Introduction
Deeds are written documents that make it clear on their face that they are intended to be a deed by the person or persons entering into them (normally by stating as much) and are validly executed and delivered as a deed.
A deed in common with other written agreements provides evidence of the transaction or matter to which it relates, but entering into a document as a deed provides certain advantages.
Please note that this briefing note does not attempt to address issues such as the registration of deeds, nor any particular form of deed (i.e. trust deeds etc.), and is just a broad outline relating to Isle of Man law to assist your understanding.
Advantages of a Deed
A deed has the following advantages:
- The limitation period to enforce it (i.e. a specialty) in the event of a breach of its terms is generally 21 years in the Isle of Man, as opposed to the 6 year period applicable to other contracts; and
- No consideration is required for a promise (a "covenant") made in a deed to make it enforceable. Consideration in this context means payment in any form or value given by a party, which is usually required to form a binding contract unless the contract is made by way of deed. Deeds are often used because there may be doubt about whether a party is providing consideration under the arrangement.
Types of Deed
There are two categories of deed:
- Indentures or Deeds of Indenture – being deeds to which 2 or more persons are party, evidencing some act/agreement between them other than simply their consent to jointly express a common intention (ie. a conveyance would be an Indenture – one party wanting to sell and one party to buy, so two different intentions); and
- Deed Polls – being deeds made by and expressing the intention of a single person only, or made by 2 or more persons joining together to express a common intention or create an obligation (for example a deed declaring a change of name).
The term specialty refers to a contract or covenant executed as a deed. Historically a promise contained in a deed was referred to as a "contract on a specialty".
It is common to describe a deed by its effect, for example a trust deed or deed of gift.
The Parts of a Deed
A deed is often divided into several distinct parts, which can be described as follows:
- Heading
- Parties
- Recitals
- Operative Provisions
- Testimonium
- Schedules
- Execution and Attestation
Heading
A deed may be described as a deed using language like "This Deed" or "This Indenture". Alternatively it could be stated to be a Conveyance, Conditional Bond and Security (which is a type of security over real estate under Isle of Man law) or a Lease, according to the nature of the transaction.
The date is commonly at the start of the deed or at the end in the testimonium.
Parties
The parties to a deed are usually described immediately after the heading and following the words "BETWEEN" or "PARTIES".
After the description of the parties it is also very common to give each party a definition, for example (the "Vendor"). That definition is then used throughout the deed to refer to the party.
After a description of a party there may be additional provision to differentiate between parties, for example "of the first part". This may appear where 2 or more persons or a group of persons are parties representing different interests and each person or group may be expressed to be of a separate part.
Recitals
Recitals explain the background of the deed and normally follow a description of the parties to it.
Operative Provisions
Operative provisions set out the rights and obligations of the parties to the deed and are normally found immediately after the recitals.
Testimonium
This is the concluding part of the deed and normally placed after the operative provisions and before the schedules, it connects the signatures to the document and will usually record the fact that the document is a deed.
Schedules
Any schedules often follow the testimonium but come before the signatures to prevent any addition to the body of the deed.
Execution and Attestation
This is the section of the deed where the signature of each party together with any witnesses to the signature appear. A separate signature block, usually specifying that the document is executed as a deed, will be included for each party.
The Requirement of Delivery
Delivery is a legal requirement for a deed.
Delivery originated as a physical act (handing over the document), but it is now a rule that relates to the intention to be bound by deed. The executed deed takes effect on delivery. If a deed is delivered on terms that it does not take effect unless and until certain conditions are fulfilled it is called an escrow (or it may be referred to as a delivery of the deed in escrow).
Executing in counterparts
A deed may provide that it can be executed in counterparts. This will permit each party to sign a separate but otherwise identical original copy of the deed, all of which copies together will form a single binding document. This is particularly helpful where parties are signing in different jurisdictions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
