Certificates of title

Page contents:

• Introduction
• Title searches
• Land - General law
• Torrens system
• Caveats
• Easements
• Covenants
• Party walls

Introduction

A title search will show the name(s) of the owner(s) and whether the owner's ownership is subject to other claims, such as a mortgage, easements, right-of-way or a caveat, as well as the location and dimensions of the land.

Knowing who actually owns the land is important for a number of reasons:

• If the owner noted on the title and the instructing client are different legal persons, how does the client derive authority to enter into a contract?
• If more than one name is noted on the title, do the other owners consent to the commission, and are they parties to the contract?
• Lodging applications over the land will require the consent of all owners and you will need this information when filling out forms such as development applications.

If several mortgages are listed it may be wise to find out about your client's financial position. Other information which may be important to the commission may also be noted on a Certificate of Title.

In the case of work on leasehold premises the client may be the landowner or, in some circumstances, the tenant. Where the tenant will remain in possession it is advisable to ask the client's solicitor to define the rights of both lessor and lessee as covered in the lease document.

Title searches

Most client-architect agreements specify that it is the client's responsibility to provide the architect with the necessary title particulars, but it is important to realise that the 'duplicate' Certificate of Title is not necessarily up to date. If you want to see the Certificate of Title, it is advisable to ask the client to arrange a title search by a professional title searcher. Title searches are inexpensive and are available within several days of being ordered. All recent dealings will be on the original Certificate of Title kept at the titles office.

Land - General law

Australia has two quite separate systems of land law, which operate independently. Land held under the older system is usually referred to as 'general law land' or 'deeds registration land' or ‘old systems title’ land. In order to prove ownership to sell or mortgage the property, the owner is obliged to produce documents collectively called a 'chain of title'. The chain of title is supposed to contain all documents relating to the title, such as mortgages, conveyances and wills. A prospective purchaser inspects the documents to ascertain whether another party has a financial interest in the land. A chain of title which is complete (no documents are missing) and can be traced back at least 30 years, is known as a 'good chain of title' – that is, a purchaser can reasonably believe no-one else has a better claim than their own.

If the chain of documents is incomplete, (documents lost, stolen or produced by a fraudulent vendor) then the chain is 'bad' and the purchaser risks another party claiming an interest coming forward unexpectedly. There is no guarantee, however, that all relevant documents disclosing current legal interests have been produced. The validity of an apparently good chain of title cannot be certain.

Generally, general law land is being converted to the more certain Torrens system.

Land – Torrens system

There is still a considerable amount of land held under the general land system in Australia, but the vast majority of land holdings are under the Torrens system, the principle feature being that the only document needed to evidence ownership is the Certificate of Title.

A single register has been set up by each state and territory in Australia (except Queensland which also has decentralised offices in Rockhampton and Townsville) and all dealings affecting a parcel of land are recorded on the register. The information contained on the register can be treated as conclusive evidence that what is stated on the Certificate of Title is in fact correct and that all relevant facts relating to the title are on the title. The government in each case guarantees the accuracy of the title.

There are two exceptions to this rule. A registered title obtained by fraud will not be 'good' and cannot prevail against the interests of the person defrauded. Secondly, certain interests enforceable against the registered owner are not stated on the title. The most important of these undisclosed interests are easements and covenants.

Each parcel of Torrens land actually has two certificates of title (except in NSW). The original is kept by the state in the land-titles office, and the duplicate certificate of title is held by the registered owner or by the mortgagee in the case of a registered owner who has borrowed money in order to finance purchase of the property. The name of any mortgagee will also appear below the name of the registered proprietor. Once a mortgage has been paid off, the word 'discharged' and the date will be stamped over the mortgage.

As well as the name of the registered owner appearing on the title, the type of interest held is also described. For example, two people may hold land as joint tenants. Their interest is of equal value. If one joint tenant dies, the remaining owner inherits the deceased's interest automatically.

Alternatively, owners may hold their land as tenants in common and their interests may be equal or unequal. For example, A may own 60 per cent and B may own the remaining 40 per cent. The proportion of each owner's interest will be stated on the title. Tenants in common may also choose to take one Certificate of Title for the entirety or may each receive one Certificate of Title for their individual

share. A tenant in common may sell or mortgage their share without consent from the owner/s. On the tenant's death it will pass to whoever is named in his or her will.

If development is proposed for a group of allotments, site amalgamation will be required in order to avoid problems with the National Construction Code (BCA).

