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Case #2-11 False Consideration in a Deed (Revised Case #9-17 May, 1988. Transferred to Article 2 November 1994.)
Commissioner B, a member of a state conservation commission, filed a complaint with a Board of REALTORSŪ charging that REALTORŪ A had been a party to the naming of a false consideration in a deed.
In his response, REALTORŪ A denied the charge and protested that all of his actions had been clearly necessary in his client's interest and justifiable in view of the unusual circumstances. At the hearing, Commissioner B, the complainant, produced a photocopy of a deed to 300 acres of undeveloped land with the consideration stated to be $1,000 an acre; an affidavit from Seller C, who had deeded the land to the XYZ
Development Company, affirming that the price actually paid for the land by the company was $600 an acre; and a letter from the president of the XYZ Development Company stating that the deed was prepared in consultation with, and upon advice of, REALTORŪ A, upon whom the company depended in its land acquisition and home selling activities.
REALTORŪ A explained that he had assisted XYZ Development Company over a period of several years in working out a long-range building program, and that in keeping with this plan the company would need 300 acres of undeveloped land in that area before the end of the year. At the time he began negotiations, a news story emanating from the state
conservation commission announced that it would acquire extensive tracts of undeveloped land. The story had indicated that this acquisition would take place in five counties, including the county where the property under discussion was located. The story had also indicated that the commission would be limited in its acquisitions to land that would be purchased for not more than $800 an acre.
REALTORŪ A had advised his clients that suitable land for their proposed development could probably be purchased for $500 an acre. He recommended, however, that he be authorized to offer $600 per acre. This authority was given and REALTORŪ A negotiated purchase from Seller C of the 300 acre tract on behalf of the Development Company for $600 an acre.
REALTORŪ A expressed concern that the state conservation commission might undertake to acquire the property from the company, since the price at which it was bought was below the commission per acre limit. An officer suggested asking Seller C to deed the property for "ONE DOLLAR AND OTHER CONSIDERATIONS" and then placing revenue stamps
indicative of a $1,000 per acre price on the deed.
REALTORŪ A pointed out that it was unlikely that a $1,000 per acre value could be supported by revenue stamps alone.
He suggested that Seller C be asked to agree to a deed that would state the consideration to have been at a rate of $1,000 per acre.
Commissioner B testified that he had reviewed recorded deeds in recent sales, had visited the property in question, and had called on the sellers because of the high price at which it apparently had been sold. He had commented on the very favorable price to Seller C, who had inadvertently let it slip that the price shown on the deed was not the price paid. He
later confirmed this in an affidavit that was presented at the hearing.
What did the Panel Decide? | 
