What’s in a name? Unravelling property titles

titledeedTo ensure a smooth purchase, trouble free ownership and a straight-forward transaction come sale time, make sure you’re up to speed on the different types of property titles.

From bearing the name of a property’s registered owner to outlining outstanding easements, a Certificate of Title is often the key to determining the condition and overall value of your property.

While no doubt important to borrowers, titles are also important to your lender.

Traditionally, your lender holds the title deed to your property as security for your mortgage until it is repaid.  Lenders can often be wary of caveats or easements – land restrictions and outside claims of interest on your property – which if listed on your title, may impact on your property’s purchase price.

With a number of mainstream titles in use, understanding the differences and how they affect your mortgage can sometimes be confusing.

When hunting for your next property, here’s a quick summary of some of the most likely titles you’ll encounter:

Torrens titles

The most common property title in Australia.  Torrens title is a system of land title in which a register of land holdings maintained by the state guarantees an indefeasible title to those included in the register.  Land ownership is transferred through registration of title instead of using deeds.

This system was designed by Robert Richard Torrens for the South Australian land title registry when he was appointed Registrar of that state in the 1850’s.  He based his brilliant, simple system on the method of insuring shipping used by Lloyds of London.  It used a single register for each land holding and recorded all details and interests affecting that land.

Old system titles

Also known as common law titles, old system titles are made up of a chain of deeds which have to be placed in order to establish ownership of a particular property.  Fortunately for buyers, these titles are now rare and increasingly converted to Torrens titles.

Strata titles

Strata titles are granted to buyers of flats, units and town houses.  These titles allow buyers to own a common property and assume responsibility for a wider area through a body corporate.

Company titles

An older form of strata titles, buyers are allocated shares of a company that owns the title of the property units.

Remember, checking a title thoroughly before buying a property is important as not all lenders will allow the same level of lending for certain titles.  For instance, some lenders will reduce the level of lending for purchases in company titles.

Checking the title can also help speed up the overall purchasing process for both you and your lender.  If you’re looking for clarification on property titles, or how a title may influence your borrowing capacity, give us a call