Conveyancing


Conveyancing

In law, conveyancing is the transfer of legal title of property from one person to another, or the granting of an encumbrance such as a mortgage or a lien.[1]

The term conveyancing may also be used in the context of the movement of bulk commodities or other products such as water, sewerage, electricity, or gas.

A typical conveyancing transaction contains two major landmarks: the exchange of contracts (whereby equitable title passes) and completion (whereby legal title passes). Conveyancing occurs in three stages: before contract, before completion and after completion.

A buyer of real property must ensure that he or she obtains a good and marketable 'title' to the land; i.e., that the seller is the owner, has the right to sell the property, and there is no factor which would impede a mortgage or re-sale.

A system of conveyancing is usually designed to ensure that the buyer secures title to the land together with all the rights that run with the land, and is notified of any restrictions in advance of purchase. In most mature jurisdictions, conveyancing is facilitated by a system of land registration which is designed to encourage reliance on public records and assure purchasers of land that they are taking good title.[2]

Contents

United Kingdom

In England and Wales, this is usually done by a solicitor or a licensed conveyancer. Either may employ or supervise an unqualified conveyancer. The domestic conveyancing market is price competitive, with a high number of firms of solicitors and conveyancing companies offering a similar service. It is possible for someone to carry out their own conveyancing.

Under English and Welsh law agreements are not legally binding until contracts are exchanged. This affords both the advantage of freedom before contract, but also the disadvantage of wasted time and expense in the event the deal is not done.

The normal practice is for the buyer to negotiate an agreed price with the seller then organise a survey and have the solicitor (or conveyancer) carry out their searches and pre-contract enquiries. The seller's solicitor or conveyancer will prepare the draft contract to be approved by the buyer's solicitor. The seller's solicitor will also collect and prepare property information to be provided to the buyer's solicitors, in line with the Law Society's National Protocol for domestic conveyancing.

It takes on average 10–12 weeks to complete a conveyancing transaction, but while some transactions are quicker, many take longer. The timescale is determined by a host of factors - legal, personal, social and financial. During this period prior to exchange of contracts (exchange being the point at which the transaction becomes legally-binding) either party can pull out of the transaction at any time and for any reason, with no legal obligation to the other. This gives rise to a risk of gazumping and its converse, gazundering.

Conveyancing has been identified as one of the key targets for companies looking to take advantage of the changes in the law (originally planned to be introduced in October 2011, but which is likely to be delayed for several months), with the introduction of the Legal Services Act. This enables non-lawyers to own law firms, and is a significant threat to solicitors that today rely on income from conveyancing. The reason why this area of law has been targeted is because it is highly process-driven and therefore perceived as being more easily managed by non-lawyers. Recent trends indicate that instead of new firms that will actually carry out the work, instead, panel organisations are being created who take the instruction and pass the work to a panel of solicitors and take a fee from the client for this distribution service.

These new panels employ "progressors" whose role is to merely contact solicitors that are actually transacting the instruction to check on progress. This raises the issue of client-confidentiality and what information may be provided to such non-connected third parties. These progressors have received the moniker of Legal Naggers (or Laggers).

The position in Scotland under Scots law is that the contract is generally concluded at a much earlier stage, and the initial offer, once accepted by the seller, is legally binding. This results in a system of conveyancing where buyers get their survey done before making a bid through their solicitor to the seller's solicitor. If there is competing interest for a property, sellers will normally set a closing date for the initial offers. The contract is normally formed by letters between the solicitors on behalf of each of the seller and purchaser, called missives. Once all the terms of the contract are agreed, the missives are said to be concluded, and there is then a binding contract for the sale of the property. Normally the contract is conditional upon matters such as the sellers being able, before completion of the transaction, to prove that they have good title to the property and to exhibit clear searches from the property registers and the local authority. The fact that there is a binding contract at a relatively early stage, compared with the normal practice in England and Wales, makes the problem of gazumping a rarity. The disadvantage for the buyer is that they usually have to bear the cost of the survey for unsuccessful bids, though trials have been made of a system where the seller arranges for one survey available to all bidders. From 1 December 2008 properties for sale will have to be marketed with information, now branded as the 'Home Information Report'. This should consist of: a Single Survey, an Energy Report and a Property Questionnaire local authority searches and evidence of legal title. The Home Report will be made available on request to prospective buyers of the home. The date of final settlement is in Scotland known as the "date of entry".

Feudal England

The conveyancing process applicable to feudal fiefdoms heritable by an heir was that of "re-enfeoffment", involving the consecutive procedures of paying homage, paying a feudal relief and obtaining seisin.

Australia

In Australia much of the land which was first colonised by the United Kingdom is still Common Law (also known as Old System). However since the introduction of Torrens title in 1858 most land is now under the new system of conveyance.

Conveyancing in Australia is usually completed by a solicitor or a licensed conveyancer. There are also kits available if the buyer wishes to complete the process themselves, but due to the complexity of varying state and council laws and processes, this is usually not recommended.

