What Amount of Consideration Should Be Put on a Deed to Transfer Property to a Trust?
Full Question:
Answer:
To be legally binding as a contract, a promise must be exchanged for adequate consideration. Adequate consideration is a benefit or detriment which a party receives which reasonably and fairly induces them to make the promise/contract.
Consideration consists of something that the promisor is not otherwise entitled to. Consideration is the price paid for the promise. When thinking of consideration, one must think in terms of legal value as opposed to economic value. While economic value (e.g., money) is the most common form of consideration, consideration does not have to involve money. In order for a contract to be enforceable, each party to the contract must change his or her legal position in some way.
Deeds in many, if not most, cases do not recite the actual sales price. Instead, they simply recite "for $10.00 paid and good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged." In part, the reason is because that is the form that the recorder's office expects to see. It may also be viewed as a privacy thing, where people don't want others to know directly how much they paid or received for a given property. The actual sales price is agreed upon, and paid in advance of, signing the deed. After the agreed purchase price is paid, then the deed is signed.
Many recorders odffices require the buyer to pay a tax or fee based upon the statement of actual consideration paid (a separate form not recorded with the deed). For example, in one state it may be $15 per thousand, so if there are tax stamps shown on the recorded deed for $150, then the property was sold for $10,000. so merely stating "$10.00 paid" in the deed does not allow the buyer to avoid paying the full tax amount owed.
