Can I Sell a House I Inherited Through a Maryland Transfer-on-Death Deed?

Three siblings in Arnold learn that their mother left her house to all of them through a transfer-on-death deed. There’s no probate case and no executor to wait on. Two of them want to sell by spring. The third wants to move in. Meanwhile, the mortgage statement keeps arriving in their mother’s name.

That situation will become common now that Maryland’s transfer-on-death deed law is effective October 1, 2026. The deed moves ownership quickly, but it doesn’t clear title, pay off the loan, or settle disagreements among the people who inherit. Some beneficiaries assume the deed did all the work, while others assume they need probate anyway. Both assumptions cost time.

How soon can I sell a house I inherited through a TOD deed?

Under Real Property § 14-1009, ownership passes to the surviving beneficiaries at the moment of the owner’s death, with no probate case required. A beneficiary can generally sell right away. In practice, closing waits until the death is documented in the land records, any inheritance tax is settled, and a title company clears the chain of title.

The legal transfer is instant. The paper trail isn’t. A buyer’s settlement company needs a clean line from the deceased owner to the people signing the new deed, and a recorded TOD deed by itself doesn’t show that anyone has died.

That gap is filled by a notice of death recorded in the Anne Arundel County land records under Real Property § 14-1013. Families who record it in the first few weeks after a death avoid one of the most common closing delays.

Do all the beneficiaries have to agree to sell?

In most cases, yes. When a TOD deed names several beneficiaries, each one owns part of the house, and every owner generally must sign the deed to a buyer. Unless the TOD deed chose a different form of ownership, the beneficiaries hold title together as joint tenants with right of survivorship.

Survivorship creates a timing risk that families rarely consider. If one sibling dies while the house is still unsold, that share goes to the surviving co-owners, not to the late sibling’s spouse or children. A long standoff over whether to sell can quietly change who ends up with the money. Selling promptly, or agreeing in writing how proceeds will be divided, takes that risk off the table.

Co-owners who agree should put it in writing: list price, who pays for repairs, and how carrying costs come back out of the proceeds.

What if one co-owner refuses to sell?

Any co-owner can ask the Circuit Court for Anne Arundel County to partition the property under Real Property § 14-107. A single-family home rarely divides physically, so the court can order a sale and split the proceeds by ownership share, with mortgages and liens paid from the sale.

Partition is a lawsuit, and it costs every side time and money. That’s often why the prospect of one pushes a holdout toward a buyout or a negotiated sale.

Do Maryland’s heirs-property protections apply?

Only sometimes. The Uniform Partition of Heirs Property Act, beginning at Real Property § 14-701, gives co-owners a court-ordered appraisal, a 45-day window to buy out anyone forcing a sale, a preference for dividing land over selling it, and an open-market sale instead of an auction.

The catch is scope. The Act reaches only property held as tenants in common where a co-owner acquired title from a relative. A TOD house held under the default survivorship arrangement falls outside it unless the deed named the beneficiaries as tenants in common.

What happens to the mortgage on an inherited house?

Under 12 U.S.C. § 1701j-3, a lender generally cannot call a home loan due just because the house passed to a relative after the borrower died. The protection covers homes with fewer than five units. The loan still must be paid, and it is paid off from the proceeds when the house sells.

Two gaps catch beneficiaries. First, the protection covers relatives. A friend or unmarried partner who inherits may face a lender that enforces its due-on-sale clause.

Second, servicers often refuse to discuss a loan with anyone but the borrower. Under 12 CFR § 1024.31, a person who inherits the property generally qualifies as a successor in interest. Once the servicer confirms that person’s identity and ownership, the servicer has to deal with them. Send the death certificate, the recorded TOD deed, and the notice of death, and keep payments current so late fees don’t eat into the sale.

Will a buyer’s title company accept a TOD deed?

Title companies can insure a sale by TOD beneficiaries, but they examine the chain of title closely. A TOD deed carries no warranty of title, so any defect left from earlier owners becomes the beneficiaries’ problem to fix before closing. Nobody else in the chain is on the hook for it.

A title examiner will typically confirm:

• The TOD deed was recorded while the owner was still alive
• No later TOD deed or revocation appears in the land records
• The name on the death certificate matches the name on the deed
• No named beneficiary died first, and no divorce revoked a spouse’s designation
• Open mortgages, judgments, liens, and unpaid property taxes

Boundary and easement questions can also surface, especially on older waterfront lots along the Magothy and Severn Rivers. Because the law is new, some underwriters may ask for extra affidavits until TOD sales become routine.

Do I have to pay Maryland inheritance tax before closing?

Maryland inheritance tax on property passing outside probate is due when the Register of Wills determines the amount, under Tax-General § 7-217. A beneficiary who owes tax reports the house on an Application to Fix Inheritance Tax on Non-Probate Assets, and the Register sends an invoice. Close relatives are exempt, so many families owe nothing.

That form goes to the Register of Wills in the county where the owner lived, which is the Anne Arundel County Register of Wills for most of our clients.

