In NY (and many other states), the ownership of real estate is transferred automatically and immediately when the original owner passes away, either according to the will (if the late owner left one), or according to the law. That means, no probate or administration[1] will be required!!

Many people are surprised to learn about this rule. – As owners of real estate, they may have spent efforts and resources to establish plans to avoid the dreadful probate, by, for example, setting up living trusts or joint tenancies. On the flip side of the coin, they may find themselves the new owners of real properties without much advance notice. (Or, they may never find out that they are the owners of real properties.)

In this article, I will delve into the legal framework of this rule, including its root tracing back to the British common law. In later article(s), I will explore the practical ramifications of the rule.

Real properties as primary household assets

For many households, particularly low- to middle-income groups, their homes are often the largest assets of their household wealth. For example, according to here, as of 2019, for households having annual income ≤ $192k, housing comprised more than 85% of the household wealth.[2] Therefore, for these households, how real estate is inherited can result in substantial practical impacts, both in terms of the estate planning for owners of real estate, and in terms of the responses required, if any, of the new owner(s) of the inherited real estate.

The rule – Title to real estate vests immediately in heirs and devisees upon death of owner

In NY, the courts have long held that “[t]he title to real estate, upon the death of the owner, vests immediately in his heirs and devisees”.[3] This means that the moment when the owner of a house passes away, the legal ownership of the house automatically & immediately transfers to whomever entitled to inherit the house. If the deceased owner left a will, the “devisee(s)” of the house provided under the will becomes the new owner(s).[4] And, if the deceased owner did not leave a will, then the “distributee(s)” of the estate provided under the NY law[5] take the house[6]. Legally, no further actions on the part of the new owner(s) are required to transfer the ownership of the house.

For example, John passed away owning a residential house and a Picasso painting, both located in NY, and John was survived by his wife Jane and no children. If john passed without a will (“intestate”), then under the NY law, the house will be owned immediately by Jane at the moment when John passed. Jane can sell, rent, mortgage, or renovate the house right away, without any court proceeding. In contrast, Jane will need to start a court administration proceeding for her to officially inherit the Picasso painting.

On the other hand, let’s say John passed away owning the residential house, the Picasso painting, and a commercial property in NY. Additionally, John passed leaving a will (“testate”) gifting the commercial property specifically to a local nonprofit organization for use as its operational base, and everything else to Jane. Then, at the time when John passed, the nonprofit organization became the new owner of the commercial property, and Jane became the new owner of the house, without the requirement for the nonprofit or Jane to take any further actions. Jane will still need to start a court proceeding to probate the will in order to inherit the Picasso painting.

Uniform Probate Code

NY is not the only state that has adopted the rule of immediate vesting of the title of real estate. At the minimum[7], the Uniform Probate Code[8] also provides for the same rule. Specifically, §3-101 of the UPC provides:

“Upon the death of a person, the person’s real and personal property devolves to the persons to whom it is devised by the person’s last will […], or in the absence of testamentary disposition, to the person’s heirs […]” (emphasis added)

UPC (2019), §3-101[9]

As of this date, 18 states have adopted UPC, not including NY.[10] Therefore, these 18 states should have the same rule as NY regarding immediate vesting of the ownership of real estate upon death of the owner. As discussed in the next section on the root of the rule, it’s probably safe to further conclude that the rule should be common across the country.

The root – British common law under feudal economy

According to one author[11], the root of this immediate vesting rule can be traced back to the early English law under the feudal system. At the time, real properties (lands in particular) were the primary assets of an estate, and were inherited directly by the eldest son. (“[U]nder English law, […] land was the bulwark of the economy and the feudal system required it to be passed on to the eldest son”.) The surviving spouse and other children and relatives were entitled to inherit only the personal properties (with exceptions not detailed here).

In America, this dichotomy between real property and personal property persisted, manifesting itself in the immediate vesting rule for real property and in the need for a probate or administration proceeding to transfer the title of personal property.[12][13] Regardless of its historical root, in the modern municipal real estate system, such an immediate vesting rule does provide the benefits of continued ownership of real properties, allowing municipalities to assign responsibilities for the payment of property taxes and fees to the new owner(s) without prolonged disruptions.

