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Nominal Consideration
By Contributor on January 22, 2019
Nominal consideration refers to a consideration amount that is significantly less than the market value of the asset which changes hands in the transaction.
For an ownership transfer of a property to be legally considered as a proper purchase, there must be consideration so that the property has the legal protection regarding purchasers.
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As such a nominal consideration is like a token payment so that the transaction meets the requirement of consideration.
This makes the contract enforceable by law as a purchase transaction.
The lack of consideration might categorized such a transaction as a gift which would not give the contract the legal backing a purchase enjoys.
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Even a $1 nominal consideration makes a contract a “regular” one.
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