November 7, 2012

Grant Deed - For a Valuable Consideraton......

To transfer real property in California, a deed must be executed by the "seller" and be given to the "buyer" for recording.

The introductory language for deeds is "FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged." This phrase encapsulates that the seller and buyer have entered into a bilateral agreement, seller conveys the realty to the buyer in exchange for the buyer's money.  

The term "consideration" has a legal meaning to it. The California Civil Code defines consideration as 

"Any benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise."

In normal language, consideration basically means something of value, e.g. money, property, etc.

An issue then presumably arises if a person receives real property as a gift. In such case, the "buyer" does not exchange any consideration for the realty. Instead, they receive something for nothing. The buyer then becomes concerned that the inclusion of the language "FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged" on the deed makes it void or voidable. However, a California case held that such language did not have to be listed on the deed. Goad v Moulton (1885) 67 C 536.
So in the case of a gift deed, the above language need not be included on the deed.

While this might not seem like a major issue, I think it is emblematic of the propensity of many people to handle document drafting themselves instead of retaining an attorney. I have seen this question raised a few times. Over the years, I have received requests to provide a copy of (1) a small estate affidavit, (2) a grant deed template and (3) a Heggstad petition to various people. 

I usually cringe when I hear these requests because I tell them what purpose does the document serve if they cannot understand it. If a person gives you the keys to a stick shift car (I proudly drive one) and you can only drive automatic, what benefit does the car provide you? The same applies to a blank grant deed as a non-attorney typically has no idea what language is necessary and what each component represents. A person is free to act as their own attorney, they should just be aware of the intended (and unintended) consequences.