York Transfer-on-Death Deed
What we do
A deed is a short document that does something permanent. Most of the trouble we are asked to fix comes from deeds that were prepared to save a few hundred dollars and cost a great deal more later — a parent's name removed with no thought about capital gains, a child added who then divorced, a property put into a trust that was never signed.
We prepare and record deeds, and we advise on whether the transfer being contemplated is the right one.
Transfers into a revocable or irrevocable trust, so that the trust actually owns what the plan says it owns. Transfers between family members. Transfers into a limited liability company for a rental property. Removing a deceased owner from title. Transfer-on-death deeds. And correcting deeds that were recorded wrongly, which is more common than it should be.
Funding a trust is not optional
This is the failure we see most. A trust was signed years ago, sometimes at real expense, and the house was never put into it. A trust only controls what has been transferred to it. Until the deed is recorded, the house passes exactly as it would have without a trust — through probate, on the terms of the will, or on the intestacy rules if there is no will.
Funding is a step, not a formality, and it is worth checking on any plan you signed and have not looked at since.
Transfer tax, and who actually pays it
New York State charges a real estate transfer tax on conveyances where the consideration is more than $500 — $2 for each $500 of consideration, which works out at 0.4 percent. That tax is the seller's by statute; if the seller does not pay it or is exempt, the duty falls on the buyer, and liability becomes joint.
On residential property sold for $1,000,000 or more there is an additional one percent — commonly called the mansion tax — and that one is the buyer's, with the same fallback onto the seller if the buyer does not pay. It is charged on the whole price, not on the amount above a million, and the continuing lien deduction that applies elsewhere does not apply to it. In New York City, residential conveyances of $2,000,000 or more carry a further supplemental tax on a sliding scale. New York City also charges its own separate Real Property Transfer Tax on top of the State's.
Sources that say simply "the seller pays New York transfer tax" are describing half of it.
Transfers for no money are often exempt — but check first
Two exemptions cover most family and planning transfers: a conveyance without consideration and not in connection with a sale, including a genuine gift; and a conveyance that changes only the identity or form of ownership where the beneficial ownership does not change. The Tax Department has applied the second one to a transfer into a revocable trust, on the ground that the person transferring keeps the same beneficial ownership through the trust.
One caution we give in writing every time: where a mortgage stays on the property, the transfer may not be as clean as it looks, because assumed debt can count as consideration. Whether the change-of-form exemption fully covers a transfer of mortgaged property into your own company is not settled by anything we can point you to, and it is the single most common place where a do-it-yourself transfer produces an unexpected tax bill. It is also worth telling your lender before you do it, since most mortgages contain a due-on-transfer clause.
The paperwork
A deed does not take effect against the world until it is recorded, and recording requires more than the deed. Outside New York City, that means Form TP-584 — the combined transfer tax return — and Form RP-5217, the real property transfer report, filed with the county clerk. Inside New York City the transfer report goes through ACRIS, except on Staten Island which uses its own version of RP-5217, and the transfer tax return is TP-584-NYC.
The transfer tax return has a deadline of its own: it must be filed no later than the fifteenth day after the deed is delivered, whether or not the deed is being recorded then.
The transfer-on-death deed
New York has had a transfer-on-death deed only since 19 July 2024. It lets you name a beneficiary who takes the property when you die, without probate, while you keep complete ownership and control in the meantime. You can sell, mortgage or give the property away; the beneficiary has no interest in it at all while you are alive, and the beneficiary's creditors cannot reach it.
Because the statute is new, a good deal of what is written about it is wrong. These are the points that matter.
Two witnesses and a notary — both. The deed must be signed in front of two witnesses who are present at the same time and who witness the signing, and acknowledged before a notary. These are not alternatives. A transfer-on-death deed that was notarized but not witnessed is not valid, and this is the most frequently misstated point in the whole statute.
It must be recorded before you die. Recording is part of what makes it valid, not a step that can be taken afterwards. An executed transfer-on-death deed found in a drawer after death does nothing at all. It is recorded in the county where the property sits, like any other deed.
A will cannot revoke it. You revoke a transfer-on-death deed with one of three things: a later transfer-on-death deed, an express instrument of revocation, or a lifetime deed that expressly revokes it. Whichever you use must be acknowledged after the deed you are revoking, and recorded before you die. Tearing up or writing on the recorded deed does nothing. The statutory form says so in terms.
The beneficiary takes it as it stands. Mortgages, liens and other interests come with it, and the deed carries no warranty of title.
There is no substitution if the beneficiary dies first. New York's transfer-on-death deed contains no anti-lapse rule. If your sole beneficiary predeceases you, the gift simply lapses and the property is back in your estate. If you named two or more beneficiaries to take together, a lapsed share goes to the others in proportion. Naming a substitute is not something the statute does for you.
Joint ownership beats it. If you own with a right of survivorship — as joint tenants or, for a married couple, as tenants by the entirety — the survivor takes on the first death and the transfer-on-death deed does nothing. It operates only on the death of the last surviving owner. And a deed made by joint owners can only be revoked by all of the living owners together.
It does not put the property beyond your estate's creditors. To the extent the probate estate is not enough to pay an allowed claim, or a statutory allowance to a surviving spouse or child, the estate can reach property that passed by transfer-on-death deed. A proceeding to do that must be started within eighteen months of the death.
And it should not be relied on for Medicaid planning. We are being deliberate here. The statute says the deed does not affect your eligibility for public assistance during your lifetime — that is about eligibility, not about what happens after death. What happens after death, where New York's estate recovery rules meet this new statute, has not been settled by any case or any published State guidance we can find. Anyone who tells you a transfer-on-death deed reliably protects the house from Medicaid recovery is telling you something that is not yet established. If protecting the home is the goal, that is a different conversation and usually a different instrument.
Is a transfer-on-death deed right for you?
Often, for one straightforward property going to one person, it is an economical and sensible thing to do. It costs a fraction of a trust, and it can be revoked at any time if circumstances change.
It is a poor fit where there are several beneficiaries, where a beneficiary is a minor or receives means-tested benefits, where the property carries a mortgage the beneficiary cannot service, or as a substitute for planning generally. It also does no good if the beneficiary does not know it exists — someone still has to find out that they are one.