Consideration For Texas Deeds

Consideration Clauses in Texas Deeds

Because it identifies in writing the legal and equitable title of real property to its rightful owner, a deed is a critical document for anyone owning property. A Texas deed may come in one of several different forms; it could be a special warranty deed, a general warranty deed, a transfer on death deed, or a gift deed, to name a few. In the case of real property, the promissor pledges something of value, and the promisee gives something of value, usually money in exchange for property. The deed defines the terms of that exchange. In order to be legally binding, several elements must be included within the deed. One required element for example is that the deed must be based on valid consideration or mutuality of obligation. In a legal sense, consideration is the price paid in exchange for something promised to another. Importantly, without some type of consideration, there is no deed. Iacono v. Lyons, 16 S.W.3d 92, 94 (Tex. App.- Houston [1st Dist.] 2000, no pet.) (citing Texas Gas Utils. Co. v. Barrett, 460 S.W.2d 409, 412 (Tex. 1970)).

Common Consideration Clauses

Consideration defines the terms of exchange in the deed. In the case of Copeland v. Alsobrook for example, consideration was defined as “some right, interest, profit, or benefit that accrues to one party, or, alternatively, of some forbearance, loss or responsibility that is undertaken or incurred by the other party. Copeland v. Alsobrook, 3 S.W.3d 598, 606 (Tex. App.-San Antonio 1999, pet. denied); Solomon v. Greenblatt, 812 S.W.2d 7, 15 (Tex. App.- Dallas 1991, no writ).

Two common consideration clauses frequently found in Texas deeds are:

  1. “Cash and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.”
  2. “TEN AND NO/100 DOLLARS ($10) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.”

Although the amount of $10.00 is traditionally used in Texas deeds, it is not intended to reflect the actual valuation of the property. Considered a Nominal Consideration, the appellate courts in Texas reviewed the common use of “$10.00 consideration or less” and found its use to be sufficient to support a deed conveying land.

Other Types of Consideration

Listed below are several other types of consideration and the court cases which helped define them:

Forgiveness of Loans – in which consideration is the payment and discharge of loans to convey land. Lassiter v. Boxwell Bros., Inc., 362 S.W.2d 884 (Tex. Civ. App.—Amarillo 1962, no writ).

Services to be Rendered – in which a purchaser conveys land based on services to be provided to the seller. These services are valued as an expense incurred by the purchaser and provided to the seller which are equal to the value of the land. Tobin v. Benson, 152 S.W. 642 (Tex. Civ. App. 1912, writ refused).

Release of a Judgement – in which consideration includes removing a previous claim on an asset. The conveyance of property releases the seller from a binding agreement. For example, a purchaser might pay off liens on the land in exchange for conveyance of that property. J.S. Brown Hardware Co. v. Catrett, 45 Tex. Civ. App. 647, 101 S.W. 559 (1907, writ dismissed), citing McAlpine v. Burnett, 23 Tex. 649, 650, 1859 WL 6353 (1859).

Forbearance to Sue – in which a purchaser refrains from exercising the legal right to enforce a debt in exchange for conveyance of the property from the debtor to the purchaser. In one case the purchaser agreed not to contest a will and to pay the cost of probating the will including the attorney’s fees. Wells v. Timms, 275 S.W. 468, 470, (Tex. Civ. App.—Fort Worth 1925, writ dismissed).

Promises to Support Grantor and Maintain Propertyin which the purchaser of the property agrees to financially support the grantor and keep the property in a state of good repair in exchange for conveyance of that property. Freeman v. Jones, 43 Tex. Civ. App. 332, 94 S.W. 1072, 1073 (1906, no writ).

Love and Affectionin which a grantor agrees to convey property to another “for natural love and affection.” This consideration is usually the one cited in a gift deed. Stafford v. Stafford, 41 Tex. 111, 115, 1874 WL 7993 (1874).

Given the number of different deeds available in Texas and the importance of the consideration within the deed, anyone wishing to convey property would be wise to work with a real estate attorney to determine the option which best meets the client's need.

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