Do I need consideration?
Unless the transfer is a gift, you likely need consideration as part of your deed. Consideration describes the value that changes hands as part of an agreement between two or more parties. It could be money changing hands, the discharge of a debt, the performance of services, capital in a business, or anything else of value.
Nominal Consideration – This is the most common form of consideration (e.g., “the sum of $10.00”). With this consideration the parties can keep the actual consideration private.
Actual Consideration – The parties can publicly put the purchase price paid for the property in their deed. However, most states do not require that the actual consideration be listed in the deed. The purchase price will be listed in the Real Estate Tax Affidavit.
Gift – No consideration exists if the property is a gift. Common language for a Gift Deed is that the property is being transferred “for love and affection” or similar language. In states with documentary transfer taxes based on the amount of consideration (including Washington), specifying that the property was a gift can save transfer taxes.
What is a bona fide purchaser?
Lets say that you have a lien on someone's property and the home owner tries to ditch that property by selling it to someone else. The buyer may be considered a bona fide purchaser for value if the buyer had no notice of the lien (claim or defect) and they actually exchanged value (i.e. consideration) for the purchase.
The buyer may fail to qualify as a bona fide purchaser if, for example, the deed recites that the buyer paid no value (i.e. a gift), or the buyer received prior notice of your claim in a letter from your attorney.
In contrast, if the buyer is not a bona fide purchaser, the seller may be barred by the court from selling the property on the grounds that it was a fraudulent transfer.
As always, speak to an attorney before drafting your deed.
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