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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.
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