Lady Bird Deeds and Refinancing

Refinancing can be stressful enough, but for homeowners with a Lady Bird Deed, lenders sometimes throw an additional hurdle into the process. It’s not uncommon for a lender to request that a Lady Bird Deed be removed before closing. Here’s why this happens, how Lady Bird Deeds work, and what you can do if your lender raises concerns.

What Is a Lady Bird Deed (Enhanced Life Estate)?

A Lady Bird Deed, also called an Enhanced Life Estate Deed, allows a property owner to record a deed that only becomes effective upon their death. At that time, the property automatically transfers outside of probate to the named beneficiaries, also called remaindermen.

This type of deed is considered “enhanced” because it preserves the homeowner’s full control of the property during their lifetime. Under a Lady Bird Deed, the homeowner can:

• Cancel the conveyance at any time.

• Sell the property at any value they choose.

• Mortgage or refinance the property without beneficiary approval.

• Remodel, lease, or otherwise control the property without liability to the remaindermen.

In short, the remaindermen only receive what the homeowner owns at death, unless the deed is revoked. If the property is sold beforehand, the Lady Bird Deed has no effect.

This is very similar to a revocable trust, where the grantor retains the ability to revoke the conveyance and maintain full ownership during their lifetime.

How Is a Lady Bird Deed Different from a Traditional Life Estate?

Most states use a traditional life estate rather than Lady Bird Deeds. Here’s how they differ:

• Traditional Life Estate:

  • Ownership of the property transfers immediately to the remaindermen.

  • The homeowner becomes a “life tenant,” retaining only the right to live in the property until death.

  • The life tenant cannot cancel the conveyance, sell, or mortgage the property without the remaindermen’s consent.

  • Renovations or permits often require signatures from the remaindermen.

  • If the property is sold, the life tenant may not receive proceeds from the sale.

• Lady Bird Deed (Enhanced Life Estate):

  • The deed remains dormant until the homeowner’s death.

  • The homeowner keeps full control and ownership rights.

  • Beneficiaries (remaindermen) have no enforceable rights until after death.

Because Lady Bird Deeds are recognized in only a handful of states, confusion often arises when refinancing with out-of-state or multi-state lenders.

Why Do Lenders Require Removal of a Lady Bird Deed?

The issue usually stems from lender misunderstanding.

• When recorded, county property appraisers often list Lady Bird Deeds as “remainder interest” in the name of the beneficiaries.

• To lenders unfamiliar with Lady Bird Deeds, this looks identical to a traditional life estate, making them believe the remaindermen are current owners.

• As a result, lenders may refuse to refinance, claiming the homeowner “is not the owner.”

How to Refinance a Property with a Lady Bird Deed

Fortunately, resolving this is typically simple:

1. Cancel the Lady Bird Deed

   • The homeowner can file a Quitclaim Deed back to themselves with language revoking the Lady Bird Deed.

   • Some lenders may ask remaindermen to sign as well, though this is not legally necessary since they hold no current ownership interest.

2. Complete the Refinance

   • Once the Lady Bird Deed is revoked, the homeowner appears as sole owner of record, satisfying lender requirements.

3. Re-execute the Lady Bird Deed

   • After refinancing, the homeowner can create a new Lady Bird Deed naming the desired beneficiaries.

   • While it’s wise to inform the lender, it typically does not violate mortgage terms since the deed only takes effect upon death.

Final Thoughts

Refinancing with a Lady Bird Deed in place can cause unnecessary confusion, especially with lenders outside Florida or unfamiliar with this unique estate planning tool. Thankfully, the fix is straightforward and quick.

If you’re facing challenges with a refinance because of a Lady Bird Deed, our team is here to guide you through the process so you can protect your property and your beneficiaries’ future. Contact our Real Estate Law Attorney for personalized guidance.

The attorneys at The Orlando Law Group help with all types of legal issues for businesses in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.

If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.

Last Updated on July 31, 2025 by The Orlando Law Group