Don’t let the invoice sit. According to the Maryland Register of Wills, unpaid tax picks up a 10% penalty and interest after 30 days. After 90 days, the account goes to the state’s Central Collection Unit, which can charge interest of up to 18%. When a sale is pending, the tax can often be paid from the proceeds at settlement.

What taxes come up when I sell the inherited house?

Selling an inherited house can trigger federal capital gains tax, Maryland income tax, and Maryland withholding for out-of-state sellers. The gain is generally measured from the home’s value on the date of death, not what the owner originally paid, which often keeps the taxable gain small when the house sells promptly.

Three tax issues come up at nearly every sale:

• Stepped-up basis. 26 U.S.C. § 1014 sets the basis of inherited property at its fair market value at death. If a parent bought an Eastport rowhouse decades ago, most of that appreciation drops out of the calculation. A date-of-death appraisal is the best evidence of that value.
• Nonresident withholding. Under Tax-General § 10-912, the clerk collects withholding at recording when a nonresident sells Maryland real property. A sibling living in Virginia or Pennsylvania will face it unless an exemption applies, such as a certificate from the Comptroller.
• Transfer and recordation taxes. The exemption that covered the TOD deed itself doesn’t carry over to the sale. Ordinary state and Anne Arundel County transfer and recordation taxes apply, allocated by the sales contract.

Can one beneficiary keep the house and buy out the others?

Yes. A beneficiary who wants to keep an inherited house can buy the other beneficiaries’ shares, usually at a price set by an appraisal. The others sign a deed conveying their interests, and the buyer typically refinances into a new loan in their own name to pay them and retire any existing mortgage.

Most buyout disputes aren’t about the appraisal. They’re about credits. If one sibling has been paying the mortgage, taxes, and insurance since the death, the family should agree up front whether those payments reduce what that sibling owes the others. Use a licensed appraiser rather than an agent’s price opinion, because the lender financing the buyout will order its own appraisal and the numbers need to line up.

A beneficiary who moves in should also update the homeowner’s policy into their own name and apply to SDAT for the homestead tax credit, which doesn’t transfer automatically from the prior owner.

What should beneficiaries do before listing an inherited house?

Before listing, beneficiaries should document the death, confirm who owns what, contact the mortgage servicer, protect the property, and settle any inheritance tax. Handling these steps first keeps a signed contract from stalling at settlement and gives every co-owner a clear picture of what the sale will actually net.

A practical order of operations:

1. Order several certified death certificates. The land records, the servicer, the Register of Wills, and the settlement company will each want one.
2. Pull the recorded TOD deed. Search MDLandRec for the deed and any later revocation before you rely on it.
3. Call the homeowner’s insurer. Standard policies often limit coverage once a house sits vacant, so ask about a vacancy endorsement.
4. Keep the house running. Maintain utilities, lawn care, and winterization, and log who pays for what.
5. Sign a co-owner agreement. Cover the listing agent, price, repairs, and expense reimbursement.
6. Choose a settlement company early. Hand over the TOD deed, death certificate, and notice of death so title work starts before a contract is signed.

Talk With an Annapolis Real Estate Attorney About Selling an Inherited Home

Evans Law represents beneficiaries in Annapolis and throughout Anne Arundel County, including Arnold, Severna Park, Glen Burnie, Pasadena, and Odenton. Our attorneys can:

• Review title and the recorded TOD deed before you list
• Record the notice of death and work with the mortgage servicer
• Represent you from contract through settlement
• Resolve co-owner disagreements, including buyouts and partition cases

Call Evans Law at 410-626-6009 or visit our office at 113 Cathedral Street in downtown Annapolis.

Frequently Asked Questions

Can the deceased owner’s creditors come after the house?

Maryland’s TOD deed law doesn’t directly address whether a deceased owner’s unsecured creditors can reach property that passed by TOD deed. Secured debts are different, since a recorded lien stays attached to the house. If the owner left significant unpaid debts, get advice before distributing sale proceeds.

Do I need to open probate for anything else?

Possibly. The TOD deed moves only the house. Bank accounts, vehicles, and other assets without a named beneficiary may still require an estate opened with the Register of Wills, often a simplified small estate when values are modest.

Who pays property taxes and utilities until the house sells?

The beneficiaries do, as the new owners. Co-owners usually split those costs by ownership share, and a written agreement lets whoever advances them get reimbursed at settlement.

Can we rent the house out instead of selling?

Yes, if all co-owners agree. You’ll need landlord insurance and a lease, and you should check local licensing rules, since the City of Annapolis requires rental licenses. Renting also means the co-owners share landlord liability and decisions for as long as they hold the property.

What if the house is in the Annapolis Historic District?

The inheritance itself isn’t affected. Exterior work generally needs approval from the city’s Historic Preservation Commission before it starts, though, which matters if pre-sale repairs involve windows, roofing, or siding.

What if a beneficiary lives out of state and can’t attend closing?

That beneficiary can usually sign the deed ahead of time before a notary where they live, or appoint someone under a power of attorney. Most settlement companies handle remote signers routinely.

Author: Evans Law