The Process of Conveyancing Explained
When buying or selling property, you’re bound to come across many different legal terms that you may not be familiar with. One of the more important ones is conveyance.
So what exactly is conveyancing, and how is it related to real estate? Here’s everything you need to know.
What Is Conveyancing?
Conveyancing is defined as the act of legally transferring property from one party to another. The process is executed through a conveyance instrument or legal documentation such as deeds, leases, contracts, wills, or a title.
The primary purpose of conveyancing is to ensure that the property is transferred in a legal manner and alongside the appropriate documentation while simultaneously protecting you in case there is a breach of contract.
The contract details the obligations of both parties during the transaction. This will cover a variety of aspects, including the property price, date of sale, and terms of sale.
Different Types of Conveyancing
Conveyancing is a term primarily associated with buying a property, with sales deeds being the most common form of real estate conveyance. The transfer of property and land should cover the certificate liens, mortgage, land title, and additional transfer agreements.
Property conveyancing also confirms that the conditions of transfer have been met, which means all taxes and charges will be settled before the exchange date.
While conveyancing is commonly used in real estate, there are several other assets where deeds and documents proving legal ownership are referred to as conveyance. Exploration companies within the gas and oil sector use conveyance documents when transferring the piece of land. Another example is the transfer of car ownership.
Below are a few examples of conveyancing deeds:
- Grant deeds - issued when the seller confirms that the property is free of any lien and the ownership is transferred to the buyer.
- Quitclaim deed - issued when property ownership is transferred from the seller to the buyer with little to no buyer protection.
- Reconveyance deed - issued by mortgage lenders once the homeowner has completed their mortgage repayments and now owns the property outright.
The process is overseen by the conveyancer, a legal representative who helps the buyer and seller complete the property deed transfer.
Who Handles the Conveyance of Property?
Real estate transactions often involve a lot of money exchanging hands, which is why it’s important to avoid mistakes or potential fraudsters. Therefore, the process must be completed by a professional who is highly skilled in real estate law and possesses the authority to finalize the instrument of conveyance.
The conveyancer could be a dedicated conveyancer or a registered solicitor. Either way, they will be responsible for managing all relevant documentation and ensuring that both parties (buyer and seller) have been presented with hard copies of the contract that are subsequently signed.
Documents include but are not limited to property deeds, mutation entries, survey plans, location plans, architecture certificates, occupancy certificates, asset transfer agreements, certificates of commencement, proof of registrations, and drafted conveyancer deeds.
Each aspect can include several key elements. For example, the contract of sale includes the property address, sale date, names of all the parties, and an agreed cooling-off period. Meanwhile, the land title certificate includes caveats, easements, heritage delays, and renovations.
Conveyancing fees depend on a number of factors, but for a single-family home purchase, you should expect to pay around $1,000. This is a reasonable price for a service that guarantees the legality of your transaction and gives you peace of mind after the title transfer.
Conveyancing for Purchases and Sales
With millions of property transactions taking place each year, the importance of the conveyance process cannot be understated. While the fundamentals and right of conveyance are consistent, there are clear differences between the process for purchasing and selling.
Conveyancing when buying is relatively straightforward. Here is a breakdown of the process:
- Find a property you want to buy and make an offer.
- Hire a conveyancer to represent you throughout the process of transferring the property deeds.
- The conveyancer contacts the seller’s legal representative to seek relevant info about the property along with a contract pack.
- The conveyancer organizes and handles the property surveys and searches to confirm there are no major issues with the property.
- You sign the relevant conveyance documents to complete the transfer.
Once this process has been finalized, funds can be released on the day of your exchange. The conveyancer will also ensure that all relevant property taxes are paid and land registrations are completed within the relevant timeframe.
When selling a property, the process is essentially reversed. This makes it a little more complex as your conveyancer will need to prepare the contract pack, while you will also need to provide them with the necessary info on the property.
Prior to the transfer, the conveyancer will ensure that all of the mortgage costs, taxes, and other relevant expenses have been settled.
Conceptually, it may sound simple. In reality, it can become very complex, especially when buying and selling property. As such, finding a reliable conveyancer to manage the legal aspects of the transfer is pivotal.
Key Things to Know About Conveyancing
There are a number of ways to transfer a piece of property from one owner to another. Below we’ve listed a few examples of conveyances.
- An arm-length transaction could be used to transfer the property at a fair market value and allow the buyer to become the new legal owner. This can be a useful option when buying or selling from/to a relative.
- A gift conveyance is needed when the property is gifted to another party (usually a relative), but the recipient will need to pay gift tax on any piece of property with a value of over $16,000.
- The property deed may also be conveyed following a property owner’s death as directed by their will. This means executing their will so that the property is conveyed to the right party, who only pays an estate tax if the property is worth more than $12.06m.
Understanding the convey definition in real estate circles, as well as other markets, also means understanding the tax aspects. In addition to tax planning for property taxes, it is important to acknowledge the conveyance tax. It is levied by a government authority on the transfer of a property’s deeds and usually falls on the seller. It may be a set amount or a percentage fee, depending on your location.
Voluntary conveyance is when the property is willingly transferred to another party without seeking full consideration (a legal term for financial compensation). This could be done for charitable reasons or to forfeit the property to the lienholder.
What Is Fraudulent Conveyancing?
If a property is transferred to avoid taxes and creditors or with other illegal motives, it’s designated as fraudulent conveyancing.
It is a crime that carries different punishments from one jurisdiction to the next but usually includes significant fines as well as potential jail time. While a professional conveyancer will look for signs of fraud, it is also the responsibility of all parties involved to make sure that the process is conducted legally.
Conclusion: What Does Conveyancing Mean to You?
Whether buying or selling real estate, conveyancing ensures that the property deeds are transferred legally. That’s why it is crucial to find a trustworthy and experienced conveyancer to oversee the process. This will enable you to conduct the purchase or sale with confidence.
What is the meaning of conveyancer?
A conveyancer is a legal representative who oversees the transfer of a property from one party to another. They may be a licensed conveyancer or solicitor who is fully regulated and experienced in property law.
Is conveyancing a solicitor?
Conveyancing is the legal process of transferring property from one party to another. However, a solicitor may act as the conveyancer on your behalf during this legal process.
What type of law is conveyancing?
Conveyancing is commonly used in real estate law that focuses on the legal transfer of a title or the granting of encumbrance, such as a mortgage. It is conducted using a legal document known as an instrument of conveyance.
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