Voluntary Conveyance

Reviewed by Sujaini | Updated on Aug 27, 2020

What is Voluntary Conveyance?

Voluntary transfer refers to an elective transfer of title from one person to another without proper consideration. Consideration refers to the value that is required for the property in return. Without it, the transporter should be prepared to provide a valid reason for the move.

Like any real estate transaction, the voluntary conveyance is a type of voluntary transfer of property. The lack of adequate consideration given to the seller distinguishes voluntary conveyance, however.

Consideration is a legal term relating to the consideration given in exchange for the property at issue.

The following is a common volunteering scenario:

  • To prevent default and the impact it has on the credit history of the borrower, certain delinquent borrowers may willingly forward the property to the lender. The lender is able to accept title conveyance and then sell the property.

  • Depending on local regulations, the applicant can then have the right to file an insurance claim to recover any remaining deficiencies. The creditor removes the stigma of default in making such a conveyance.

Fraudulent Voluntary Conveyance to Avoid Creditors

In most jurisdictions, sale of the property to a third party is illegal in order to avoid claims on that property by creditors. This is known as a fraudulent conveyance, and creditors can use civil legal proceedings to defend their claim to the land.

Penalties rely on whether the court rules that the fraud is real, malicious, or constructive that describes a fraudulent transaction that is de facto.

Voluntary Conveyance for Charitable Purposes

To ensure the required tax deduction, donors wishing to convey real property to a charitable organization must carefully manage the consideration issue. The receiving company must have a tax exemption in good standing with the income tax department, and qualified appraisers and tax attorneys will properly evaluate the transaction. With these protections in place, consideration takes the form of a tax deduction.