Introduction to Conveyancing

Category: Contract, Justice

Last Updated: 20 Apr 2022

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ABSTRACT

Conveyancing, as simple as it may seem to be, represents interplay of personal interests and commitments, and the basic requirements of the laws of the land in order that the process is truly effective and binding. The commitment of two parties in agreeing to be bound by their covenants requires a solid foundation which could only be given by the laws of the land to ensure that rights of parties are protected. On this regard, conveyancing is one of those acts that require government intervention as it exercises its duty to be the protector of people rights.

This work focuses on the basic foundations of conveyancing as it details the essential elements and how these elements are played in different scenarios in various key nations of the world.

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The conclusion raises this author’s conceptualization of conveyancing as a whole and where it is heading to in the future. Globalization and the dynamism of societies brought about the advances in technology set a new paradigm for conveyancing initiatives. Unless conveyancing is reviewed and perceived in the light of all these changes, conveyancing would remain a thing in the past

AN INTRODUCTION TO CONVEYANCING

What is conveyancing?

Conveyancing is the act of transferring legal title to property from one person to another through the execution of a legal deed or instrument. The non-execution of a legal deed or instrument does not, however, negate or deny the validity of the conveyance as between the parties. However, for purposes of recordation, a deed is essential. There is no specific deed that is required in a conveyance. In some cases, however, the Statue of Frauds would require that agreements are embodied in a document in order to preserve the rights of parties thereto. It is important, therefore that the parties’ intentions are truly reflected and written in the deed of conveyance. Thus, it is a presumption in law that whatever provisions and agreements written in a deed of conveyance, the same was freely entered into by the parties to conveyancing.

The California Civil Code defines transfer of property as an act of the parties, or of the law, by which the title to property is conveyed from one living person to another (Title 4 Chapter 1 Section 1039). The act maybe done directly by the parties privy to the contract of conveyance or through their authorized representatives or agents. The transfer or conveyance from one person to another may be voluntary or by operation of law. A voluntary transfer is an executed contract, subject to all rules of law concerning contracts in general; except that a consideration is not necessary to its validity (California Civil Code, Section 1040).

Conveyance, unless a contrary intention appears, includes assignment, appointment, lease, settlement, and other assurance, and covenant to surrender, made by deed, on a sale, mortgage, demise or settlement, of any property, or on any other dealing with or for any property; and convey, unless a contrary intention appears, has a meaning corresponding with that of conveyance (Conveyance Act of 1919). The conveyance warrants that the subject matter of conveyance is free from any lien and encumbrance.

Electronic conveyancing is the system of exchanging sales and mortgage documentations and property data between the vendor and buyer or their assigns and this is done electronically.

What is the subject matter of conveyancing?

Just like any other contract where a subject matter is essential, a person’s title, ownership, and possession of property are the subject matter in conveyancing. Actual possession of the property may not, in most cases, be held essential for the validity of any conveyance. What is more important is that in conveyances, the person, in whose favor the conveyance is being made, ascertains the validity of the title to the property which is the subject of conveyance. Title to property is the bundle of rights in a piece of property in which a party or several parties may own either in terms of a legal interest or an equitable interest thereto. Ownership of property is either absolute or qualified (California Civil Code, Section 678). It is absolute when a single person has the absolute dominion over it, and may use it or dispose of it according to his pleasure, subject only to general laws (California Civil Code, Section 679). The ownership of property is qualified when it is share with one or more persons; or when the time of enjoyment is deferred or limited; or when the use is restricted (California Civil Code, Section 680). Possession of property does not necessarily connote having a title to the said property. In some cases, a person may be in possession of a property but he may not have a title to the said property. Thus, it is very important that title to property is verified and validated in conveyancing; otherwise the subsequent holder of the property may not have the legal title to said property as he will only by subrogated unto the rights of the previous holder thereof. If that right is defective in the first place, then the subsequent holder in conveyancing also acquires that defective title.

