Be careful of title

By Bailey Compton 3 Nov 2023

Always check what property title you’re getting.

We sometimes get lulled into a false sense of security when dealing with properties in Australia. The Real Property Act 1900 provides “indefeasibility of title”. It means that, when you check title register, the registered owner is the guaranteed title holder. We sometimes forget that there are other forms of title in NSW.

Before Torrens Title, there were the Old System Title. In simple term, Old System Title are registers that register the ownership of property under a person’s name. For example, John Smith owned XYZ property. Old System title did not guarantee who owned property or even the coordinates of the property. In fact, the burden of ensuring the property is owned by the vendor is the purchaser’s.
Torrens title was introduced in 1853. The government did not automatically change all of the properties to Torrens title, it was done over a period of time. The government would first identify the coordinates and then the ownership of the property. Whilst going through this process, the land was either designated as qualified title or limited title. Whilst this was occurring, we could not guarantee the coordinates or the title of the property. The guarantee of Torrens title are not there.

When buying an Old System title, or qualified title, there was a requirement in place on the vendor to produce an abstract. These abstract traces the ownership of the property right back to its origin land grant or subdivision. This means that, the purchaser knows who owns the property and its approximate boundaries. Under the standard law society contract, the vendor must product an abstract for the purchaser within 7 days of the exchange of contract. If you are a purchaser of an old system title or qualified title, you should undertake a survey to ensure the accuracy of the property boundary. We also suggest title insurance to be taken out to secure your home.

There was a recent case initiated in the Supreme Court where vendor failed to issue an abstract. The purchaser refused to settle the property, and the contract was terminated by the vendor. The purchaser initiated a proceeding saying they cannot terminate and thereby take the deposit.

As a conveyancing solicitor, we were a little bit excited that a case which guided us was about to be heard by the Supreme Court. Unfortunately, the parties settled on the stairs of the Supreme Court. Unfortunately, we have no access to that settlement as it was confidential.

It is a reminder to both real estate agents and consumers that if you are purchasing a title that is questionable, you need to appoint property professionals who know what they are dealing with within this space.
The failure to provide an abstract is a simple mistake for the people who have grown up with Torrens title. There are experienced solicitors and licensed conveyancers who have dealt with this space that know what is necessary to do.