Friday, March 22, 2013

Nominal consideratoin deeds

One of the document types we track is deeds. How many are recorded each week, month or year is an indicator of the direction of the market. However, not all deeds are created equal. At the end of each day as I scroll through the deeds just recorded, I detect quite a few that are for nominal consideration. These transactions don't involve the exchange of any money, but the consideration portion of the deed always says $1 or $100. Because the registry of deeds is charged with collecting the deeds excise tax due on every transaction and because the tax is based on the sales price of the property, the parties are required to state some quantifiable consideration on the deed. "Love and affection" is not sufficient. The nominal consideration deeds we see disclose several standard circumstances: transferring property into a trust or making a spouse or child a co-owner of the property (or making them not a co-owner of the property) are the most common scenarios. I looked at the deeds recorded this week (from Monday, March 18 thru Thursday, March 21) and compared the nominal to full consideration deeds. The nominal consideration deeds accounted for 57% of the total (39 of 69). Here's the breakdown by community: Billerica - 9 of 13 deeds were for nominal consideration; Carlisle - 1 of 2 deeds were for nominal consideration: Chelmsford - 5 0f 8; Dracut - 4 of 4; Dunstable - 0 of 1; Lowell - 12 of 19; Tewksbury - 4 of 7; Tyngsborough - 1 of 2; Westford - 3 of 9; Wilmington - 1 of 4. As long as we continue comparing total deeds to total deeds, we'll still have an accurate view of the broad trend. Still, there seems to be a lot of shuffling of properties and my sense is that's a relatively new phenomenon that warrants further study.

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