Title to property also relates to a formal document that serves as evidence of ownership. The form is dictated by the laws of the place where the deed is consummated or in a place where parties to the agreement made themselves bound. The actual and physical conveyance of the document is, in most cases, required in order to transfer ownership in the property to another person.

Property of any kind may be transferred. A mere possibility, not coupled with an interest, cannot be transferred (California Civil Code, Section 1044 and 1045).

Title to the property includes all the covenants express and implied unless otherwise stipulated expressly in the deed of conveyance. Where a seller transfers the property with full title guarantee, the following covenants for title are implied (Estates Gazette; October 27, 2007 Issue 743, p196-197):

1) The seller has the right to dispose of the property in the manner purported;

2) It will at its own cost do all that it reasonably can to give the transferee the title that it purports to give;

3) It is disposing of its entire interest in the property, where that interest is registered, and of the whole lease, where the interest is leasehold;

4) It is disposing of a freehold where it is unclear whether the interest is freehold or leasehold;

5) In the case of a subsisting lease, the seller covenants that the lease still subsists and that there is no subsisting breach that could result in forfeiture;

6) The seller covenants, with regard to a mortgage of a property that is subject to a rent, charge or lease, that the mortgagor will observe and perform the obligations laid down by these;

7) The transferor is disposing of the property free from all charges and encumbrances and from all other third party rights, being rights about which the transferor does not and could not reasonably be expected to know;

8) Where the transfer is made with limited title guarantee, all the above implied covenants are given, but the final implied covenant will be altered. The seller will covenant that the transferor has not encumbered the property nor granted third-party rights, and that it is not aware of any other party having done so since the last disposal for value.

The conveyancing act, therefore, is not limited to what the parties expressly agree or stipulate in their contract or deed. The law is deemed included in the contract or deed of conveyance and the provisions of the law shall be read into the said conveyance as the covenants are impliedly agreed upon by the parties.

What is property?

Property includes those things which a person or group of persons have exclusive rights. Properties are classified into personal property, real property, or intellectual property.

Personal property is any property that can be moved from one location to another as distinguished from immovable properties such as land and buildings. In common law, it is also referred to as chattels or personalty. Personal property may be either tangible or intangible. Tangible personal property includes those that are not attached to real property or land like furniture, clothing, jewelry, art, writings, or other household goods. They are not usually titled properties; although in some cases, certificates of titles may be required such as ownership of boats, vehicles, and the like. Intangible personal property refers to those that cannot be physically moved but whose value is duly represented in an instrument such as a negotiable instrument, securities, goods, intangible assets, and choses in action. Every kind of property that is not real is personal (California Civil Code, Section 663).

Real property, as defined in the California Civil Code, consists of land; that which is affixed to land; that which is incidental or appurtenant to land; that which is immovable by law; except that for the purposes of sale, emblements, industrial growing of crops and things attached to or forming part of the land, which are agreed to be severed before sale or under the contract of sale, shall be treated as goods and be governed by the provisions of the title of this code regulating the sales of goods (Section 658). Land is the material of the earth, whatever may be the ingredients of which it is composed, whether soil, rock or other substances, and includes free or occupied space for an indefinite distance upwards as well as downwards, subject to limitations upon the use of airspace imposed, and rights in the use of airspace granted by law (Section 659). A things is deemed to be affixed to land when it is attached to it by roots, as in the case of trees, vines, or shrubs; or imbedded in it, as in the case of walls; or permanently resting upon it, as in the case of buildings; or permanently attached to what is thus permanent, as by means of cement, plaster, nails, bolts, or screws (Section 660).

The Conveyancing Act of 1919 provides that a conveyance of land shall be deemed to include and shall by virtue of this Act operate to convey with the land all buildings, erections, fixtures, commons, hedges, ditches, fences, ways, waters, watercourses, liberties, privileges, easements, profits à prendre, rights, and advantages whatsoever appertaining to the land or any part thereof, at the time of conveyance (Section 67).

