Conveyancing
Conveyancing is the act of transferring the
ownership of a property from one person to another.
The buyer needs to ensure that he or she gets
good 'title' to the land; i.e., that the person
selling the house actually has the right to
sell it. The system of conveyancing is designed
to ensure that the buyer gets the land together
with all the rights that go with it, and knows
about any restrictions in advance.
A typical conveyancing transaction, whether
a sale or purchase, contains two major 'landmarks',
which are exchange of contracts and completion,
plus the three stages: before contract, before
completion and after completion.
In most modern jurisdictions, conveyancing is
facilitated by a system of land registration
which, in the near future, is likely to lead
to widespread electronic conveyancing.
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.
