For anyone selling their home, understanding the conveyance process is an essential part of a successful sales process. From both a legal and practical standpoint, conveyancing can be viewed as a series of specific steps that must be taken in order. Each step needs to be completed before the next can be undertaken.
The Basic Facts of Conveyances
Before examining conveyances in detail, a good understanding of the concept is necessary for sellers who want to move through the process without delays or complications.
Here are the key concepts that home sellers need to know about the legal meaning of “conveyancing.”
- In legal terminology, a conveyance is merely an action that results in the transfer of property ownership from one person or party to another person or party. A party can refer to a wide range of business entities but usually is a corporation. A “person” typically refers to an individual seller or buyer who is unconnected with a corporation and is entering the transaction for the sole purpose of purchasing or selling a residential home.
- In addition to the action of conveyance, the term also refers to the document that represents the written evidence of the process. In other words, a conveyance can refer to the written instrument that the buyer and seller complete to make the transaction legal.
- The term has many legal meanings, even outside of property, but is most commonly used by buyers and sellers of homes. In this case, “conveyance” refers to the contract that offers minute detail concerning the date of transfer, selling price, and the responsibilities of both buyer and seller.
- The term “conveyancing” arose from the legal concept of a conveyance, which in turn led to the job of “conveyancer” to describe a professional person who facilitates the process between a buyer and seller.
- A conveyance is a legal contract that binds a seller and a buyer to perform according to the listed obligations within the document. As is the case with most other legal agreements, when one party fails to live up to the commitments stated in the conveyance, the other party can claim damages and attempt to enforce the contract’s provisions in court.
- A preponderance of contract stipulations within a conveyance serve to protect the buyer by making sure the buyer is getting a legally clean title, understands any restrictions that might exist on the property (covenants, liens, encumbrances, or prior mortgages, for example), and is shielded from fraud.
- The term “conveyance” enjoys widespread use in multiple areas of the law and is by no means limited to property sales. However, within the realm of property transactions, the term can be considered synonymous with the “deed of sale.” More specifically, legal experts view the sale deed as one type of conveyance, among many other categories of transfers.
- During a formal conveyance process, the parties perform numerous steps, which almost universally include: settling any charges and/or charges on the property, making sure that all written conditions within the document have been fulfilled, confirming the details of financing for the sale, carefully reviewing the property’s history in order to uncover any prior encumbrances, mortgages or liens, and drawing up the hard-copy documents that will eventually become a part of the final agreement.
Conveyance Steps for Sellers
The two crucial milestones of the conveyance process in the property sale process are the contract exchange and the completion. Think of this as a five-step process that consist of pre-contract exchange, the contract exchange itself, the period between the exchange and completion, the completion itself, and the post-completion phase.
Within each of the five steps, there are sub-categories of activities that pertain to that particular step. It is important not to skip even a seemingly small, unimportant action because each one plays a vital part in the overall conveyancing process. Whilst your solicitor will be dealing with this, you should have an idea of what is required along the way.
Noting the five general phases/steps, and the actions that must be performed within each category. Conveyance transactions are, technically speaking, rather straightforward legal actions. There is not much room for interpretation or alteration of the standard process.
A standard conveyance is conducted by a professional conveyancer or a solicitor and achieves the single goal of transferring ownership of a designated property (commonly a residential dwelling) from the seller to the buyer.
In practical terms, the initial action in a conveyance takes place when a prospective buyer makes an offer to the seller. The end of the process is marked when the keys to the property are handed over from the seller, now known as the former owner, to the buyer, now called the “owner,” or “new owner.”
Read about the Conveyancing Process for Buyers.
Here are the five steps and a detailed delineation for each one:
Step One: Prior to Contract Exchange
This is the most complicated and vital step of the process and begins with the seller of the property enlisting the help of an estate agent. After that, the seller entertains various offers from prospective buyers, eventually negotiates with one of them, and settles on an initial offer amount from that buyer.
At this point, and not before, a seller hires a conveyancer/solicitor and formally instructs him/her to perform the conveyancing process. In the majority of residential home sales, sellers choose an estate agent and solicitor/conveyancer at the same time but don’t officially “hire” the conveyancer/solicitor until an offer is made on the property. It is acceptable for sellers to discuss fees with the solicitor/conveyancer before an offer is received. That way, the seller can move into action quickly once the offer comes in.
