Administering Real Property by “Lack of Probate” Affidavit

Washington law provides an incomplete solution to the problem of transferring title to real property at death outside of probate.  At death, real property in Washington can generally pass “outside of probate” only if it was:

  • Held in joint tenancy form,
  • Held in community property form so long as it was subject to a Community Property Agreement, or
  • Transferred to a Living Trust during life and held by the trust at death.

Unlike the law of several other jurisdictions (see: Transfer on Death Deeds), Washington law does NOT provide for real property to pass at death subject to a death beneficiary designation, similar to POD accounts, TOD securities, life insurance policies, IRAs, pension plans, etc.

Consequently, a probate proceeding is often required to transfer title to a large portion of real property held at death, namely:

  • Separate real property (whether by an unmarried or married Descendant), or

A probate proceeding may be necessary for other reasons besides transferring title to real property, for example, the estate consists of more than $60,000 of personal property.  But in many cases:

The only reason necessitating a probate is to clear title to this “errant” real property.

Practically speaking, what often happens is that an unmarried, elderly parent dies having owned “the family home” for decades but little else except perhaps some joint tenancy or POD/TOD bank or securities accounts that the parent has put in his/her name along with his/her adult children.  The parent dies, and the children keep the home and succeed to the accounts/securities.  Sooner or later:

  • They enter into an agreement to sell the home,
  • Their broker or the buyer contacts a title insurance company to arrange for the purchase of title insurance required by the buyer, and
  • The title company reports back that title to the property remains in the name of the parent, as no probate was ever begun, and as a consequence:

The property lacks what is known as “clear title,” so:
Title to the property is uninsurable,
and the buyer, if he/she remains willing to buy the property at all,
is willing to buy it not for full market value
but only at a substantially discounted price.

Another popular circumstance is upon the death of the first to die of a married couple owning a home and relatively little else, and the surviving spouse wants to:

  • Sell the home to purchase a smaller home or condominium, or
  • Transfer the home to a Living Trust created following the deceased spouse’s recent death in order to avoid probate on the home at the surviving spouse’s eventual death.

What to do?  Enter the “Lack of Probate Affidavit.”  A title insurance company may be willing to issue (now or later) a title insurance policy on real property held in a Descendant’s name without a probate upon its receipt of what title insurance companies call a “Lack of Probate” Affidavit, a practical, business (as opposed to a legal) solution to passing real property at death “outside of probate.”  [Not a “legal” solution in the sense that there is no Washington law that expressly authorizes it, not that it is “illegal.”]

Historically, title companies have taken the position that title vests automatically in the heirs — except as may be provided by Descendant’s Will. If there’s no Will, or if the Will confirms what would result from automatic vesting in the heirs, a Lack of Probate Affidavit and any Will are recorded, and upon the later sale of the property by the heirs, the title companies will generally insure title for a Deed from the heirs.

Suggestion:  If Descendant left real property that would otherwise require a probate to clear its title, you might consider seeing if you can find a title insurance company willing to issue (now or later) a policy on the property upon your delivery of a Lack of Probate Affidavit (and any Will of Descendant)  Among Descendant’s papers, find the title policy that Descendant purchased when he/she bought the property, telephone them, tell them your situation, and ask for their advice, eg, their willingness to issue a new title policy on the property, now or in the future, upon your execution and delivery to them of a Lack of Probate Affidavit.  Be prepared, however, to:

  • Pay an increased premium for the policy (relative to its price if the property had been probated).
  • Shop among title companies to find one that is willing to insure title without your having to probate the property.

What would be best would be to acquire a new title insurance policy now, in the names of Descendant’s takers of the property.  Query: Is its cost substantially less than the cost of a probate, which would allow you to avoid purchasing the new policy altogether?  What might be acceptable, if you can find it, is to acquire the title insurance company’s written commitment now to issue a new title insurance policy in the future in the name of any potential buyer of the property.

Problem:  In Washington, recording any Deed, evidencing transfer of real property, requires the simultaneous submission of a Real Estate Excise Tax Affidavit.  Transfers of real property by gift or inheritance are exempt from the real property excise tax, and the exemption is provided on the Excise Tax Affidavit.  The problem is that WAC 458-61A-202(7), effective December 17, 2005, does not provide for a Lack of Probate Affidavit to be one of the accepted documents for claiming an exemption from excise tax based on inheritance.  Acceptable documents are only: a Community Property Agreement, a Trust Agreement, a termination of joint tenancy, Letters Testamentary or of Administration, or a Court Order.

Examples of Lack of Probate Affidavit Forms:

  1. Community Property Not Subject to Community Property Agreement: “Lack of Probate” Affidavit — Community Property, for Title Insurance Company form

    Note that this is the same Affidavit that is used in the case of community real property subject to a Community Property Agreement, although without such an Agreement, a different box is checked on the Affidavit

  2. Separate Property: “Lack of Probate” Affidavit — Separate Property, for Title Insurance Company form