A common conveyance by a solicitor or licensed conveyancer usually takes 4–6 weeks. Most firms offer fixed price services which usually includes costs of searches, legal advice and other outlays.

In most states and territories a typical conveyance includes, but is not limited to, the following:

  • Title Searches
  • checking for encumbrances and restrictions on the property
  • ensuring any special conditions mentioned in the contract are met
  • making sure rates, land tax and water consumption charges are paid by the appropriate party
  • arranging for the payment of fees and charges
  • preparation of legal documents.

Searches tend to take up the bulk of the conveyance. Due to the three level system of government in the country (federal, state and local), it must be made sure that all rights and title are properly awarded to the seller. Most information is retrieved from state or local (council) authorities. It is important to note that conveyancing processes, legal documentation, contract requirements and search requirements vary between each state and territory.

A standard search package could include:

  • Company search
  • Contaminated Land search
  • Council Property search
  • Full Council Inspection of Records search
  • Land Tax search
  • Main Roads search
  • Registered Plan Search or Building Units/Group Titles Plan Search
  • Titles Search & check title search

Requirements, searches and costs can vary from state to state, depending on local property legislation and safeguards.

United States

The conveyancing process in the United States varies from state to state depending on local legal requirements and historical practice. In most situations, three attorneys will be involved in the process: one each to represent the buyer, seller, and mortgage holder; frequently all three will sit around a table with the buyer and seller and literally "pass papers" to effect the transaction. (Some states do not require all parties to be present simultaneously.) In order to protect themselves from defects in the title, buyers will frequently purchase title insurance at this time, either for themselves or for their lender.

In most states, a prospective buyer's offer to purchase is made in the form of a written contract and bound with a deposit on the purchase price. The offer will set out conditions (such as appraisal, title clearance, inspection, occupancy, and financing) under which the buyer may withdraw the offer without forfeiting the deposit. Once the conditions have been met (or waived), the buyer has "equitable title" and conveyancing proceeds or may be compelled by court order. There may be other last-minute conditions to closing, such as "broom clean" premises, evictions, and repairs.

Typical papers at a conveyancing include: deed(s), certified checks, promissory note, mortgage, certificate of liens, pro rata property taxes, title insurance binder, and fire insurance binder. There may also be side agreements (e.g., holdover tenants, delivery contracts, payment holdback for unacceptable repairs), seller's right of first refusal for resale, declaration of trust, or other entity formation or consolidation (incorporation, limited partnership investors, etc.). Where "time is of the essence," there have been cases where the entire deposit is forfeited (as liquidated damages) if the conveyancing is delayed beyond the time limits of the buyer's contingencies, even if the purchase is completed.

Words used to indicate conveyance, or words of conveyance include grant, devise, give, and sell.

See also

Notes

  1. ^ Black's Law Dictionary (7th ed. 1999)
  2. ^ Dukeminier et al., Property 559 (6th ed. 2006)

External links


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Look at other dictionaries:

  • conveyancing — con·vey·an·cing n: the act or business of drawing up conveyances (as deeds or leases) con·vey·an·cer n Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. conveyancing …   Law dictionary

  • conveyancing — con‧vey‧anc‧ing [kənˈveɪənsɪŋ] noun [uncountable] LAW the legal work of changing the ownership of land or property from one person or company to another : • It is possible to do the conveyancing yourself, however it is a complicated process and… …   Financial and business terms

  • Conveyancing — Con*vey an*cing (k[o^]n*v[=a] an*s[i^]ng), n. (Law) The business of a conveyancer; the act or business of drawing deeds, leases, or other writings, for transferring the title to property from one person to another. [1913 Webster] …   The Collaborative International Dictionary of English

  • conveyancing — [kən vā′ən siŋ] n. [< CONVEYANCE + ING] the act or work of drawing up documents for transferring the ownership of real property conveyancer n …   English World dictionary

  • conveyancing — [[t]kənve͟ɪənsɪŋ[/t]] N UNCOUNT Conveyancing is the process of transferring the legal ownership of property. [mainly BRIT, LEGAL] …   English dictionary

  • conveyancing — The transfer of ownership of land from the person currently holding title to a new owner. See also electronic conveyancing …   Big dictionary of business and management

  • conveyancing — conveyance ► NOUN 1) the action or process of conveying. 2) formal a means of transport; a vehicle. 3) the legal process of transferring property from one owner to another. DERIVATIVES conveyancer noun conveyancing noun …   English terms dictionary

  • conveyancing — noun Date: 1690 the act or business of drawing deeds, leases, or other writings for transferring the title to property …   New Collegiate Dictionary

  • conveyancing — /keuhn vay euhn sing/, n. the branch of law practice consisting of examining titles, giving opinions as to their validity, and drawing of deeds, etc., for the conveyance of property from one person to another. [1670 80; CONVEYANCE + ING1] * * * …   Universalium

  • conveyancing — noun /kənˈveɪənsɪŋ/ The drawing of deeds etc. concerning transfer of property, and the legal execution of such transfers …   Wiktionary