What Is a Transferor?

When two parties agree to a transfer, one party if known at the transferor, and one is known as the transferee. The transferor is the party making a transfer to another party as part of a legal arrangement. Terms and conditions accompany the transfer to assure both sides fulfill their obligations of the transfer.

Key Takeaways

  • A transferor is one party to a transfer of property or services.
  • The transferor transfers property to another party, known as the transferee, to complete a legal transaction.
  • A legal transfer must involve at least two parties, each with different responsibilities.
  • An example of a transfer involves a house and its associated land transferring from the current owner to a new owner. This transaction usually includes a bank as a third-party mortgage originator. In this example, the transfer involves three parties.

Understanding Transferor

The transferor typically gets involved with legally binding agreements such as land sales, the transfer of stock securities, and the transfer of funds from bank accounts. The transferor tracks details required by the terms of the transfer, including the payment of fees. 

Healthy economies require the transfer of assets, and high levels of market liquidity and cash turnover typically accompanies good economic times. In recessionary times, economic activity slows due to fewer transfers of assets. 

A common example of an important transfer in a typical economy involves a house and its associated land transferring from the current owner to a new owner. This transaction oftentimes includes a bank as a third-party mortgage originator. In the above example, the transfer involves more than a simple exchange between two parties, due to the bank’s legal right to own the asset until the borrower fully pays the mortgage.

Other examples of transfers include the sale of an automobile where the transferor holds the certificate of title as proof of ownership. Many of these sales are made between two individuals who do not draw up complicated terms and conditions for sale and instead use a simple purchase and sale agreement. In general, a transfer made between individuals conducted outside of a financial institution or other legal body exposes the parties to higher risks and subsequent disputes, which may be difficult or impossible to resolve.

The Transferor in Modern Times

Technology now makes the transfer of assets much easier than in past decades. It is now possible for an individual to transfer money from their bank account to a friend’s account using transfer services provided by banks and other firms such as Venmo. Online mobile banking applications also make it easy to transfer money from one account to another using a smartphone or desktop computer. Investment services also offer easy transfer capabilities of funds among accounts, as well as between financial institutions. The advent of fingerprint and facial recognition technologies promise to make transfers of assets even easier and more secure in the years to come. New types of money called cryptocurrencies, also have the potential to disrupt the role of transferors in the future.