What is a property title?

A property title is a legal document, which records the specific information about a property. Details include who owns the property, if there are any encumbrances on the property such a mortgage, caveat or any covenant and easement.

A title can be in a form of a paper Certificate of Title, however nowadays, a Certificate of Title is held electronically either with a bank or a proprietor’s legal representative.

At settlement, the details of who owns the property, generally the Vendor, will be replaced with the new purchaser’s name. Settlement is also the time when a mortgage on title is discharged and can be replaced with the purchaser’s mortgage.

Encumbrances such as covenants and other restrictions such as easements remain on title and will “run with the land. This means they will not be removed and will continue indefinitely. Caveats are removed prior to settlement.

There are different types of titles for different purposes.

These are the two most common types of property titles:

Torrens title

The Torrens Title system is a manner in which the ownership of a property is recorded and is a system commonly used by most Australian states and territories. This is where at settlement, the ownership of property is registered with the Land Registry Office.

The Torrens Title system is also a way in which to describe property that is considered “freehold”. This means property that includes ownership of the land and the dwelling of the land. Most properties in Australia are owned under Torrens title. Also known as freehold title. This includes both the dwelling and the land.

If there is a mortgage on the property, the financial institution involved will withhold the certificate of ownership until the mortgage is paid, or “discharged”.

Strata title

The strata title relates to property where the proprietor has limited access to certain parts of the property. Generally, this means the proprietor will only own the property from the paint of the wall inside the property. The rest of the property is commonly owned.

Most Australian apartments are strata-titles. Individuals own their homes, but there are common areas or land that is shared by all. The common property is managed by the owners or an external owners corporation or body corporate managers.

This means additional management and additional fees.

It also restricts what improvements you can do to the property. If you want to paint the exterior or extend you need to seek consent to do this from the other owners.

Insurance for the building is covered by the Owners Corporation, but the internal parts of the building are to be insured by you such as floor coverings, kitchen, electrical power points etc.

The less common types of titles:

Company or Stratum title

Company title was intended for partial ownership. Property owners purchase shares in the company that owns the building. They are directors of the company as well. They have a licence to use their property.

This type of title was used in the 1960s, before strata titles were invented. Many units in the inner city such as St Kilda, Caulfield have stratum titles.

Because of risks associated with stratum titles not all lenders will lend on them.

Many of them are being converted into Strata Titles.

Limited Torrens title

Properties with limited Torrens Title do not have clear boundaries about which part of the property belongs. It can be a little messy. To determine which part each person owns, a paid investigation is performed.

Community Title

The Community Title can be shared by many people. It can be used to manage large estates, such as small towns or communal neighbourhoods. The general community usually manages the property’s maintenance.

Although the land and the dwelling can be individually owned and mortgaged against, there are certain responsibilities that must all be shared.

Why do I need to know about titles?

Property owners and particularly investors should know about the different types of land holding, titles and plan types.

The type of title you have will impact your rights and impact any improvements you want to make to your property.

Different title types have different issues and not all lenders will lend on all types of titles.

Make sure you have a competent lawyer and conveyancer when you are getting contract advice and understand the different title types.

This has a direct impact to the return of your investment and how you enjoy your property.

How can I get a copy of my certificate of title?

A search of the State Government’s Land Titles Office records will give you the details of the certificate of title. You will need to pay for a search and conveyancers and lawyers can perform a search for you.

The original will be either an original certificate or an electronic record. The title search will be up to date showing all the encumbrances and property details. Mostly now the original title documents are destroyed and converted to an electronic version only.

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