Introduction
If you have ever gone through a real estate deal, you must be quite familiar with the term “Conveyance”, which is often used as a legal term in real estate transactions. This happens when an owner of a property transfers his ownership to another. The legal process that takes place to solidify this ownership of the property is conveyance. Although this term is often used in real estate, there may be some other industries like mineral oil industries. So to learn what the term conveyance actually implies and why it is so important to understand, let us go through the basics of this term and see how it works.
What is Conveyance?
Conveyance is the term that refers to the act in which the ownership of a property is transferred from one person to another. It is a legal document that is made when transferring the said ownership from the seller to the buyer. You can also say that conveyance is a contract under which sellers and buyers are bound to stand by their commitments.
This legal contract, lease, title or deed can be referred to as an instrument of conveyance which is used to solidify the deal made between the buyer and the seller. The document, be it a contract, lease, title or deed will include all the terms that the seller and buyer have agreed upon. This includes the purchase price, date of transfer, along with all the other obligations and responsibilities which both parties have to abide by. In case either of the parties fail to carry out these obligations and responsibilities, the other party can move to court against the former party which is not considered to be a defaulter.
The whole conveyance process is quite lengthy and includes a review for liens, a check ensuring that all conditions have been met, settlement of taxes and other charges that are concerned with the property transfer, confirming the access to finance and preparing all the necessary documentation for the transfer of ownership of the property.
How does Conveyance work?
Now that we have seen in brief what the term conveyance stands for, let us go a little deeper and try to understand how conveyance works. As we discussed above, conveyance represents the act of legally transferring a property from one part to another. In simple terms you can say that when two people or entities transfer ownership of a property among themselves, it is done through the process of conveyance. Conveyance is a term that is often associated with real estate transactions and the conveyance of ownership of real estate is also referred to as conveyancing. There is a legal representative that looks over the whole process that takes place, this representative is called the conveyancer. A real estate tax also known as the conveyance tax is levied upon the real estate transactions. These taxes are imposed on real estate transactions that take place at the country, state or municipal level.
A conveyance instrument is needed to execute a conveyance. This instrument can be a legal document which is in the form of a lease, contract or deed is a legal proof of the transaction that takes place between two parties and represents all the necessary details of the transaction that both parties have agreed upon. This document is the ultimate proof that the ownership of the property has been transferred from one entity to another.
As mentioned above, the conveyance instrument, whether it is a deed, contract or lease includes all the terms of the deal—price of purchase, time of transfer, obligations and responsibilities that both parties have agreed upon. There also have been cases where either one of the parties have failed to follow through this contract and abide by the said obligations and responsibilities. In such cases, the other party has legal rights to take the former party to court for not following through their responsibilities.
The act of conveyancing also ensures that the buyer is informed in advance about any restrictions on the property such as mortgages and liens which helps to assure the buyer a clean ownership of the property without any debts. A lot of buyers prefer to purchase title insurance which protects them against the possibility of fraud in the title transfer.
Although the term conveyance is popularly used in the real estate transactions, it can also be used in the oil and gas industries where it is known as mineral rights conveyance. This includes conveyance in the form of a contract that grants rights of ownership of certain parcels of land and gives mineral rights to other entities, which is usually a company, without turning over the title of the land. The company gets rights to operate on the landowner’s property through the conveyance. The owner of the land gets compensated for transferring the rights to the company that explores their land.
What is required for the completion of a Conveyance?
There are certain important details and documents that need to be produced in order to complete a conveyance. These documents and information is what will go in the conveyance contract and decide the terms on which the contract will stand. The requirements for completion of a conveyance are as follows: * The full name of the granter or the seller who currently owns the land or the property and is trying to sell the property. * The full name of the grantee or the buyer who is buying the property from the granter or the seller. * All the necessary legal information of the property including any limitations in the form of leases or debts. * Affidavit of consideration which will include the purchase price of the property, time of transfer and other conditions related to the same. This needs to be agreed by both the parties. * Warranties, depending on the type of the deed. * Signatures of the concerned parties and witnesses.
The act of conveyance is an important one in any real estate transaction as it makes the transaction completely legal and gives both the parties security against any potential fraud that may occur.