Practical implications

For real estate owners, this immediate vesting rule may complicate the cost-benefit analysis of their estate plans. For example, for a person whose primary assets are real properties, it may not be cost- or tax-efficient to adopt measures to avoid probate, such as living trusts or joint tenancies, since real properties do not require probate. For those who inherited real estate, uncertainties often arise as to the responses required to complete the inheritance process, such as whether and how to officially clear the titles of the inherited real estate. Also, if the deceased owner of real properties did not leave a will, there may be uncertainties about who the rightful heir(s) (and thus the new owner(s) of the real properties) are, resulting in errors, unexpected delays, or even frauds.

I will explore these practical implications in later posting(s).

[1] The court proceeding for the distribution of a decedent’s estate is termed “probate”, if there is a will, or “administration”, if there is no will. In this article, the two terms are used interchangeably, unless specifically noted otherwise.

[2] The numbers are based on my visual measurements of the bar chart in the article. The texts of the article observed a little differently: “In 2019, housing wealth represented, on average, nearly 75 percent of the total assets of the lowest-income households. For households in the middle of the income distribution, housing wealth represented between 50 and 65 percent of total assets, but for the highest income households that percentage was only 34.”

[3] Kingsland v. Murray, 133 N.Y. 170, 44 N.Y. St. Rptr. 515, 30 N.E. 845 (N.Y. 1892); see also, Town of Niskayuna v. Joll, 2020 N.Y. Slip Op. 32408 (N.Y. Sup. Ct. 2020).

[4] E.g., Waxson Realty Corp. v. Rothschild, 255 N.Y. 332, 174 N.E. 700 (N.Y. 1931). (“Upon the death of […] the testatrix, the title to the land in question […] vested in the devisees named in her will or, if not legally devised, in her heirs at law.”)

[5] The “distributes” are family members, prioritized according to their relationships to the deceased, with the spouse and child(ren) having the highest priority. NY Estates, Powers, & Trusts Law, §4-1.1.

[6] E.g., Kraker v. Roll, 100 A.D.2d 424, 474 N.Y.S.2d 527 (N.Y. App. Div. 1984). (When [a person dies] intestate […], title to [real property] automatically vested in his distributes […] as tenants in common”.); also see, Waxson Realty Corp. v. Rothschild, supra.

[7] I did not conduct a survey of the laws of all 50 states, nor have I found any sources with such information.

[8] Initially promulgated in 1969 by the National Conference of Commissioners Uniform State Laws, and approved by the House Delegates of the American Bar Association. See, e.g., Goldsworthy, Body F. (1969), “Uniform Probate Code – Abolishing the Distinction between Real and Personal Property in Estate Administration,” North Dakota Law Review: Vol. 46: No. 3, Article 3. Available at: https://commons.und.edu/ndlr/vol46/iss3/3. (“Goldsworthy”.)

[9] Accessible at: https://www.uniformlaws.org/viewdocument/final-act-104.

[10] AK, AZ, CO, HI, ID, MA, ME, MI, MN, MT, ND, NE, NJ, NM, PA, SC, SD, & UT. See https://www.uniformlaws.org/committees/community-home?CommunityKey=35a4e3e3-de91-4527-aeec-26b1fc41b1c3.

[11] Goldsworthy, supra at Footnote 8.

[12] “In this country, by tradition, title to personal property of the decedent passed to his personal representative and thence to his next of kin or legatees. Title to land, however, belonging to a decedent devolved directly upon the heir or devisee.” Goldsworthy, supra, p.313.

[13] The Uniform Probate Code removed the dichotomy between real and personal property, providing for the immediate vesting for both real & personal properties. (“Upon the death of a person, the person’s real and personal property devolves to the persons […]” UPC, §3-101.) Many other states have also followed suit, but not NY.