Caveats

The caveat procedure enables a person claiming an outstanding debt against a person who has a registered interest in land, or who claims an interest (which is not registered on the land title or is not registrable at law), against another person’s registered interest in land, to lodge a caveat with the Registrar of Titles over that land. When in place, the caveat gives notice that someone besides the registered owner claims to have an interest in the land. To anyone searching a Certificate of Title, or attempting to ‘deal’ with the land (transferring it on sale; registering a mortgage or other security interest over the land; etc), the effect of the caveat is to prevent anyone dealing with the land. The person who has lodged the caveat (the ‘caveator’) will be notified if the registered owner on the Certificate of Title attempts to sell or mortgage the property.

Except in exceptional circumstances, the caveat can only be removed by the caveator and that is what gives the caveat power. In this way it can be used to secure payment of debts owed by the land owner to the caveator, because it prevents the land owner dealing with the land until the caveator agrees to remove it.

However, a person owed a debt cannot indiscriminately or arbitrarily take advantage of a caveat lodgement. Generally, depending on the State or Territory, a caveat can only be lodged by a solicitor who has a reasonable belief that his or her client has a legitimate and substantiated claim over the land owner’s interest in the land.

Easements

An easement is the right of an owner of land over the lands of another. It must exist for the better enjoyment (use) of the land to which it is attached. A positive easement is the right to do something upon the land of another. A negative easement restricts the use an owner may make of their land.

Easements need not be registered on the title in order to be valid but the Torrens system provides for both registration and removal of easements by inclusion on or deletion from the Certificate of Title.

Examples of easements:

• A right to light or a view. A right to prevent unreasonable obstruction of the flow of light or air, such as the addition of a new storey on adjoining property.
• A right of way. This may be gained from continuous and apparent use but is usually noted on the title and may pass to a purchaser without any express agreement. Also, a right of way of necessity can be implied in favour of a purchaser if their land is, by virtue of subdivision, 'locked' by adjoining land and the purchaser must pass over it in order to gain access to his or her own land.
• Drainage easement. These are common in Australia. Generally such easements are noted on the certificate of title. Their effect is to restrict building over a certain strip of land.

Covenants

A covenant is a promise made in a deed creating an obligation. Covenants may be positive, requiring the performance of an act – or negative, when they are restrictive and prevent a particular act from occurring. Common covenants imposed by local councils in NSW require land owners or owners’ corporations to maintain stormwater detention tanks in good order and function.

A covenant is said to run with the land when the obligation or the benefit of the covenant passes to new owners, though it should be noted that planning instruments sometimes specifically override any covenants that are inconsistent with the requirements of the planning instrument (again common in NSW).

Restrictive covenants are common in subdivisions. For example, developers may resell blocks containing restrictive covenants regarding fencing, permissible building material and height of buildings.

All states except Queensland permit the notification of restrictive covenants upon the Torrens Register. In the ACT, NT and Queensland the practice is to lodge a caveat specifying the interest. In South Australia a memorandum of encumbrance is registered. In NSW, Tasmania and Victoria, provision for recording restrictive covenants exists.

Restrictive covenants may be modified or discharged and all states except South Australia have made statutory provision for such action. (NSW s.89, Vic s.84, Qld s.181, WA s.129C, Tas ss.84A ff.)

Ascertaining easements and covenants

There is no specific method of discovering whether land that is the subject of a particular project contemplated by an architect is subject to an easement or covenant. The following may be reasonable inquiries depending on the circumstances:

• ask the owner/client or the client's solicitors in writing if they are aware of any easements or covenants
• check that the title search provided by the client's solicitor is up to date so that it is reasonable to expect that all recent dealings have been noted on it
• enquire at the local shire council or relevant planning authorities exercising control
• inspect the site and ask neighbouring land owners whether there are any circumstances from which an easement or covenant can be inferred
• require or commission a detail survey of the land from a registered surveyor. Such a survey should show all of the encumberances on land.

Party walls

A party wall exists between two properties where neighbours enjoy rights of support from the wall. There are several kinds of party walls: equal rights may be vested in both parties, ownership may vary according to where the wall stands on the land, one party may own more of the wall (dominant ownership) or there may be a combination of equal, varying and dominant ownership contained within the one wall.

The Australian states and territories all have their own relevant legislation. The Certificate of Title usually shows the width of the party wall at ground level. A survey should be done to establish boundaries, the thickness of the party wall and projections such as fireplaces.