Intellectual Property, as defined in Publication 489 of WIPO Intellectual Property Handbook, refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce. It is divided into two categories: industrial property, which includes inventions (patents), trademarks, industrial designs, and geographic indications of source; and copyright, which includes literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designs. Rights related to copyright include those of performing artists in their performances, producers of phonograms in their recordings, and those of broadcasters in their radio and television programs. The law puts so much value and respect into man’s creations which are products of his mental thought, personal potentials, and innate creativity. The intention is to bind all other members of society from claiming the work others as their own and appropriating the rights thereto. While measurement or actual factual knowledge may be difficult to ascertain, nevertheless, the laws of the state creates the presumptive trust upon people as they claim ownership and originality to the products of their intellect, judgment, and reasoning.

What are the systems of recording of properties?

Personal property does not require certificate of title unlike real property, except in some cases like title to motor vehicles, boats, airplanes and the like where registration is required. The system of registration in the latter class of personal property is governed by the agency of the government which has direct control over the day-to-day movements of there properties. In case of conveyance, the certificates of ownership of these vehicles or modes of transportation are necessary to make the transfer from one person to another effective and binding.

There are two general systems of recording real property, namely, the Torrens Title System of registration and the English System. The Torrens System is a system of land title by the state which guarantees indefeasible title to the property which is included in the Registry of Lands. This was established to secure title to property and forever quiet clouds of ownership, uncertainties, complexities, and do away with the cumbersome process of documenting transfers as ownership passes from one person to another in order to show proof of unbroken chain of title back to a good root of title. The Torrens Title is a notice to the whole world that one’s ownership to the property is free from lien and encumbrances and his title of ownership thereto is not subject to prescription. Thus, the owner is secured in his title to the property. There is indefeasibility of title to lands under the Torrens system (Hypec Electronics v Registrar-General [2008] NSWSC.18). This system was formulated by Sir Robert Torrens for the Premier of South Australia in 1858. Since then, it has become pervasive around the Commonwealth of Nations.

In the United States, only Iowa has all its lands under the Torrens System. Other states such as Minnesota, Massachusetts, Colorado, Georgia, Hawaii, New York, North Carolina, Ohio and Washington have a limited implementation of the Torrens System.

Generally, land registration is not required. Instead, there are laws that are commonly referred to as recording acts. Each state in the USA has a different recording act. There are, however, three main statutes which govern title to property in case of issues or conflicts in conveyances namely, the race statute, notice statute, and lastly, the race/notice statute.

The race statute provides that whoever records first wins. The application and implementation of this statute is not generally favored as it creates an unfair advantage to the person who has prior notice of the conveyance. North Carolina, though, implements this method.

The notice statute gives right to the bona fide purchaser. A bona fide purchaser is a subsequent purchaser for value who had no actual or constructive notice of a prior conveyance. Good faith is the key to the right that is granted to the bona fide purchaser who parts with his money in exchange of the subject matter of the conveyance.

The race/notice statute provides that a subsequent purchaser for value wins if at the time of conveyance, that subsequent purchaser had no actual or constructive notice of the prior conveyance, and the subsequent purchaser records before the prior purchaser. While recording acts do not require recordation; they do create a strong incentive for recordation. At a minimum, recordation creates constructive notice to any subsequent purchasers that a prior conveyance occurred and therefore protects the prior purchaser in the event of a subsequent conveyance. But this will not hold water when the subsequent purchaser is a bona fide purchaser for value. In this case, the system of registration fails.

The English System is based on the Land Registration Act of 1862 which was subsequently amended in 1925. The present English System is based on the Land Registration Act of 2002 which holds the 1925 provisions with the addition of a future compulsory electronic conveyancing system.

In other countries, like Ireland, land registration is not required; hence, there are two parallel registries of property, the land registry and the registry of deeds.

Intellectual property requires registration with the Patent Office. The Patent Office shall establish a special register to record patent applications, utility models and all related date, exploitation and application thereof, in conformity with the provision of this Law, as set out in its Regulations (The Law on the Protection of Intellectual Property Rights, Law No. 82, 2002, Article 5).

Who are legal parties to conveyancing?

