When buying a property, it is natural to focus on the house or building. However, it is just as important to understand the property’s legal title. A title search shows who owns the property and identifies any legal rights, restrictions, or obligations affecting the land. If the title is not checked carefully before purchase, you may discover unexpected restrictions, costs, or problems when you later renovate, develop or sell the property.
This guide explains what a record of title is, what a title search may uncover, and why checking the title is an important part of the property-buying process.
What Is a Property Title?
A record of title is the official legal record for a property. It provides important information including the legal owner, the property’s legal description, records mortgages and other legal interests affecting the property, and helps confirm ownership and identify legal issues when the property is bought, sold, or refinanced.
Why Should the Title Be Checked Before Buying?
A title search may identify legal rights or restrictions that affect how you can use the property. For example, the title may show:
- a right for another person to cross or use part of the property;
- rules restricting what can be built or how the property can be used;
- financial or legal obligations affecting the land; and
- any other restrictions or requirements relating to the property.
These matters may affect your ability to renovate or develop the property. They may also affect your privacy, ongoing costs, or ability to sell the property in the future.
Do I Need a Lawyer to Review the Title?
Anyone can obtain a copy of a Record of Title. However, the wording can be technical, and some legal interests are recorded in separate documents that must also be reviewed. A lawyer reviewing the title will usually consider:
- whether any registered rights or restrictions could interfere with your plans for the property;
- whether there are any mistakes or legal problems with the title; and
- for a cross-lease property, whether the legal plan matches the property’s actual buildings and layout.
The purpose of the review is to explain what the title means in practical terms and identify any issues before you are committed to the purchase.
Frequently Asked Questions
When should the title be checked?
Ideally, the title should be checked before you sign an agreement to buy the property.
- If you are buying through negotiation, the sale and purchase agreement may include a condition allowing the title to be reviewed and approved.
- If you are buying at auction, the title should be reviewed before auction day. A successful auction bid is usually unconditional, which means you are generally committed to completing the purchase.
What Is a Title Defect?
A title defect is a legal error, inconsistency, or other problem affecting the property’s ownership or the interests registered against it. Common examples include:
- additions or alterations to a cross-lease property that do not appear on the official plan;
- missing or incomplete documents; and
- an incorrect legal description of the property.
A title defect may delay a sale, reduce the property’s value, or make the property more difficult to sell.
Can problems with the title be fixed?
Some title problems can be fixed. However, fixing a title issue may take time and can be expensive. It may also require the agreement of neighbours, other property owners, lenders, or public authorities.
Will the Bank Check the Title?
A bank will usually check the title before lending money against the property. However, the bank’s main concern is whether the property provides suitable security for the loan. The bank may not consider whether the title affects your personal plans, such as building an extension, adding another dwelling, changing access, or redeveloping the property. A bank’s approval should therefore not be treated as confirmation that the title is suitable for your intended use.
Property titles can be complex, with a great deal to consider. At Foley Douglas, our role is to make the process straightforward. Our experienced property team can review the Record of Title, identify potential issues, and clearly explain how they may affect your purchase or future plans. Contact Foley Douglas before signing an agreement or bidding at auction so you can proceed with clarity and confidence.
