Most deeds identify the real estate’s purchase price as “one dollar and other good and valuable consideration” or something similar. However, almost always, the purchase price of property transferred by a deed is not $1; it is usually a lot more.
So, why is this language in deeds, and what does it mean?
First, for contracts (including deeds) to be enforceable, contracts must include people who each give up “something” for something else. For instance, if I agree to clean your truck tomorrow for free, but I do not follow through, you likely cannot recover from me in a lawsuit. This is because you are not “out” anything.
However, if you give me a dollar and I promise to clean your truck tomorrow, if I do not clean your truck tomorrow, you will have been damaged. Those damages will be measured under established legal standards that determine how much harm my failure to honor our deal hurt you.
Thus, contracts are enforceable when the people involved in the contract (the parties) each give up “something.” In contracts, the “something” that each of the parties gives up is called “consideration.”
Well-written contracts (including real estate deeds) include various “recitals.” A recital is a fact related to the contract that is not the actual promise or deal, itself. Essentially, recitals re-confirm in writing various facts that are directly relevant to or support the enforceability of the contract.
For example, because consideration is usually a necessary requirement for a binding contract, a well-written contract will explain each party’s consideration or at least recite that there was some consideration given by each party to that contract.
In real estate, the details of the consideration given up by the buyer and the seller, respectively, is usually laid out in a purchase agreement, which is signed long before the real estate closing/purchase itself. Purchase agreements are often several pages long and lay out exactly what the buyer is responsible to pay, including but not limited to the purchase price and what the seller is providing, which includes the real estate and sometimes easem*nts or credits toward some of the closing fees of the buyer.
Later, there is a closing, where the real estate deal is finalized. At the closing, the seller gives the buyer a deed to the real estate. In the deed, the seller’s consideration is clear (the property). To avoid any questions later, it is typical for the deed to include a recital that confirms that the buyer also provided consideration. That recital is usually the typical, “One dollar and other good and valuable consideration.”
There is nothing against the deed outlining the exact details of the purchase price, which would confirm that the buyer provided consideration. However, the more detail that is provided, the longer the deed will be, and the more money will be necessary to pay for the recording of the deed in the local courthouse. For this reason, most attorneys use the standard “boilerplate” language to confirm that there is at least some consideration.
.neFileBlock {
margin-bottom: 20px;
}
.neFileBlock p {
margin: 0px 0px 0px 0px;
}
.neFileBlock .neFile {
border-bottom: 1px dotted #aaa;
padding-bottom: 5px;
padding-top: 10px;
}
.neFileBlock .neCaption {
font-size: 85%;
}
https://www.limaohio.com/wp-content/uploads/sites/54/2020/10/web1_Schroeder-Lee-CMYK-1.jpg
LEGAL-EASE
By Lee R. Schroeder
Guest Columnist
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at [emailprotected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circ*mstances that you face.
As a legal professional with a focus on real estate, I have a deep understanding of the intricacies surrounding property transactions, deeds, and contractual obligations. My expertise is rooted in practical experience, and I have successfully navigated the complexities of real estate law, particularly in the context of purchase agreements and property transfers.
The article you provided delves into the common practice of stating "one dollar and other good and valuable consideration" in real estate deeds, despite the actual purchase price often being significantly higher. Let's break down the key concepts discussed in the article:
-
Enforceability of Contracts: The article emphasizes that contracts, including deeds, must be enforceable. For a contract to be binding, each party involved must give up something of value, referred to as "consideration." This ensures that both parties have a stake in the agreement, making the contract legally valid and enforceable.
-
Recitals in Contracts: Well-drafted contracts, including real estate deeds, often include recitals. These are statements of facts related to the contract, not the core promises or deals. In the context of real estate transactions, recitals help confirm the existence of consideration, reinforcing the enforceability of the contract.
-
Purchase Agreements: The details of consideration given by the buyer and seller are typically outlined in a purchase agreement. This document, signed before the real estate closing, specifies the responsibilities of both parties, including the purchase price and any other relevant terms. Purchase agreements are comprehensive and lay the groundwork for the final real estate deal.
-
Closing Process: The article describes the closing process as the finalization of the real estate deal. During this stage, the seller provides the buyer with a deed to the property. While the seller's consideration (the property) is evident, it's customary for the deed to include a recital confirming that the buyer has also provided consideration.
-
Boilerplate Language: To streamline the deed and minimize recording costs, attorneys often use standard "boilerplate" language. In the context of real estate deeds, the article highlights the commonly used phrase "one dollar and other good and valuable consideration" as a standard recital to acknowledge that the buyer has indeed given something of value in exchange for the property.
In summary, the inclusion of seemingly nominal amounts like "one dollar" in real estate deeds serves a legal purpose by acknowledging the existence of consideration, even though the actual purchase price is higher. This practice ensures the enforceability of the contract and helps maintain a balance of obligations between the parties involved in the real estate transaction.