Conveyancing is a contract between two parties who agree to bind themselves according the agreed terms and conditions. In common law, there are three elements in a contract of conveyance, namely, offer and acceptance, consideration, and intention to create legal relations. In civil law, the concept of consideration is not central in a contract of conveyance. In addition, some formalities are required and must be complied with under the Statute of Frauds.

The most important feature of a contract is that one party makes an offer and the other accepts the offer. There is a meeting of the minds between the parties. It is only necessary that somebody gives the impression of offering or accepting contractual terms in the eyes of a reasonable person and not that they actually did want to contract. In the case of Carlill v Carbolic Smoke Ball Co., the Supreme Court defined a unilateral contract as one whereby obligations are only imposed upon one party upon acceptance by performance of a condition. In the US, the general rule is that in case of doubt, an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offered chooses (Mckendrick, Contract Law, 2005).

Consideration, although not necessary in the civil law systems, is required under the common law system. One party brings something to the bargain which is either conferring an advantage for the other party, or incurring some kind of detriment or inconvenience to the other party. There are three rules that govern consideration, namely, it must be sufficient but need not be adequate; it must not be from the past; and the consideration must move from the promissee.

In England and Wales, conveyancing is usually done by a solicitor or licensed conveyances. 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 (Council for Licensed Conveyancers, England).

Conveyancing in Australia is usually completed by a solicitor or a licensed conveyancer. 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, its usually not recommended.

Capacity is an aspect of status and is defined by a person’s personal law – law of domicile, law of nationality, law of the place of incorporation in case of companies. When the law limits or bars a person from engaging in specified activities, any agreement, or contract to do so are either voidable or void for incapacity. (Barnett, Contracts, 2003).

How is conveyancing recorded?

Conveyancing of property is a system of documentation and registrations to ensure that the subsequent holder and owner of property are secured in the title that he acquires. The conveyance consists of three phases, namely, the passing of equitable title through the execution of legal instruments, the physical transfer of the certificate of title to ownership, and the registration of the transfer of title to ownership of the property. The last act, which is the registration of the transfer of title to ownership, is governed by a system of land registration by which ownership of estates in land is recorded and registered by the government to provide and secure titles and facilitate future dealings of properties.

How conveyancing is made effective?

The California Civil Code provide that an estate in real property, other than an estate at will or for a term not exceeding one year, can be transferred only by operation of law, or by an instrument in writing, subscribed by the party disposing of the same, or by his agent thereunto authorized by writing (Section 1091).

Conveyancing, as a contract between two parties with capacity to bind themselves, can be made effective by both parties agreeing, whether orally or in writing, to undertake the transfer of property from one to another for a cause or consideration. An effective conveyance is one that identifies the parties and property, and specifies the property rights to be conveyed, and which is validly executed to convey that property right. It does not require any special form of words, terms of art or words of limitation (Conveyance Act amended 2001 Chapter 97 Section 10, Office of the Legislative Counsel of Nova Scotia).

In recent years, however, the act of conveyancing has given rise to another industry whereby third parties, not privy to the transfer of property, mediate for and in behalf of one party and completes the transfer of property from one to the other following a set of terms acceptable to that party represented by the conveyancing outfit. The conveyancing outfit is the agent of the party for whom it mediates or transacts business in the contract of conveyance. As an agent, the conveyancing outfit has the legal and moral obligation to put the best interest of the party it represents and to disclose to the party represented all details pertinent to the conveyancing transaction. Where that conveyancing outfit fails to observe the contract of agency, it shall be legally liable to the party it represents. As in the case of Markson v Cutler [2007] NSWSC.1515, the court held the agent liable when it decided that Agent failed to communicate relevant information and disobeyed instructions. Agent to indemnify purchaser in respect of costs (December 2007).

In New South Wales, the Conveyancing Industry has become a big factor in the transfer of properties so much so that the government intervened on behalf of the general public, thus establishing its Conveyances Licensing Act of 1995. In the said Act, licensing of conveyancers is required. The Act seeks to regulate the fees imposed by these conveyancing outfits, to secure the trust reposed upon them by the parties to a conveyance, and to ensure that professionalism and ethics are upheld during the entire transaction and even after the consummation of the contract or deed of conveyance.

