Conveyance

Key Takeaways

• A conveyance is the transfer of an interest in real property from one party to another.
• In Washington every conveyance of real estate, and every contract creating or evidencing an encumbrance on real estate, must be by deed (RCW 64.04.010).
• Washington's recording chapter defines conveyance broadly, covering any written instrument that creates, transfers, mortgages, or assigns an interest in real property, or by which title may be affected (RCW 65.08.060).
• That recording definition excludes a will, a lease for a term not exceeding two years, and an instrument granting a power to convey as agent for the owner (RCW 65.08.060).

What It Means

A conveyance is the transfer of an interest in real property from one party to another. The word covers both the act and the paper that carries it out, so a broker will say the property was conveyed at closing and will also call the Deed itself the conveyance. In an ordinary sale the seller conveys and the buyer receives, but the term reaches well past sales: a gift, an inheritance, a mortgage, an easement grant, and a court-ordered transfer each convey an interest of some kind.

What separates a conveyance from a promise to convey is worth holding onto. A purchase and sale agreement is a contract. It obligates the seller to convey later and it binds both parties, but it moves nothing. The conveyance happens at closing, when the deed is signed and delivered. Until that moment the buyer holds a contract right rather than ownership.

Because interests in land are permanent and public, conveyances have to be in writing. Nothing about real property is transferred on a handshake, and the Statute Of Frauds is the reason.

How It Works in Washington

In Washington, the form requirement is blunt. RCW 64.04.010 says that every conveyance of real estate, or any interest in it, and every contract creating or evidencing any encumbrance upon real estate shall be by deed. Leases are the main carve-out: they do not require acknowledgment, witness, or seals, although to be recorded a lease or a memorandum of lease needs the lessee's and lessor's signatures acknowledged. RCW 64.04.020 then supplies the requisites of the deed itself, which must be in writing, signed by the party bound by it, and acknowledged before a person authorized to take acknowledgments.

Washington's recording chapter uses a wider definition for its own purposes. RCW 65.08.060 defines a conveyance as every written instrument by which any estate or interest in real property is created, transferred, mortgaged, or assigned, or by which the title to any real property may be affected, and it expressly excludes a will, a lease for a term not exceeding two years, and an instrument granting a power to convey as agent or attorney for the owner. A transfer the owner makes by choice is Voluntary Alienation; one forced through foreclosure, condemnation, or escheat is not. Either way, RCW 65.08.070 makes Recording the step that protects the new interest against later buyers.

Example

Owen Delacroix agrees to sell his Tacoma duplex to Hana Kim for $585,000. They sign a purchase and sale agreement on April 2 with a June 6 closing date, and Hana deposits $15,000 in earnest money.

Nothing has been conveyed on April 2. Owen still owns the duplex and Hana holds a contract right to buy it. On June 6 escrow disburses, Owen signs and delivers a statutory warranty deed to Hana, and the deed is recorded with the Pierce County Auditor. That is the conveyance. Hana's $15,000 earnest money is credited against the price, so she funds the remaining $570,000 from her loan and her own cash.

On the same day Hana signs a deed of trust securing a $468,000 loan, which is 80 percent of the $585,000 price, leaving $102,000 of her own money on top of the earnest money. That deed of trust is a second conveyance, because RCW 65.08.060 counts an instrument by which an interest is mortgaged as a conveyance, and RCW 64.04.010 requires a contract evidencing an encumbrance to be by deed. Two conveyances, one closing.

Common Mistakes and Exam Traps

• A purchase and sale agreement is not a conveyance. It creates an obligation to convey; the conveyance happens when the deed is delivered at closing.
• Conveyance is broader than sale. Mortgages, deeds of trust, easement grants, gifts, and court-ordered transfers all convey an interest in real property.
• Washington uses the word two ways. RCW 64.04.010 is the rule that a conveyance must be by deed, while RCW 65.08.060 defines conveyance for recording purposes and sweeps in mortgages and assignments while excluding wills and leases of two years or less.
• Recording is not what makes a conveyance valid between the parties. RCW 65.08.070 makes an unrecorded conveyance void as against a later good faith purchaser who records first, not void as between the grantor and the grantee.