Terms

Voluntary Conveyance What It Is How It Works

Voluntary Conveyance What It Is How It Works

Voluntary Conveyance: What It Is, How It Works

What Is Voluntary Conveyance?

Voluntary conveyance refers to a transfer of title from one individual to another without adequate consideration. Consideration refers to compensation expected in return for the property. Without it, the conveyor should offer a legal explanation for the transfer.

Understanding Voluntary Conveyance

Voluntary conveyance, like any real estate sale, is a voluntary property transfer. However, it lacks adequate consideration given to the seller. Consideration is the compensation given in exchange for the property. Here are some common scenarios for voluntary conveyance.

Voluntary Conveyance to Avoid Default

Some delinquent borrowers will voluntarily convey the property to the lender to avoid default and its effects on their credit history. The lender can accept conveyance of title and sell the property. Depending on local laws, the lender may have the right to file an insurance claim to recover any remaining deficiency. In making such a conveyance, the borrower avoids the stigma of default.

Fraudulent Voluntary Conveyance to Avoid Creditors

In most states, it is illegal to transfer property to a third party to avoid creditors’ claims on that property. This is known as a fraudulent conveyance, and creditors can pursue their claim on the property via civil legal action. Penalties depend on whether the court rules the fraud as intentional or de facto fraudulent transaction.

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Voluntary Conveyance for Charitable Purposes

Donors wishing to convey real property to a charitable organization must carefully manage the issue of consideration to ensure the desired tax deduction. The receiving organization must have an IRS tax exemption in good standing, and the transaction should be vetted by independent appraisers and tax attorneys. Consideration comes in the form of a tax deduction with these safeguards in place.

Voluntary Conveyance to Descendants

A property owner can convey real estate to a descendant as a gift or via a last will and testament. Many states allow for a gift deed to change hands with a nominal consideration, such as a small monetary amount or simply love and affection. Such a gift can be considered suspicious when creditors seek possession of the property to fulfill claims on it.

Involuntary conveyance is the transfer of real property without the owner’s consent. This can happen in cases of condemnation due to neglect or natural disaster, failure to pay taxes, or the death of a property owner with no direct heirs. In such cases, the state will take custody of the property.

Involuntary conveyance is the transfer of real property without the owner’s consent. This can happen in cases of condemnation due to neglect or natural disaster, failure to pay taxes, or the death of a property owner with no direct heirs. In such cases, the state will take custody of the property.

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