WHAT IS 'Voluntary Conveyance'

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

BREAKING DOWN 'Voluntary Conveyance'

Voluntary conveyance, like any sale of real estate, is a form of voluntary property transfer. Voluntary conveyance is distinguished, however, by the lack of adequate consideration given to the seller. Consideration is a legal term that refers to the compensation given in exchange for the property in question. Following are some common scenarios for voluntary conveyance.

Voluntary Conveyance to Avoid Default

Some delinquent borrowers will voluntarily convey a property to the lender in order to avoid default and the effects it has on the borrower’s credit history. The lender can accept conveyance of title, then sell the property. The lender may then have the right to file an insurance claim to recover any remaining deficiency, depending on local laws. 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 in order to avoid creditors’ claims on that property. This is known as fraudulent conveyance, and creditors can pursue their claim on the property via civil legal action. Penalties depend on whether the court rules that the fraud is actual, that is intentional, or constructive, which describes a de facto fraudulent transaction.

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 properly vetted by independent appraisers and tax attorneys. With these safeguards in place, consideration comes in the form of a tax deduction.

Voluntary Conveyance to Descendants

A property owner can convey real estate to a descendent as a gift or via a last will and testament. Many states allow for a gift deed to change hands, listing a nominal consideration which could be 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 the property.

Involuntary Conveyance Is the transfer of real property without the owner’s consent. This can take place 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.

  1. Voluntary Liquidation

    Voluntary liquidation is a self-imposed wind up and dissolution ...
  2. Voluntary Trust

    A voluntary trust is a type of living trust that is created during ...
  3. Property Rights

    Property rights are laws created by governments in regard to ...
  4. Voluntary Simplicity

    Voluntary simplicity is a lifestyle that minimizes consumption ...
  5. Title

    A title is the right to the ownership and possession of any item ...
  6. Transfer Tax

    A transfer tax is any kind of tax that is levied on the transfer ...
Related Articles
  1. Investing

    What You Should Know About Real Estate Valuation

    Accurate real estate valuation is important to mortgage lenders, investors, insurers, and buyers and sellers of real property.
  2. Taxes

    Sell Your Rental Property for a Profit

    Learn how to sell your rental property for a profit. Find out how to master the selling process.
  3. Personal Finance

    State Laws Dictate Division Of Joint Property

    In breakup, divorce or death, community or common law will determine how property is divided.
  4. Managing Wealth

    Investing In Foreclosures Not A Get-Rich-Quick Venture

    Investing in foreclosures takes capital, time and careful planning. But it can be lucrative.
  5. Taxes

    Trade Properties To Keep The Taxman At Bay

    Like-kind exchanges can mean a much lower tax bill on real estate for savvy investors.
  6. Taxes

    10 Things to Know About 1031 Exchanges

    Real estate swaps grow popular, but traps are many. Here's 10 things to know when considering 1031 swaps. Also: Beware new rules on vacation homes.
  7. Taxes

    Reducing Capital Gains Tax on Investment Property

    The 1031 exchange rules can help reduce or eliminate property gains taxes on investment property.
  8. Managing Wealth

    Tips For Transferring A House Title

    Transferring a house title can be complicated at times. Here are some guidelines to help you get through the process.
  1. The key difference between real estate and real property

    Understand how real estate is legally different from real property and the implications of that difference for each property ... Read Answer >>
Hot Definitions
  1. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  2. Current Assets

    Current assets is a balance sheet account that represents the value of all assets that can reasonably expected to be converted ...
  3. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  4. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  5. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
  6. Depreciation

    Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account ...
Trading Center