There has long been doubt and ambiguity in Washington about whether consideration must be recited in a deed gifting real property, but a Washington Court of Appeals has recently dispelled the confusion.
The requirements for transferring real property vary from state-to-state. In Washington, real property must be transferred by deed. RCW 64.04.010. The basic requirements for a Washington deed are that it must (1) be in writing, (2) be signed by grantor, (3) be acknowledged (i.e., notarized), and (4) contain a complete legal description of the property. RCW 64.04.020; Berg v. Ting, 125 Wn.2d 544, 551, 886 P.2d 564, 569 (1995).
While these requirements do not include a requirement that consideration be recited in the deed used to gift the real property, RCW 64.04.030 through 050 (which provide sample language for the various types of deeds) include recitals of consideration given for the real estate. Notwithstanding, RCW 64.04.030 through 050 state that the particular deed at issue “may be substantially in the following form” or “may be in substance in the following form.” Thus, it seems that most attorneys and others creating deeds to gift real property in Washington take the ultra-safe (and long followed) route of reciting consideration even though there really is no consideration for the transfer. The good news is that the confusion appears to be over.
In the recent case of Bale v. Allison, Case No. 67395-5-I, 294 P.3d 789, 798 (Wash. Ct. App. 2013), Division One of the Washington Court of Appeals stated that “no recital of consideration is required to effectively gift real property.” Recognizing that RCW 64.04.020 does not require a recital of consideration and that RCW 64.04.030 through 050 use the permissive rather than the mandatory word of “may,” the court held valid a quit claim deed gifting real property even though it did not recite any consideration. Further, the court pointed out that Washington regulations related to real estate excise tax provide that a gift of real estate is exempt from real estate excise tax because it is not a sale with consideration. WAC 458-61A-201.
Although the holding in Bale v. Allison may be appealed to the Washington Supreme Court, as it currently stands, it provides the clearest statement by a Washington court on whether a recital of consideration is needed in a deed gifting real property and will hopefully resolve the issue. If those preparing deeds will trust the court’s holding, deeds gifting Washington real estate will no longer include the contradictory recital that consideration is transferred while claiming that the property was transferred as a gift. Black’s Law Dictionary defines “gift” as “[t]he voluntary transfer of property to another without compensation.” As such, Bale v. Allison provides a holding that will make deeds gifting real property in Washington much more logical and consistent with the actual transfer being made.
The oral arguments are very interesting to listen to.
Very helpful, thank you. Does the gift consideration recital apply to inheritance? For example, must a Personal Representative’s deed recite consideration when transferring real estate, whether residential or commercial property, to an heir for no consideration?
Aaron, thank you for your question. The reasoning of the court in Bale vs. Alison applies to transfers of property by inheritance or devise for no consideration as well as by gift during a donor’s life. Therefore a Personal Representative’s deed transferring property to an heir or devisee for no consideration is not required to include a recital of consideration.