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What is a Certificate of Title?

Many Australians dream of one day owning property. The change from renting to owning is a big step and can be very rewarding. When the sale is finalised at settlement, you will be the new legal owner of the property, and you will have your name on the certificate of title. A certificate of title is the way to record and prove the official ownership of land. It’s a legal document, like a passport or car registration, and there is one for every property in Australia. But where did this process come from, what sort of information is contained on the certificate, and what is the future for certificates of title in Australia?

Here is everything you need to know about certificates of title.

Origins of the certificate of title

To catalogue the ownership of land it requires a system that is thorough and precise. Australia’s journey to record land ownership takes place across three distinct phases of its history. By the end, the system that was created would be so successful that it would not only be adopted across Australia, but also by other countries around the world. The story begins with the establishment of a penal colony in Sydney.

In 1788, Governor Phillip claimed Australia for the British, pronouncing it as ‘crown land’. According to English Law, the land of a British colony belonged to the reigning monarch. From this point, for land to be privately owned by citizens or companies, it would need to be given or sold by the crown. Once land was released by the crown it would become classified as Old System land.

Old System land refers to any land that was sold under the Old System of land titles. The Old System was in place in Australia from 1792 until 1863, until it was replaced by the Torrens Title System. All land in Australia now falls into one of these three categories – Crown land, Old System title or Torrens title.

Old System

The first grant of crown land was in 1792 and it marked the beginning of the Old System. Under the Old System, taking ownership of land was quite a complicated process. Because there was no centralised record like there is today, it required a lot of admin and paperwork. Every time a property was sold a new deed would be created. The deed recorded the sale and the names of the seller and new owner. Then, in order to buy a property under the Old System, you would need to collect all of the official documents created in the life of the property. This means compiling a chain of deeds all the way back to the first one. If one of the deeds was destroyed or missing it could prevent the sale from going ahead. The problems with this process of establishing a chain of ownership was recognised and amended in 1919 in the Conveyancing Act. The amendment only required ownership to be proven for the past 30 years.

One of the other difficulties with land ownership under the Old System is that the burden falls on the chain of deeds and is not guaranteed by the state. This means that land disputes could be resolved by producing deeds as evidence but without a central authority to refer to. The Old System has been described as “complicated, expensive, and uncertain”.

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Torrens title

In 1839 Sir Robert Torrens left London and arrived in South Australia. He worked to champion land reform that would eventually lead to the system in use today that bears his name. Robert Torrens introduced a system of land ownership that was modelled after the registration of merchant ships.

The Torrens title system worked around a central ledger held by the state that would record official ownership. For the landowner to prove their right to the property they received a certificate of title. The certificate of title functioned as a receipt of purchase and referred to the corresponding record held by the state.

The Torrens title system was officially introduced as the system of land ownership in 1863 and is still in place today. It was so successful that it quickly spread to the rest of Australia, New Zealand, and been adopted by many other countries around the world. Under the Torrens system, a certificate of title was the single document required to verify ownership. It contains the necessary information about the property and its owner.

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What does the certificate of title contain?

A certificate of title under the Torrens title system is made up of three parts.

  • A description of the land which relates to the certificate
  • First schedule – which lists the owner who is guaranteed by the state
  • Second schedule – which lists all the registered interests that affect the land.

Land description

Under the Torrens title system, parcels of land are much more specific than the Old System. While the Old System relied on descriptions of land dimensions, shape, and size, under the Torrens title system property diagrams are attached with description, and its lot and plan number which reference the exact property the title is referring to.

First Schedule

The first schedule names the owner of the property. It also outlines how that ownership is distributed if more than one person owns the property. This can appear as ‘tenants in common’ which describes the way ownership is divided. Tenants in common can share ownership in equal parts, or one person may own a majority, for example one quarter might belong to one person, and the other three quarters belongs to the other.

Ownership can also be recorded as ‘joint tenancy’ which means both people own the whole property. In a case of joint tenancy, if one person dies the other wouldn’t need to be given full ownership, but would continue to own the whole property as before. These details of ownership are recorded in the first schedule of a certificate of title.

Second Schedule

The second schedule contains all the registered interests that affect the land. This means anything the relates to ownership or use of the land. For example, if your house blocks your neighbour from accessing the street, they may legally have access to walk through your property in order to get to the road. Access to travel through or onto your property is called an ‘easement,’ and these are recorded in the second schedule.

It will also outline how the property can or can’t be used. These are called ‘covenants’ and they include things like, limits on the size of the building, privacy measures, restrictions on height limits, or sustainability requirements for an extension.

You’ll also find any mortgages that relate to this particular property. If you get a loan from a bank to buy a property then the bank will be listed as having an interest in the property. The name of the institution or individual who has lent the money will be named on the certificate and the mortgage recorded on the certificate of title.

Also recorded on the certificate of title are any ‘caveats’. These are records of interest in the property that can restrict dealings. For example, if a spouse has contributed to the mortgage of a property that is in their partner’s name, they may be eligible to lodge a caveat to protect their interest. We strongly recommend legal advice is obtained before lodging a caveat.

Are you ready for NSW’s new eConveyancing rules? Find out what they mean for you.

The future of certificates of title

While the Torrens title system in Australia isn’t likely to change, the way ownership is processed will continue to be updated. There has been a lot of discussion lately about digitising the certificate of title. With the success of electronic drivers licences in NSW, it has prompted some discussion to follow the same course for land ownership. In NSW, MP Victor Dominello has been advocating for the change. The Registrar General has reflected this commitment towards 100% eConveyancing. A bill passed the NSW Parliament in May 2021, with plans to completely remove paper titles by the end of the calendar year.

The process for recording ownership in Australia has come a long way. The introduction of the Torrens title system has greatly increased the accuracy and efficiency of buying and selling land, the plan to digitise certificates of title is another step in that same journey.

If you’re buying or selling property, get in touch with our team today. We’ll help you through the journey and guide you each step of the way. Get in touch today.

This article is provided for general information purposes only. Its content is current at the date of publication. It is not legal advice and is not tailored to meet your individual needs. You should obtain specialist advice based on your specific circumstances before taking any action concerning the matters discussed in this article.

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