North Dakota Gift Deed

Gifts of Real Property in North Dakota

A gift deed, or deed of gift, is a legal document voluntarily transferring title to real property from one party (the grantor or donor) to another (the grantee or donee). A gift deed typically transfers real property between family or close friends. Gift deeds are also used to donate to a non-profit organization or charity. The deed serves as proof that the transfer is indeed a gift and without consideration (any conditions or form of compensation).

Valid deeds must meet the following requirements: The grantor must intend to make a present gift of the property, the grantor must deliver the property to the grantee, and the grantee must accept the gift. Gift Deeds must contain language that explicitly states no consideration is expected or required, because any ambiguity or reference to consideration can make the deed contestable in court. A promise to transfer ownership in the future is not a gift, and any deed that does not immediately transfer the interest in the property, or meet any of the aforementioned requirements, can be revoked [1].

A lawful gift deed includes the grantor's full name and marital status, as well as the grantee's full name, marital status, mailing address, and vesting. Vesting describes how the grantee holds title to the property. For North Dakota residential property, the primary methods for holding title are tenancy in common, and joint tenancy. A grant of ownership of real estate to two or more persons is presumed to create a tenancy in common, unless a joint tenancy is expressly created in the conveyance (N.D.C.C. 47-02-06).

As with any conveyance of real estate, a gift deed requires a complete legal description of the parcel. All deeds in North Dakota are required to indicate whether the legal description was taken from a previous instrument, or if it is newly drafted. A metes and bounds description requires the name and address of the person drafting the description (N.D.C.C. 47-19-03.1, 57-02-39). Recite the source of title to establish a clear chain of title, and detail any restrictions associated with the property. All transactions of real property must be accompanied by a Statement of Real Estate Full Consideration form, which must be filed with either the Secretary of the State Board of Equalization or county Recorder's office, unless exempt pursuant to N.D.C.C. 11-18-02.2. Record the completed deed at the local County Recorder's office.

The IRS levies a Federal Gift Tax on any transfer of property from one individual to another with no consideration, or consideration that is less than the full market value. In accordance with federal law, individuals are permitted an annual exclusion of $15,000 on gifts. This means that gifts valued below $15,000 do not require a federal gift tax return (Form 709). Even so, donors should consider filing one for many gifts of real property [2].

In North Dakota, there is no state gift tax. For questions regarding state taxation laws, consult a tax specialist. Gifts of real property in North Dakota are subject to the federal gift tax. The grantor is responsible for paying the federal gift tax; however, if the grantor does not pay the gift tax, the grantee will be held liable [1].

With gifts of real property, the recipient of the gift (grantee) is not required to declare the amount of the gift as income, but if the property accrues income after the transaction, the recipient is responsible for paying the requisite state and federal income taxes [3].

This article is provided for informational purposes only and is not a substitute for the advice of an attorney. Contact a lawyer with any questions about gift deeds or other issues related to the transfer of real property. For questions regarding federal and state taxation laws, consult a tax specialist.

[1] https://nationalparalegal.edu/public_documents/courseware_asp_files/realProperty/PersonalProperty/InterVivosGifts.asp
[2] http://msuextension.org/publications/FamilyFinancialManagement/MT199105HR.pdf
[3] https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

(North Dakota GD Package includes form, guidelines, and completed example)