Legal-Ease: Why does my deed say that I bought my house for one dollar?

In most circumstances, it should not take a law degree to be able to read and usually understand most written agreements and documents, including deeds to properties. However, a struggle comes when the language in a deed seems to be literally inaccurate.

A prime example of this confusion and apparent inaccuracy appears in almost every real estate deed that is prepared, used and recorded as a part of a real estate sale and purchase. Almost every real estate deed states some language that is at least similar to the following: “For one dollar and other good and valuable consideration, I sell my property to whomever.” Sometimes, the dollar amount recited is 10 dollars, and other times, the amount paid is recited as being “love and affection.”

Although it can happen, almost never is a piece of property sold by one person to another person for exactly one dollar. So, if the purchase price of one dollar or 10 dollars or love and affection is not literally accurate, why is it included in almost every real estate deed?

The answer to this question breaks down into two parts.

First, a deed is a contract for ownership of real estate. Every contract must include some “consideration” (or a legal replacement for consideration). Consideration is an act, promise or item of value that is being exchanged for the real estate.

So, for a deed to legally transfer ownership of real estate, the purchaser in the deed must have provided some consideration. Often, the consideration for a real estate purchase is money. Other times, real estate may be sold in exchange for the purchaser not suing the seller. In still other situations, the consideration might be a promise that the buyer will give something else (a vehicle or other real estate) to the seller through a different transaction.

Second, documents that are filed at the local courthouse are filed as stand-alone documents. Deeds generally are not filed at the courthouse with other documents that would explain why the buyer sold the property to the seller and vice versa.

With consideration being an indispensable component of a real estate deed coupled with the fact that a deed usually does not have a detailed explanation of what the consideration is, real estate deed preparers tend to use a “recital” or “standard language” to tell every reader of the deed that there is at least some consideration; thus, the deed is valid.

The important language that communicates, “Hey, world, there is at least some consideration that makes this deed a valid real estate transfer contract” has been translated into “For one dollar and other good and valuable consideration”. When that “one dollar” language is in the deed, the reader can know that the requirement of consideration is satisfied.

The actual, literal purchase price for the real estate conveyed in a deed can be determined by identifying the conveyance, or tax paid, for the real estate’s transfer, which tax is based upon the actual purchase price of the real estate.

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 [email protected] 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 circumstances that you face.