What is $10 BetweenFriends?
Posted on January 31, 2020 | Leave a comment
When someone is about to sign a deed, have you ever had them ask what this line means?
“…for and in consideration of the sum of $10.00 (ten) and other valuable considerations…”
In real estate, you see it over and over … but for a customer who has not seen it before, it can be confusing.
The best way to describe it to them is that it is simply a legalism. It even has a cute name; a peppercorn.
In legal terms, the $10 is a “peppercorn consideration.” It is an actual common law term to make it clear that an actual enforceable transfer is taking place and not a promise.
To make a contract enforceable it needs a little “real” value as consideration; hence, “in consideration of ten dollars and other valuable consideration….” This is considered the “form” of the exchange of valuable consideration. The actual value is immaterial, it could say ten dollars, it could be one dollar… one famous judge has said that it can be something as small as a “peppercorn”… which is why this is often called “peppercorn consideration.”
If they really want to get in the weeds they can google the Real Estate Closing Deskbook: A Lawyer’s Reference Guide & State-by-state Summary by the American Bar Association, page 65.
Oh, and tell them they can keep the $10 in their wallet, you don’t need that.
Know Your Deeds, Part I: WarrantyDeeds
Posted on July 25, 2014 | Leave a comment
General Warranty Deeds and Special Warranty Deeds (sometimes known as a Limited Warranty Deed, and infrequently as a Trustee’s Deed or Executor’s Deed) can be used to transfer property from the seller to the buyer with certain guarantees against future problems or claims. What differentiates the two is the degree of the coverage of the warranty.
General and Special Warranty Deeds both guarantee the buyer that:
– The seller owns all the rights (the title) to the property.
– The seller has the right to sell (convey) the property.
– The property is free of all encumbrances besides those mentioned in the deed (easem*nts, judgments, restrictive covenants, etc).
– The seller will defend the property against all claims.
Here is the big difference between the General Warranty Deed and the Special Warranty Deed.
General Warranty Deeds encompass the property’s entire history. The seller states that they don’t just own the property, but all rights in the property as well.
A Special Warranty Deed only covers the period of time for which the seller owned it, and is only responsible for debts and problems accrued or caused during his ownership of the property. They are often given by corporations, and seen in most foreclosures.
While the seller in a Warranty Deed must defend the title against all other claims and compensate the buyer for any unsettled debts or damages, the seller in a Special Warranty Deed is only responsible for debts and problems accrued or caused during his ownership of the property.
What bridges that gap for the purchaser if they are getting a Special Warranty Deed? Title Insurance.
An owner’s title insurance policy backs up the claims of both types of Warranty Deeds, protecting the buyer from any future questions about ownership or liens.
In the course of investigating Title during the process of issuing Title Insurance, the results of the search will give the buyer confidence that they will have knowledge of potential issues. Although Title Insurance does not guarantee that you will not have a title problem, it does provide peace of mind and insurance to help pay to correct the problem or to compensate you if the problem cannot be corrected.
Title Tip of the Week: Don’t Mess up aMarriage.
Posted on December 27, 2011 | Leave a comment
On Warranty Deeds, we continue to people trying to use the phrase “joined by” as opposed to using the correct “husband and wife.”
Not good.
Bad: “Fred Murray joined by Ethel Murray”
Good: “Fred Murray and Ethel Murray, husband and wife.”
As a seasoned expert in real estate law, particularly in the intricacies of deeds and property transfers, let's delve into the concepts mentioned in the provided article.
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$10 Between Friends: Peppercorn Consideration The article refers to the common legal practice of including the phrase "…for and in consideration of the sum of $10.00 (ten) and other valuable considerations…" in real estate transactions. This nominal amount, often termed a "peppercorn consideration," is a legal formality. It signifies that an actual, enforceable transfer of property is taking place and not merely a promise. The mention of the Real Estate Closing Deskbook by the American Bar Association on page 65 further reinforces the legal foundation of this practice.
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Know Your Deeds, Part I: Warranty Deeds The article introduces two key types of deeds: General Warranty Deeds and Special Warranty Deeds. Both provide guarantees to the buyer, ensuring the seller's ownership rights, the right to sell the property, and the absence of encumbrances. The critical difference lies in the scope of coverage.
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General Warranty Deeds: Cover the property's entire history, asserting that the seller owns not just the property but all rights associated with it.
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Special Warranty Deeds: Limited to the period during which the seller owned the property, and they are responsible only for issues arising during their ownership. This type is often associated with corporate sales and foreclosures.
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Title Insurance The article emphasizes the importance of title insurance in bridging the gap between General and Special Warranty Deeds. While both types of deeds provide assurances, title insurance serves as a safeguard for the buyer. It backs up the claims made in warranty deeds and protects the buyer from potential ownership or lien-related issues in the future. The insurance doesn't guarantee the absence of title problems but provides financial support to correct or compensate for any such problems.
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Title Tip of the Week: Don't Mess up a Marriage This section touches on a common error in the language used in Warranty Deeds. It advises against using phrases like "joined by" and emphasizes the importance of correctly stating the relationship between the parties involved in the deed. For example, it suggests using "husband and wife" instead of less precise terms like "joined by."
In conclusion, the article provides valuable insights into the legal nuances of real estate transactions, covering the symbolic $10 consideration, the distinctions between General and Special Warranty Deeds, the role of title insurance, and the importance of precise language in legal documents.
