The fundamental difference between a deed and an agreement is that no consideration is needed to be exchanged for a deed to be legally binding. However, with an agreement, consideration needs to be exchanged to become a legally binding contract.
‘Consideration’ is usually monetary, but can take the form of ‘in kind’ consideration.
What is a deed?
A deed is often described as being a special type of binding promise or commitment to do something in writing.
In family law, deeds are drafted to enable a Certificate of Title be transferred from joint names to the name of the party who has been granted the property due to family law proceedings.
Another example is if a person wanted to buy a property, but needed a guarantor to enable them to get a mortgage, a guarantor deed would need to be prepared.
Execution (how they are formally signed)
Generally, to execute a deed you would need it to:
1. Be in writing;
2. Be personal sealed; and
3. Delivered to the other party.
Some states have different requirements depending on what you’re using the document for.
For the purposes of the Conveyancing Act 1919 (NSW), all deeds are to be signed and sealed by the party bound by the deed and witnessed by one person who is not a party to the deed. Any instrument that is expressed to be a deed that is signed and sealed in accordance to this Act is determined to be sealed.
For the Property Law Act 1969 (WA), all deeds must be signed by the party bound by the deed and witnessed by one person who is not a party to the deed. No seal is needed unless it is executed by a corporation.
In addition, formal delivery is not required to the other party.
The Property Law Act 1974 (Qld) says that all deeds must be signed (or an individual’s mark) by the party bound by the deed. Just sealing the deed is not sufficient.
If an instrument is expressed to be a deed and is signed, attested by a witness and sealed, it is said to be duly executed as per this Act.
The Property Law Act 1958 (Vic) states that an individual needs to sign or place their mark to execute the deed and that sealing is not sufficient.