Barrett Henry is a Broker Associate at REMAX Collective with 23+ years of Florida real estate experience. He works with heirs, estates, and surviving family members navigating foreclosure after inheriting Florida property. Direct service in the Tampa Bay area; referral connections statewide.
What Is a Florida Transfer on Death Deed?
Florida enacted its Transfer on Death Deed (TODD) statute effective July 1, 2024, under Part XV of Chapter 711 of the Florida Statutes. A TODD allows real property owners to designate beneficiaries who will automatically receive the property upon the owner's death -- bypassing the probate process entirely.
The TODD is revocable during the owner's lifetime. The owner retains full rights to sell, mortgage, or transfer the property without the beneficiary's consent. The beneficiary has no ownership interest until the owner dies. Upon the owner's death, the beneficiary records the TODD and a death certificate to establish title.
TODDs have become popular estate planning tools because they avoid probate, are inexpensive to create, and can be revoked at any time. However, they do not protect the property from liens, foreclosure, or creditor claims.
What a TODD Does NOT Do: Liens Survive the Transfer
The most important thing Florida property owners -- and their beneficiaries -- must understand about TODDs: the transfer is subject to all liens and encumbrances on the property at the time of the owner's death. A TODD does not eliminate:
- First and second mortgages
- Home equity lines of credit (HELOCs)
- HOA and condo assessment liens
- IRS federal tax liens
- Florida judgment liens
- Mechanic's and contractor liens
The beneficiary inherits the property exactly as it stands -- including all debt obligations secured by the property. If the property has a $350,000 mortgage and $50,000 in equity, the beneficiary receives both: the equity and the obligation to service the debt.
The Due-on-Sale Question: Will the Lender Call the Loan?
Many mortgages contain a due-on-sale clause that allows the lender to demand full repayment if the property is transferred to a new owner. A TODD triggers a transfer at death. Does this mean the lender can call the entire mortgage balance due when a beneficiary inherits?
In most circumstances, no. The federal Garn-St. Germain Depository Institutions Act of 1982 prohibits lenders from enforcing due-on-sale clauses in certain situations, including when:
- Property is transferred to a relative of the borrowerupon the borrower's death, and the transferee will occupy the property as a primary residence
- A joint tenant or tenant by the entireties inherits the property upon the other owner's death
If you are a family member inheriting a Florida property via TODD and you intend to live there, Garn-St. Germain generally protects you from having the loan called due. However, if you are not a relative of the deceased owner, or if you do not plan to occupy the property, you may not qualify for this protection. Consult a real estate attorney to evaluate your specific situation.
Federal Rules Protecting Heirs: Successor in Interest
Even when Garn-St. Germain applies, the beneficiary still needs to deal with the mortgage servicer. CFPB mortgage servicing rules (Regulation X, 12 CFR Part 1024) require servicers to communicate with confirmed successors in interest -- people who acquire an ownership interest in a mortgaged property through inheritance or other qualifying transfers.
After inheriting a property via TODD, the beneficiary should:
- Contact the servicer and provide documentation-- a certified copy of the death certificate and the recorded TODD (with the beneficiary's acceptance) establish the transfer
- Request successor-in-interest status -- this allows you to receive account statements, receive loss mitigation options, and communicate about the loan
- Evaluate assumption or refinance -- depending on your financial situation, you may be able to formally assume the existing loan or refinance into your own name
- Keep paying the mortgage -- payments do not automatically stop during the documentation process; continued payments prevent default
What If the Owner Died Behind on the Mortgage?
If the deceased owner was already delinquent on the mortgage, the beneficiary inherits a property in default. This is not uncommon: property owners near death may have missed payments for months, and the estate may be too complex or contentious for anyone to address the mortgage during the transition period.
As a TODD beneficiary who inherits a delinquent property, you have the same loss mitigation options as any owner in default -- but you must act as a successor in interest first. Options include:
- Loan modification -- restructure the loan to a payment you can afford; read our Florida loan modification guide
- Repayment plan -- catch up the arrears over time while resuming regular payments
- Reinstatement -- pay all arrears and fees in a lump sum to bring the loan current; see our guide on mortgage reinstatement in Florida
- Sell the property -- if there is equity, a pre-foreclosure sale can pay off the mortgage and preserve that equity for you
- Short sale -- if the property is worth less than the mortgage, a short sale can resolve the debt with lender approval
If a foreclosure lawsuit has already been filed against the estate, you may need to respond to that lawsuit as a successor in interest. Contact a Florida real estate attorney promptly if a lawsuit is pending.
TODD During the Owner's Lifetime: No Foreclosure Protection
If the property owner is alive and facing foreclosure, the TODD provides no protection. The TODD has no legal effect until the owner dies. The property is fully subject to foreclosure by any lienholder during the owner's lifetime. The lien would be extinguished at foreclosure sale, and the named beneficiary would inherit nothing.
Florida property owners facing foreclosure who have executed a TODD should understand that the TODD will not save their home. The focus must be on the foreclosure itself -- through loss mitigation, a pre-foreclosure sale, or legal defense.
Creditor Claims Against TODD Property
Florida's TODD statute provides that a beneficiary takes the property subject to any claim that could have been asserted against the deceased owner. This includes the claims of mortgage lenders, but also potential claims of unsecured creditors if the estate is insolvent. The statute gives the decedent's creditors a window to assert claims against the transferred property.
Additionally, under Florida probate law, if the estate does not have enough assets to pay creditors and expenses, the personal representative may have a claim against TODD-transferred property to satisfy those obligations. If you are a TODD beneficiary and the estate appears to be insolvent, consult a probate attorney before assuming the property is yours free and clear.
Related Resources
- Florida Foreclosure Process Guide
- Florida Loan Modification Guide
- Florida Mortgage Reinstatement
- Sell Before Foreclosure: Protect Your Equity
- Short Sale in Florida
- Florida Foreclosure Defense
- Free HUD Housing Counselors in Florida
- Lis Pendens in Florida
- Florida Foreclosure Surplus Funds
- Florida Foreclosure Checklist
Inherited a Florida home with a mortgage or foreclosure pending? Contact us today for a free consultation -- no cost, no obligation.