The solicitor or conveyancer will ask the seller to complete several surveys about the state of the property and what will formally/legally be part of the sale. These documents need to be filled out with the utmost diligence as they will eventually become part of the contract, and will be binding on the seller.
These questionnaires, which are sometimes called surveys, are legally known as Transaction forms, and each one has a number. At this stage of the process, the most important ones to know about are TA 6, TA 7, TA 9, TA 10, and TA 13. Don’t panic your conveyancer or solicitor usually inserts sticky notes in the pack of paperwork.
See: Land Registry Forms
The TA 6, to be filled out by the seller, notes any complaints/disputes (typical examples include boundary disagreements or noisy neighbours), boundaries, possible future developments (shopping malls or major motorways), utilities, buildings works, contract details, and council tax.
If the seller is not the owner of the property, then a TA 7 must be filled out by a leaseholder, or a TA 9 will be filled out by a common-holder.
The TA 10 is often called the “fittings and fixtures inventory sheet.” It delineates everything that is included with the property sale.
The TA 13 includes several technical sections, and it provides details about the transfer of keys and making sure the property is not subject to prior mortgages or liabilities. This document also notes the place and time of completion.
Failure to honestly and completely fill out the TA documents can lead to problems for the seller. Before the contract is completed, a prospective buyer might find an incomplete TA form as grounds for pulling out of a negotiation. After completion, a buyer can use an incomplete or misleading TA form as grounds for suing the seller. That is why estate agents and conveyancer professionals routinely advise sellers to spend time and effort when filling out the various TA forms.
Step Two: During the Exchange of Contracts
The buyer and seller need to agree on a place and time for the formal contract exchange. The seller’s conveyancer will do the actual transfer when the time arrives.
Each side’s conveyancer or solicitor will spend time making sure that the contracts are a perfect match and identical in every way. After that, they will post the contracts to each other.
During the critical phase after the contracts are mutually mailed, the seller cannot entertain other offers for the property. Also, both the buyer and the seller are now involved in a legally binding negotiation process. If the buyer defaults (or backs out for whatever reason), the seller can retain the deposit money and sue the prospective buyer. In cases where a seller defaults, the buyer can retrieve the deposit amount and sue the seller. Note that provisions are in place for a natural fail within a property chain, but check with your solicitor.
Step Three: After Exchange but Before Completion
This phase begins when the seller accepts and receives the buyer’s deposit, which typically amounts to 10 per cent of the total sale price of the property, but can vary depending on circumstances.
The seller should begin the move-out process, even though the seller is the legal owner of the property until the conveyance is completed. In almost all cases, sellers move out at least several days before completion to ensure a smooth transition to the buyer. Experts advise sellers to start the move-out process as soon as they can do so.
This is the phase when the seller must meticulously inspect the property and make sure that everything on the inventory of fittings/fixtures is in place. If something is missing or broken, it should be replaced immediately. It is imperative that the list exactly match the actual state of the property. Sellers who neglect this step do so at their own risk and can end up facing severe difficulties.
Step Four: At the Time of Completion
Either the seller or the conveyancer (or solicitor) will receive any amounts outstanding from the property’s sale price.
Either the seller or the conveyancer (or solicitor) will be required to give the seller (or the seller’s agent) legal documents that establish property ownership. This is usually a deed.
The seller’s conveyancer or solicitor will use the sale’s proceeds to settle (pay) any remaining amounts due on the current mortgage.
The seller leaves spare sets of keys, if there are any, inside the property the new owner. The owner gets the original set of keys from the estate agent.
Step Five: Actions After Completion
Only two actions take place in this final phase, and both include paying the professional fees associated with the conveyance. The seller will pay the estate agent, the solicitor (if one is involved), and the conveyancer.
It Pays to be Thorough
The conveyance process can appear complicated and overwhelming at first, but after one becomes familiar with the general concepts and particular steps, the legal transaction of conveyance is nothing more or less than a series of simple legal events that help a seller transfer property to a buyer.