Every lender has their own terms and conditions, and this is intended only as a general guide to understanding this topic. Contact us to discuss your individual circumstances.
From bearing the name of a property’s registered owner to outlining outstanding easements, a Certificate of Title is often the key to determining the condition and overall value of your property.
While no doubt important to borrowers, titles are also important to your lender.
Traditionally, your lender holds the title deed to your property as security for your mortgage until it is repaid. Lenders can often be wary of caveats or easements – land restrictions and outside claims of interest on your property – which if listed on your title, may impact on your property’s purchase price.
With a number of mainstream titles in use, understanding the differences and how they affect your mortgage can sometimes be confusing. When hunting for your next property, here’s a quick summary of some of the most likely titles you’ll encounter:
Strata titles are granted to buyers of flats, units and town houses. These titles allow buyers to own a common property and assume responsibility for a wider area through a body corporate.
An older form of strata titles, buyers are allocated shares of a company that owns the title of the property units.
In a stratum subdivision the building is subdivided into lots, with common land, i.e. driveways, stairwells, gardens being owned by a service company and appearing on the subdivision as an additional lot.
Each lot owner holds a certificate of title for their lot, together with shares in the service company.
The most common property title in Australia, the Torrens title system is where ownership and all dealings on a property are detailed on the one document, i.e. a Certificate of Title or Deed of Grant. Under this system a mortgage is a charge or encumbrance on the title. Registrations is compulsory to effect legal transfer of an interest in property and each time the property is sold, mortgaged, or a mortgage discharged, the transaction is recorded on the Certificate of Title.
Old system titles
Also known as common law titles, old system titles are made up of a chain of deeds which have to be placed in order to establish ownership of a particular property. Deeds must be prepared for all dealings on a property are made in the form of conveyances, whether the transaction is a sale, a mortgage, a re-conveyance, etc. Under this system the mortgage is in fact a transfer of ownership. Fortunately for buyers, these titles are now rare and increasingly converted to Torrens titles.
Remember, checking a title thoroughly before buying a property can help speed up the overall purchasing process for both you and your lender. If you’re looking for clarification on property titles, or how a title may influence your borrowing capacity, call us today.