Why is it essential to carry out a property title search before purchasing a property?

If you’re in the market for buying a home, you want to be sure that you’re purchasing a property with a clear title. Your conveyancer or solicitor will ensure this by conducting a search of property title documents before settlement. 

In most states, you can also run a title search online yourself through an authorised provider by paying a small fee. You could search for ASIC approved information brokers for running a title search online. However, some states and territories may have different rules regarding property title searches, and require you to visit an office. 

You can check your state or territory government’s website for the latest information. You could also select your state in the table below to find some useful information on title searches provided by the relevant state government.

If you find that a property’s title isn’t clear, it’s worth discussing it with the seller’s agent before settlement, so they can take the necessary steps to clear the property’s title. If that’s not possible, it may be worth seeking legal advice before buying such a property, as it could result in litigation later.

A property title search can reveal critical information about a property. Here are a few things to look out for:

- Ownership

A property’s title documents will include the name of all its past and present owners. If the property is owned by multiple people, the type of property ownership will be indicated. Joint owners typically hold property in two ways - as tenants in common or as joint tenants. 

Joint tenants own the property together, and one owner cannot sell the property without the consent of the other. However, tenants in common own individual shares in the property. They can sell or gift to an inheritor in their will their respective shares independently.

- Easement or right of use 

An easement refers to usage rights on a property, given to specific people who don’t own it. For instance, a property may include a right of way easement for the neighbours to cross the backyard and access a road. While an easement doesn’t give away any ownership rights, it may restrict your land usage and prevent you from renovating or building in the area designated as an easement.

- Registered mortgages

If there’s a mortgage registered on a property, the owner will not have the title certificate, which is held by the lender until the mortgage is paid off. If you’re buying a property with a mortgage secured by it, ensure that the seller discharges the mortgage before settlement, or you may end up facing significant delays in ownership transfer. 

- Covenants

Covenants dictate how you may use a property. For instance, some covenants limit what you’re allowed to build on the land or the materials used for building. Such rules are usually included on the title document to restrict the number of buildings in an area or to maintain its overall look and feel. 

Breaching a covenant can have legal consequences, so be sure to read the title documents thoroughly and be aware of any limitations before you purchase the property.

- Caveats

A caveat is a warning that somebody apart from the owner has an interest in the property. You need to be careful about buying such a property. For instance, a builder may put a caveat on a property if the owner hasn’t paid up in full. Anybody carrying out a property title search will thus be alerted, as the property title won’t be clear.

There are several types of property titles you’ll come across, indicating the ownership structure of a property. Most residential and commercial properties fall under Torrens title or freehold title, meaning the property belongs to the title owner. However, if there’s a mortgage secured on the property, the title certificate will be held by the lender until the mortgage is paid off.

Another title you’ll often encounter, especially if you’re buying an apartment or a townhouse, is a strata title. A strata title property owner owns the area inside a unit but not the space outside, which is usually the common area shared by all the residents in the building. 

Residents are typically required to pay an annual strata fee for maintaining the common areas of such properties. A similar title would be a community title, where many people share and own a larger estate. The maintenance of common areas is supported through payments by all owners.

Properties with Torrens and strata titles are generally acceptable to lenders when you apply for a mortgage. However, some lenders may not approve a loan for a property with a limited or qualified Torrens title. A mortgage broker could help you with information about lenders who are more likely to lend you money according to the property’s title.