There are many circumstances in life when you may need to conduct a title search to get a Certificate of Title – buying or selling property, proving ownership, refinancing your mortgage and the list goes on. But what exactly is a Certificate of Title and what can it tell you about a property?
What is a Certificate of Title?
A Certificate of Title (CT) is a public and legal record of land ownership, including interests and restrictions on the land. Ten years ago, Certificates of Title were pieces of paper, but now with the rise of e-Conveyancing, CT’s are available electronically.
In Australia, state land registries hold the title information. Ity can be viewed by doing a Title Search through an authorised provider, in as little as 60 seconds. A title search can be used for many purposes, as it includes the names of the property owner(s), restrictions on the land, mortgage details, lease details and other relevant information associated with the property.
What can you see on a title search?
Conducting a title search to view the title information can reveal key details about a property. Below are five of some of the most important things you can learn from a title search.
1) Who owns the land
A Title includes the name of all land owners. If there are multiple owners, the type of ownership will be shown as either tenants in common or joint tenants. Tenants in common own a portion of the land, and can sell their share or leave it to someone else in a Will. Joint tenants own the property as a single unit, therefore if one passes away the full ownership remains with the other joint tenant(s).
An easement is a right given to another person (who does not own the property), to use the property for a specific purpose. The two most common easements are for services and for right of way. For example, your property might include a service easement that allows city workers to access an electrical pole in your backyard. A right of way easement could allow your neighbour to cross your lawn to gain access to a road, or allow service workers to cross your land to access water, electricity and sewerage infrastructure. Easements can restrict your use of the land and prevent you from building on top of it so it’s important that you’re aware of them before you buy, sell or renovate.
Covenants are guidelines and/or restrictions on the land that can limit what can be built on it, where it can be built and from what materials it may be built. These rules must be adhered to when altering a property, and are created by the property developer to retain the quality, look and feel of a building or neighbourhood. Common reasons for a covenant include to restrict the number of buildings on the land (ie to a single house), or dictate what type of building materials may be used (ie for fences). They can even be as specific as the external colour scheme or size of your driveway. Breaching a covenant can have serious consequences so it is necessary to be aware of any covenants on your property.
A caveat is essentially a warning that someone else has an interest in the property. The word caveat means “beware”, and is a legal notice lodged with the state land registry. If a person has potential claim to part or all of a property, they may lodge a caveat, which prevents the owner from selling their property (amongst other things). For example, a builder may put a caveat on a property if the owner owes them money and this will alert anyone looking at the certificate that the title is not ‘clear’. The caveat appears on the Title, so if you are considering purchasing a property look out for this red flag.
If there is a mortgage on the property, the bank holds the Certificate of Title, rather than the property owner. The institution providing the mortgage, usually a bank, will be listed on the Title. If you’re buying a property, it’s important for the seller to discharge the mortgage before settlement or there could be significant delay.