A property title establishes ownership rights and interests in a piece of real estate. It serves as proof of ownership and outlines the various rights, restrictions, and responsibilities associated with the property. A property title typically includes vital information such as the property’s legal description, boundaries, and the names of the owners. It also specifies any liens, mortgages, or encumbrances that may exist on the property, indicating any outstanding debts or legal claims against it. The title may also contain information about easements or rights of way that grant access to or across the property.
In New South Wales (NSW), property titles may have notations that they are “qualified title” or “limited title”. These notations can have significant implications for both buyers and sellers.
Old System and Torrens Title
NSW originally had a title system called, aptly enough, “Old System Title”. Ownership of land was proven through possession of a paper deed, which led to difficulties if the deeds were destroyed or misplaced. These days, most NSW properties have been converted to the more modern Torrens Title, where ownership of land is recorded electronically. When a title has been converted from Old System to Torrens it may have notations that it is “qualified” or “limited” title.
Qualified Title
When an Old System Title is converted to a Torrens Title, the title will typically be checked to ensure there is no other interest in the property existing under the Old Systems Title. However, a warning is still often placed on any new Certificates of Title indicating that the title is “qualified”. This tells the purchaser there may be some subsisting interest existing under the Old System Title.
Even with this notation, the owner of a property with a qualified title can still enjoy all the benefits associated with the property, such as selling, leasing, or mortgaging it. The qualified title may be removed 12 years after the conversion, or 6 years after the last transfer of the property. Once removed, the qualified title is converted into a full Torrens Title. This signifies complete and unrestricted ownership of the property, free from any encumbrances or limitations.
Limited Title
When land is converted from Old System to Torrens Title and has not been investigated by the NSW Registrar General, it is recorded as having a “limited” title. This means that the land has not been fully defined by a survey and the boundaries have not been examined. There may also be other factors that affect the property such as an unrecorded easement or right of way. The limited title acts as a precautionary measure, allowing the property to be transacted with a degree of caution until any dispute is resolved.
It is important to note that limited titles do not convey the same level of ownership and rights as qualified titles. While you can still buy property that has a limited title, it is vital that you exercise caution and understand in advance that there is additional due diligence that needs to be performed.
You will need the services of professionals, such as lawyers and surveyors, to investigate and address the limitations or encumbrances associated with the property. Resolving these issues typically requires legal processes, negotiations, or agreement with affected parties. In addition, if you are taking out a mortgage, you should note that some lenders may not be willing to lend for a limited title property.
Removing Limited Title
A limitation can be removed from the title by lodging a plan of survey (plan of delimitation) which satisfactorily defines the boundaries of the property. However, before the limitation is lifted it is necessary to fully investigate the land and resolve any ongoing disputes, such as boundary disputes with neighbouring properties. After any underlying issues are resolved, and the plan of survey is lodged and registered with NSW Land Registry Services, the limitation may be removed.
Conclusion
Buying and selling property involves a significant financial outlay, making it highly warranted to retain an experienced professional to help with your conveyancing needs. A property lawyer can review the title of your proposed sale or purchase, explain the implications of any restrictions, and provide advice and guidance regarding any possible legal steps available to remove those restrictions.
This information is for general purposes only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on (02) 9818 2888 or email [email protected].