Licensed conveyancers are a new breed, only coming into existence in the late 1980s. They are legally qualified individuals who advise on the transfer of rights to land and property (Lawcareers.net). A licensed conveyancer is a more reasonably priced UK alternative to a property solicitor. Moreover, licensed conveyancers are agents of the buyer, instead of a usually-more-expensive property solicitor, to transfer ownership during a sale or purchase of a house, flat, or plot of land.

In a conveyance of land, acceptance by the grantee constitutes part of the delivery of the deed. A good delivery may be effected, however, where the deed is given to a third party for the grantee, or even where the grantor himself retains possession of the instrument. In these two latter instances, the question arises as to how far an acceptance by the grantee, independent of such delivery, is essential to the passing of title. The American courts, while ostensibly almost unanimous in asserting the necessity of acceptance, are really in conflict on the question. (“Acceptance of a Deed of Conveyance by the Grantee.” Harvard Law Review, June 1996, Vol. 19 Issue 8, p612).

A transfer may be made without writing a contract or a deed except when a written instrument is required by law as in the cases falling under the Statute of Frauds. A transfer in writing is called a grant, or conveyance, or bill of sale (California Civil Code, Section 1053).

What is the future of conveyancing?

The foregoing discussion of the elements of good conveyancing and how the procedure varies from one country to another create a good impression that there is much to be done in conveyancing. Little attention has been afforded to it by governments of countries all over the world. The latter trends of intervention by regulating the transactions made by conveyancing outfits is an initial realization from government that there is a need to establish systematic and clear guidelines and processes in conveyancing of properties.

While it is true that in conveyancing, only private individuals and properties are involved, there is a need for government to once and for all establish a system which incorporates all the processes – from the meeting of the minds, to the preparation of the deed of conveyance, to the exchange of cause and consideration, to the delivery of the deed of conveyance, to the physical delivery of the certificates of title to the property subject to the conveyancing, and lastly, to the transfer of titles by legal operation of law.

As the world has opened itself to global market, sale, negotiations, and the like are readily transacted by citizens of different countries. Conveyancing is also a part of these dynamic schemes of transactions. There is a need to adapt to the changing times through the setting up of more or less uniform guidelines whereby peoples of the world are legally bound. How this is done is for the governments to consider and strategize (Reza, A Case for Global Free Trade, 2008).

As the world has become smaller and nearer between nations, and as processes have become simpler brought about by interconnectivity, the future of conveyancing may be brought about as a product of information technology. There is a big possibility of the phasing out of intermediaries or people who act for and behalf of another. While today conveyancing outfits have effectively replaced the use of solicitors, then maybe in the near future, electronic conveyancing would also replace these conveyancing outfits.

Electronic conveyancing may be seen as a very good alternative to the cumbersome process of the present system. Electronic conveyancing minimizes the cost of conveyancing, shortens the conveyancing process, documents all that transpires between the parties as oral agreements and discussions would be minimized if not obliterated, and recordation is effective. The goal setting and the strategic planning towards the realization of a more systematic and uniform conveyancing system lie in the hands of governments.

It is still a long way to go towards these realizations – a systematic way of doing things in all matters that pertains to conveyancing and a professional way of handling transactions and recordation thereof. . But the need is evident and the urgency is looming ahead.

REFERENCES

Brueckner v Satellite Group (Ultimo) Pty Ltd & Ors [2002]. NSWSC.378.

The Glebe District Hocky Club v New South Wales Harness Racing Club Limited. [2001]. NSWSC 401 revised – 17/05/2001.
Conveyancing Act 1919

Markson v Cutler & anor. [2007]. NSWSC 1515

Smith v Shortland [2007]. NSWSC 1404

Mckendric, Ewan. Contract Law. 2005. Oxford University Press

Reza, Oladi. “Is Regionalism viable? A case for global free trade. Review of International Economics, May 2008, Vol. 16 Issue 2.