What Is Conveyance?

Conveyance Explained in Less Than 4 Minutes

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Conveyance is the transfer of property from one entity to another. It’s a term that comes up often in real estate when property owners transfer ownership through a home sale or other circumstances.

This legal process solidifies the transfer of legal ownership of property. Learn how conveyance works, why it’s important during home sales, and what you can expect from the process.

Definition and Examples of Conveyance

Conveyance is the act of transferring ownership of property from one entity to another, usually in writing with a deed. If there is a mortgage lender involved, a deed of trust is created, allowing the lender to hold the title until the mortgage is repaid.

  • Alternate definition: The written document that transfers property

For example, if you sell a home to someone who is using financing, you’ll need to provide the bank a deed of trust to officially transfer the property.

Most conveyances happen at closing, and attorneys or title companies draft the deed that’s signed at closing.

How Does Conveyance Work?

When a property is purchased, exchanged, or gifted, actual ownership of the property passes from the seller/giver to the buyer/recipient. Following a defined conveyance process helps ensure the title and ownership are correctly transferred and that the title is free of any encumbrances.

A deed is usually the instrument that executes the conveyance of property. When you draft a deed, it must include the names of both the grantor (you, if you’re selling the property) and the grantee, a legal description of the property, words of conveyance, and actual cash consideration paid. To be valid, a notary should be present when you sign the deed. Finally, the deed should be recorded with the county clerk to become part of public record.

State laws govern conveyance and may require additional paperwork, such as the mortgage or security agreement. The grantor—the current owner of the property—must have the right to sell or give away (convey) the property. To complete the transfer, there should be no other claims on the property, such as outstanding property taxes or a contractor who wasn't paid.

The grantee—the person receiving the property—should be clearly named and can decide to own the property outright or own it with a partner.

States may assess a conveyance tax on property transfers when the transaction is over a certain amount. For example, New York charges $2 for every $500 when the transaction exceeds $500.

In many states, the grantor or seller is generally responsible for paying the conveyance tax, unless the buyer signs a sales contract agreeing to pay the tax. In other states, both the seller and the buyer may be equally responsible for the tax. Finally, some states do not assess a conveyance tax at all.

Check with your county recording department for specific guidelines for formatting deeds.

Types of Conveyance

Property transfer can fall into a number of categories, with grant, quitclaim, and reconveyance deeds being common.

Grant Deed

Grant deeds are the most common type of deed. The person who is currently on the deed transfers ownership to a new owner. The grantor promises that they own the property, have the legal right to convey it, and that the property is free of liens, with the exception of any that have already been disclosed.

Quitclaim Deed

The grantor transfers their interest in a property to someone else with no guarantee that the title to the property is in good standing. Basically, the deed is the grantor’s way of “quitting” their interest in the property. This type of conveyance may be used in a divorce to transfer property from one spouse to another after a divorce, from one family member to another, or from an individual to an LLC or trust. Typically, quitclaim deeds are not used in a traditional home sale.

Reconveyance Deed

Once a mortgage has been paid in full, the mortgage lender may issue a deed of reconveyance, which transfers the property title from the lender to the borrower. A deed of reconveyance shows the bank no longer has an interest in the home. In some states, the deed may be called a “satisfaction of mortgage.”

Other types of deeds include warranty, special warranty, and bargain-and-sale.

Requirements for Conveyance

To complete conveyance, you need to provide key information, including (in most cases):

  • Name of the grantor
  • Name of the grantee
  • Legal description of the property; for example, the property's metes and bounds
  • Affidavit of consideration; for example, the property purchase price
  • Warranties, depending on the type of deed
  • Notarized signatures

Key Takeaways

  • Conveyance is the legal transfer of ownership of property from one entity to another.
  • An instrument of conveyance (usually), a deed captures the necessary parties and describes the property being transferred.
  • After mortgage payoff, the lender issues a deed of reconveyance to transfer the property title to the borrower.