Elements of a Deed: What Is Consideration?

Consideration is the legal term used to describe the money or other thing of value exchanged for the title to a home in a real estate sale.

A legally valid contract must have mutual consideration. That is, something that has value must be exchanged by each party. The things exchanged can be a promise of money, assets, or services—something, that is, that has measurable value.

A deed may be conveyed for valuable consideration—usually a payment of money. The seller also transfers consideration in this exchange: the deed itself. So, there is mutual consideration in a home purchase.

Actual, Nominal, or No Consideration

If money is exchanged for a title to a home, the deed representing the transfer usually states how much was paid.  Here’s how this might be written, depending on your state’s law and customary practice:

• Actual consideration. The real price paid to acquire ownership of the property. For example: $350,000.

• Nominal consideration. For example, “for the sum of $10.00.” In most states, stating nominal consideration instead of actual consideration is normal on a warranty, quitclaim, or another type of deed transfer. As long as the magic words “for consideration” appear (for example, in the phrase “for good and valuable consideration”), we know that the home was transferred by a sale. At the same time, the county’s change of ownership form will normally show the real sale price, for assessment purposes.

The point of a deed is to transfer title from one party to the next. It is not a receipt.

As the deed is recorded, consideration is the public reference that some value was paid by the buyer to the seller. If the deed states that the title was transferred for “$10.00, and other good and valuable consideration,” the public cannot see what one party paid the other. The public knows the payment was ten dollars—plus. Enough said.

The key agency interested in the dollar amount is the state’s department of revenue and local assessor’s office. Forms submitted to the county include the actual sale amount.

Often, titles are transferred with no consideration given by the named recipient. Inherited deeds and many quitclaims represent titles passed along without expectation of payment. Examples are:

• Title transfers from one spouse to both spouses.

• Title transfers made to an ex-spouse as part of a divorce or settlement agreement.

• Transfers between family members through a gift deed.

• The conveyance of a home into a family trust.

• Transfers to heirs after a death.

• Transfers made from the business owner into a corporation, LLC, or another form of business.

Will you come across a deed where no money was paid, yet nominal consideration (such as $10.00) appears on the deed? Yes. It depends on the rules under which the deed changed hands. If the transfer, to be legally valid, must involve consideration, then the deed will show nominal consideration to avert title problems. In other cases, you’ll find gift deeds naming “love and affection” as the consideration.

Find the right deed form for your county and state. Meet up-to-date requirements. Step-by-step instructions included.

State Requirements for Consideration in Home Purchase Agreements: Examples

Which states require “actual consideration” to be disclosed in a real estate sale, and by what manner? Requirements vary based on whether a lender is involved in a deed transfer. Generally speaking:

• Alabama deeds must include the fair market value of the home.

• Arizona requires a Statement of Property Value (or exemption).

• Delaware requires the filing of an Affidavit of Gain and Value.

• Iowa requires a Real Estate Transfer Declaration of Value, to show “the full consideration paid in certain nonexempt real estate conveyances” when the deed is filed for recording.

• Michigan requires the filing of a Real Estate Transfer Valuation Affidavit.

• Minnesota requires the value to be stated on a Certificate of Real Estate Value.

• Missouri has county-specific Certificate of Value forms.

• Nevada requires a Declaration of Value form. Check county requirements as well, which have specifics on cover letters, signing, etc. As an example, a real estate agent is not allowed to sign the form in Churchill County.

• New Hampshire requires a Declaration of Consideration.

• New Jersey requires an Affidavit of Consideration or Exemption, and all deeds must include the amount of consideration and the mortgage balance.

• North Carolina requires an Affidavit of Consideration or Value Form. The form is county-specific.

• North Dakota requires a statement of full consideration on a deed.

• Most Ohio counties require a Real Estate Conveyance Fee Statement or exemption form.

• Oregon real estate documents, including deeds, must include the dollar amount of consideration and the mortgage balance.

• Pennsylvania requires a Realty Transfer Tax Statement of Value. Check for county-specific rules.

• South Dakota transfers require a Certificate of Real Estate Value to be filed with any deed.

• Tennessee deed transfers require the filing of an Oath of Consideration. Quitclaim deeds should state: “I hereby swear and affirm that the actual consideration is $10.00.”

• Texas requires an Oath of Consideration. Sale prices are not publicly recorded; buyers typically depend on appraisals, or agents with access to MLS data, for precise pricing.       

• Virginia rules are county-specific.

• In West Virginia, deeds require a Declaration of Consideration / value statement.

Statements of value are typically not required for transfers between spouses.

Some states calculate transfer taxes for deed conveyances based on the amount of consideration. You can look up your applicable law (for example, here is Burlington, New Jersey citing applicable deed rules) to review what’s necessary and proper for a valid, recordable deed.

State and county document filing rules and procedures can change. Therefore, the information in this article may have been modified by the time you read it, and should always be verified. Please know that the deed forms offered on this website are kept up to date, ensuring the correct format and contact.

Shhhh… In Non-Disclosure States, Home Prices Are Not In the Public Records

In what are called non-disclosure states, only the buyer, seller, agents and mortgage lender are supposed to know how much money changed hands. Home purchase prices need not be publicly recorded or shared with the general public.

Where sale prices are not disclosed in the tax records, assessed values are based on the taxed percentage of the sale, so they can be figured out. And buyers can find estimated values on Redfin and other real estate websites. Still, non-disclosure devalues transparency, forcing more buyers to need professional agents or to order professional appraisals or title company reports.

Non-disclosure states set this policy because it will:

• Keep counties from automatically hiking property taxes based on new sales.

• Protect homeowners’ financial privacy.

• Allow more flexible negotiation in a home purchase.

A minority of states follow a non-disclosure policy for title transfers. They include Alaska, Idaho, Kansas, Louisiana, Montana, Mississippi, Missouri, New Mexico, Texas, and Wyoming. Sometimes, or in some counties, property tax and ownership data are public although purchase prices aren’t. 

In contrast, full-disclosure states make sale prices easy to find. Most of the information connected with deed transactions is available in the county records.

Important note: This article is meant only as general information—a springboard for the reader’s due diligence. It does not replace professional advice.