Australia has a robust and comprehensive system of property registration. This system also dictates that extent of property ownership, such that a person obtains their title to land (meaning that they own it) through registration, rather than having to register their ownership as an extra step (much like you can own an unregistered car). This article will focus on the Torrens title system, although aspects of this discussion apply equally to strata title in large developed communities. In addition, the position of land not under the Torrens title system is considered.
The Torrens title system began in South Australia and has been a model for the rest of Australia and other jurisdictions throughout the world. Historically, it arose out of a chaotic series of land speculation where the State had suffered financially from the deficiencies of the traditional system of land titles under the common law. Under the now-old system of land titles, a person must theoretically trace their ownership of the land all the way back to the original grant by the State. This can be quite easily frustrated where documents are missing or inconsistent and always carried the risk that someone had a better claim to the land based on documents that the owner did not know about.
Key Advantages of the Torrens Title System
The Torrens title system has a number of key advantages that include:
- authenticity, allowing a person to be sure that the title is accurate and to avoid having to prove title to land;
- reliability, such that a person can make a claim for compensation if the register is shown to be incorrect; and
- efficiency, as the system is maintained as computerised database that can be quickly and easily searched.
Registration of Ownership
Essentially land ownership in Australia is transferred by lodging a form with the appropriate fee at the land titles office. This is usually done by a lawyer's agent (or a licensed conveyancer) and will often appear on the register that day. As most people usually have some form of a mortgage on their home, their bank or financial institution will ensure that their mortgage is paid out before the transfer occurs. If the new owners have a mortgage on the same property, then a search of the register will disclose the details of this mortgage.
Owing to the fast pace of the property market, it is common for contracts for the sale of land to be conditional on the settlement of another property. This will allow a purchaser to sell their old house and then buy a newer one all on the same day. The predictability and standardisation of the Torrens title system has certainly made this process much more straightforward, although there still remain significant differences between the States and Territories.
It should be noted that despite having been around for approximately 150 years in some parts of the country, Torrens title registration does not cover every piece of land in Australia. A number of lots are still under the old system of title as they were granted before Torrens title came into effect, and have not since been converted into the new system. The odds of you, as a purchaser, encountering one of these situations is slim, but it may occur when a parcel of land has been closely held by a family for a long period. In this situation, the assistance of a property lawyer with experience in old system title is essential.
While there are a number of people who choose to undertake their own property transfer and registration, it is not a process to be taken lightly. Banks will often refuse to allot funds for a purchase when the title to land is not clean and their mortgage could be challenged by someone else who appears on the register. As such, if you are thinking of buying or selling land, help from a property lawyer will prove invaluable in more complex or structured transactions.