Conveyance

Conveyance is the legal process of transferring ownership of property or an asset from one party to another. In real estate, conveyance refers specifically to the transfer of title in land, buildings, or other real property through a deed or similar legal instrument. In finance, the term also applies to the transfer of financial assets, rights, or interests from one entity to another as part of a loan, securitization, or sale. The act of conveyance is not complete until the legal document is properly executed, delivered, and in most jurisdictions recorded with the appropriate government office.

The Legal Document That Executes a Conveyance

A deed is the primary instrument for conveying real property. The deed names the grantor, the party transferring ownership, and the grantee, the party receiving it. It describes the property, states the consideration paid, and is signed by the grantor. Different types of deeds provide different levels of title protection to the grantee.

• General warranty deed: The grantor warrants title against all defects, even those that arose before the grantor owned the property. This is the highest level of protection and the most common deed type in residential real estate.
• Special warranty deed: The grantor only warrants against defects that arose during their ownership, not before. Common in commercial real estate transactions and foreclosure sales.
• Quitclaim deed: The grantor transfers whatever interest they have, with no warranty at all. Used for transfers between family members, adding or removing a spouse from title, or clearing up title defects.

The Conveyance Process in a Real Estate Transaction

Conveyance follows a structured sequence in a standard property sale. Understanding each step helps you protect your interests as a buyer or seller.

1. Contract execution: Both parties sign a purchase and sale agreement defining price, terms, and contingencies. This creates binding obligations but does not yet transfer title.
2. Title search: A title company or attorney examines public records to confirm the seller has clear title and identify any existing liens, easements, or encumbrances.
3. Title insurance issuance: The buyer and lender typically purchase title insurance policies to protect against defects not found in the title search.
4. Deed preparation: An attorney or closing agent prepares the deed conveying title from seller to buyer.
5. Closing and execution: The seller signs the deed, the buyer pays the purchase price, and the deed is delivered to the buyer.
6. Recording: The deed is filed with the county recorder or register of deeds. Recording provides public notice of the transfer and protects the new owner against subsequent claims.

Conveyance in Securitization and Finance

In structured finance, conveyance describes the transfer of financial assets from an originator to a special purpose vehicle. When a bank securitizes mortgage loans, it conveys those loans to a trust, which then issues mortgage-backed securities backed by those assets. The conveyance must be structured as a true sale, not a secured borrowing, for the assets to be removed from the originator's balance sheet. Courts evaluate whether the conveyance genuinely transferred control and risk to determine whether the transfer qualifies as a true sale.

Fraudulent Conveyance

A fraudulent conveyance is a transfer of property made to hinder, delay, or defraud creditors. If a person transfers property to a family member for less than fair value while facing lawsuits or insolvency, a court can void that transfer under the Uniform Fraudulent Transfer Act, which most U.S. states have adopted in some form. Creditors have a specific window, typically four to six years depending on jurisdiction, to challenge a fraudulent conveyance after it occurs.

Sources

• https://www.law.cornell.edu/wex/conveyance
• https://www.consumerfinance.gov/owning-a-home/
• https://www.sec.gov/cgi-bin/browse-edgar