Conveyance In Real Estate: Defined And Explained

We admit it – conveyance in real estate often gets overshadowed by the other exciting parts of buying a house, especially when buying your first home. But it may be the most significant milestone.

Conveyance is when the property you’ve worked tirelessly to purchase becomes yours, and you’re transferred the deed and title. We’ll go over how this works, why conveyance acts as protection and other ways to transfer property.

What Does Conveyance Mean?

Conveyance is a term used to describe the act and legal transfer of property from one party to another. The transaction is completed using an instrument of conveyance, usually a legal document such as a title, deed or lease.

Basically, conveyance is the thing that makes the property transfer official. Once the property is conveyed during the closing process, it’s yours.

How Conveyance Is Used In Real Estate

Conveyances in real estate are used to transfer real property, which is property tied to land with or without a home or structure on it.

Conveyance is facilitated by a conveyancer, an individual whose job is to help facilitate the transfer of real estate. The conveyancer is typically the closing agent at a title company or a real estate attorney. They will determine which documents are necessary for your real estate transaction.

The instrument of conveyance – in many cases, a title or deed – must lay out the conditions under which the property is given, or conveyed, to the new buyer.

Conveyance Requirements

To successfully complete conveyance, the following information is required:

• The name of the seller (grantor) and buyer (grantee)
• A description of the property
• The purchase price
• Any special warranties
• The date of transfer
• The notarized signatures of both parties (depending on state laws)

To finally transfer a property, there may be a conveyance tax, better known as a transfer tax. The tax can be imposed by state, county and city governments, and they vary widely – ranging anywhere from a couple of tenths of a percent up to 5% of the total loan amount. In some cases, the conveyance tax can be charged as a flat fee in the closing costs.

How Does Property Conveyancing Protect Buyers And Sellers?

A title company usually helps manage a conveyance. In the process, they conduct a title search to determine the history of the property. The search is important because it helps uncover issues like liens, easements and encumbrances that may limit the usefulness of a property for a buyer.

Having a legal framework for property transfer through conveyance protects both buyers and sellers. If either party defaults on their obligations, the other party can pursue remedies, such as lawsuits, a forced sale or the option to back out of the agreement.

Are There Other Ways To Transfer Property?

In addition to titles and deeds, several other options are commonly used to transfer property.

Gift Real Estate

When you gift someone real estate, you give the property to them without any payment or other form of consideration. This type of transaction usually happens between family members.

It’s important to note that the IRS has certain lifetime exemptions for gift tax, but a gift can be taxable for the gift giver if they exceed the exemption amount.

Gifting real estate is different from selling a house to a family member. Even if you sell at a discounted price, you still get money in return, so it isn’t a gift.

Transfer With A Will

Property is also commonly transferred through wills or other common estate planning instruments, like a trust. Depending on the terms, the transfer of property ownership can happen during or after an owner’s lifetime.

It’s important to review your options with an estate planning attorney if you’re considering this route.

Use A Quitclaim Deed

With a quitclaim deed, a grantor transfers their interest in a property to another party, guaranteeing that the title is in good standing. A quitclaim deed is often used in a divorce or from an individual to a trust or limited liability corporation. You won’t see this in typical home sales.

Conveyance In Real Estate FAQs

Still looking for more information on conveyances in real estate and how they work? Let’s look at some frequently asked questions about conveyances in real estate.

Why is conveyance important in real estate?

A conveyance deed is an important legal document that transfers ownership of land, a building or a home. Because it serves as proof of property ownership, it provides legal evidence if any lawsuits or disputes arise.

What are the different types of conveyance?

There are two main categories or types of conveyance: real estate and mineral rights.

Mineral rights conveyance is for selling or transferring resources such as oil, gold, copper and natural gas.

The most common types of deeds to complete conveyance in real estate transactions are warranty deeds, quitclaim deeds and reconveyance deeds.

Is conveyance the same as a sales deed?

A conveyance deed and a sales deed are often used interchangeably, but there are some differences. Both transfer the title of a property from one person to another, but conveyance is a broader term, and a sales deed is a type of conveyance.

A sales deed outlines the transfer of title, rights and property ownership from a seller to a buyer as a result of a sale. A conveyance deed can be used when a property is transferred as a gift, mortgage or lease.

It’s important to remember that all sales deeds are conveyance deeds, but not all conveyance deeds are sales deeds.

The Bottom Line: Conveyance Is A Major Milestone

In real estate, conveyance transfers real property from one person or entity to another, typically through an instrument such as a title or a deed. These documents are contracts prepared by a real estate attorney and signed by both parties.

Conveyance is important because it establishes legal recourse if either party violates the contract. Although conveyances are most common, there are other ways to transfer property, including gifts or inheritance.

Still curious about the home buying process? Connect with a Verified Partner Agent and get expert advice during your house hunt.