1) Conveyance means the transfer of ownership or interest in real property from one person to another by a document, such as a deed, lease/ or mortgage. Further any written document which transfers(conveys) real estate property or real property interests from one party to another. This must be registered before the registrar to make the document legally binding and capable of further transfers.
2) At the time of sale , especially under construction it is but a practice where the Sale Agreement between the builder and the borrower forms the basis of sanctioning of loan by the bank and hence the bank has by virtue of the agreement between the borrower and the bank, to take possession of the flat and sell it by an auction to recover the debt.
3) As far as buying the flat in auction is your discretion and you shall not be at any loss as the bank will be bound to provide you with all the relevant documents including conveyance certificate,commencement certificate, occupancy certificate ,layout plan,blue print etc.