Once an offer has been accepted, it's time for the conveyancing process to start. If you've heard your real estate agent use this term and are wondering what residential conveyancing is, we've got you covered.
Below is an overview of residential conveyancing in the U.S. Keep reading to learn what conveyancing is, how it works, and why it's crucial to every real estate transaction. Armed with this knowledge, you'll have a much better idea of what your conveyancing fee is going toward and why it's such a necessary expense.
What is residential conveyancing?
By definition, the term "conveyancing" refers to the legal process of transferring ownership of a property from one party to another, particularly a property that the new owner will live in, as opposed to one that's being used to conduct business.
At its core, conveyancing involves transferring the property deed and legal title from the seller to the buyer for a fixed fee. The whole process can take anywhere from a few weeks to a month or more to complete, depending on the level of due diligence required. The work is either done by a conveyancing team or the residential property lawyers involved in the transaction.
What's involved in the residential conveyancing process?
Now that you know more about what residential conveyancing is, the next step is to learn what's involved in the residential conveyancing process. In the U.S., each state has its own requirements for the transfer of title, so the process may vary. However, the steps below will give you a general idea of what to expect.
Chain of title
Conveyancing on a residential property usually starts with the conveyancer looking at the chain of title in public records. A chain of title refers to the sequence of property transfers -- from the original owner all the way up to the present owner. If the chain of title is incomplete, it could cause a problem with the property purchase.
As the name suggests, a tax search checks the status of any real estate taxes owed on the property. If any are unpaid, it will create a lien on the property, which will need to be cleared before the title can be transferred.
By the sound of it, you may think that a property inspection is the same thing as a home inspection. However, in a conveyancing transaction, this term refers to a property inspection that aims to find easements or encroachments that aren't recorded on the plat plan. If any are found, the plan must be updated, and the new buyer must be informed of their existence.
Name and judgment search
In a residential property transaction, the name and judgment search attempts to find out whether there are any unsatisfied judgments against the property's current owner or any previous owners. If the conveyancer finds any judgments, they must be cleared before the title can be transferred.
Once all the property conveyancing has been taken care of and the title has been cleared, it's the conveyancer's job to facilitate closing. Typically, this step involves making sure all parties are aware of the time and location of settlement, ensuring all the necessary paperwork is present and accounted for, and notarizing any documents after they've been signed.
Typically, the conveyancing team will act as the liaison between each party's real estate agent and the mortgage lender. In some cases, they may also act as the escrow agent for the residential property transaction, which means they would also be responsible for holding any funds kept in escrow during the transaction and facilitating any disbursements of funds at closing.
The Millionacres bottom line on why conveyancing is such an important part of a property transaction
Simply put, residential property transactions require each party to hire a conveyancing service because they will be responsible for ensuring the transaction is in compliance with local property law. They ensure that the buyer becomes the rightful owner of the property and that the seller is released from any ownership obligations.
If you want to get to closing on time, the conveyancing process must go smoothly. With that in mind, be sure to be prompt and diligent when corresponding with your conveyancer. When all is said and done and the property's title has been officially transferred, you'll be thankful that you took this process seriously.