Define: Conveyancing

Conveyancing is the legal process of transferring property ownership from one party to another. It typically involves a series of steps, including preparing and reviewing legal documents, conducting searches and inquiries to ensure clear title to the property, arranging for the payment of taxes and fees, and facilitating the exchange of funds between the buyer and seller. Conveyancing is typically handled by qualified professionals, such as solicitors or licenced conveyancers, who ensure that the transfer of property is completed in accordance with relevant laws, regulations, and contractual agreements. The conveyancing process aims to protect the interests of both buyers and sellers and to ensure that property transactions are conducted smoothly, efficiently, and legally.

Conveyancing is the act of transferring the legal title in a property from one person to another. The buyer must ensure that he or she obtains a good and marketable ‘title’ to the land, i.e., that the person selling the house actually has the right to sell it, and there is no factor that 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.

A typical conveyancing transaction, whether a sale or purchase, contains two major ‘landmarks’, which are exchange of contracts (whereby equitable title passes) and completion (whereby legal title passes), plus the three stages: before contract, before completion and after completion.

In most mature jurisdictions, conveyancing is facilitated by a system of land registration, which, in the near future, is likely to lead to widespread (if not mandatory) use of electronic conveyancing.

Electronic or digital conveyance can be defined as:

1. the system of exchanging sales & mortgage documentation and property data electronically
2. between vendor & buyer, agent & lawyer, brokers & banks, government & land registry
3. from point of sale to contract to settlement
4. with or without printed documentation.

United Kingdom

In England and Wales, this is usually done by a solicitor or a licenced 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 and the disadvantage of wasted time and expense in the event the deal is not done. To try to address this, Home Information Packs were introduced in August 2007.

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 inquiries. 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 some transactions are quicker and many take longer. The timescale is determined by a host of factors—legal, personal, social, and financial. During this period prior to the 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 or moral obligation to the other. This gives rise to the risk of gazumping and, conversely, gazundering.

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 in 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 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 to be available to all bidders.

Australia

In Australia, much of the land that was first colonised by England is still Common Law (also known as the old system). However, since the introduction of Torrens title in 1858, most land is now under the new (and greatly improved) system of conveyance.

In Australia, a solicitor or a licenced conveyancer typically completes the conveyancing process. 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, it’s usually not recommended.

A common conveyance by a solicitor or licenced conveyancer usually takes 4-6 weeks. Most firms offer fixed-priced services (around $1000), which usually include searches, legal advice, and other outlays.

In most states and territories, a typical conveyance includes, but is not bound or 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 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 titles are properly awarded to the seller. Most information is retrieved from state or local (council) authorities.

A standard search package could include the following:

• 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 conveyance 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.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 9th April 2024.