Understanding the different types of property titles in Australia

A property title is a legal document that establishes ownership of a piece of real estate in Australia. The title provides proof of the right to use and transfer the property, as well as details of any mortgage on the property.?

When you buy property, a conveyancer will normally conduct a property title search during the settlement process. This search will provide information about the property, including its boundaries, and any easements, covenants or other restrictions on its use.

In Australia, there are several types of property titles currently in use:?

1. Torrens title (freehold)?

The Torrens title system is the most common type of property title in Australia and is typically used for land or houses.?

Under the system, ownership of land is recorded in a central register maintained by the state or territory government. When a property is sold or transferred, the transfer of ownership is registered with the government and a new title is issued.?

A Torrens title gives you full ownership of everything that falls within the property’s boundaries, giving you full control over the use and development of the property (provided you comply with local planning legislation and get the correct permits).??

2. Limited Torrens title?

One of the key features of a Torrens title is the government's guarantee of the accuracy of the register.

However, sometimes not everything is known about a property, whether that’s because there’s a lack of documentation or evidence of ownership, or there are disputes between neighbors over boundary lines or other issues.?

In these cases, a limited Torrens title may be issued (sometimes known as a ‘qualified title’ or ‘limited title’).?

Under a limited Torrens title, the government's guarantee of title is limited to certain parts or aspects of the property, rather than the entire property. This means the government only guarantees ownership and rights to the parts of the property that have been surveyed and identified as being free of any disputes or uncertainties. Other parts of the property, such as disputed boundary lines, may not be covered by the guarantee.

This, in turn, can make it more difficult to sell or finance a property, as buyers or lenders may be hesitant to invest in a property with a limited guarantee of title. That said, a limited title can be converted to a full Torrens title if the issues or uncertainties are resolved, either through surveying or legal action.

3. Strata title

A strata title is typically used for multi-unit developments such as apartments, townhouses and commercial buildings. This is because the title allows for individual ownership of a unit within a larger development, as well as shared ownership of common areas and facilities such as lobbies, lifts, gardens and parking areas.

Under strata title, each owner has exclusive ownership and responsibility for their individual unit, while also sharing ownership and responsibility for the common property with other owners in the building. This means that decisions about the management and maintenance of the common areas are made collectively by the owners through a strata committee or body corporate. The body corporate is also responsible for enforcing the strata rules and by-laws.?

The rights and responsibilities of strata title owners are set out in a legal document called the strata title plan, which also includes details about the lot boundaries.

Strata owners are typically required to pay levies to cover the cost of maintenance, repairs, and other expenses associated with the common property.?

4. Leasehold title

Under a leasehold title, the land isn’t sold to an individual. Rather, the lessee is given the right to occupy and use the land for a specific period (usually several decades).?

Typically, the lessee will pay annual rent to the landowner, with the lease agreement specifying any other obligations, such as maintaining the property and paying for any improvements or repairs.

At the end of the lease period, the property typically returns to the original owner.

Leasehold titles are common in areas such as national parks, urban areas and other places where land is scarce or in high demand. All land in the ACT is also leasehold with a 99-year title, subject to certain conditions and restrictions.

5. Company title

This is a type of property ownership structure that was common in Australia until the 1970s but is now less commonly used.?

Under a company title, a company owns the property, and individuals purchase shares in the company that entitle them to use and occupy a particular home, subject to the rules and regulations of the company. The company is responsible for managing and maintaining the property, and shareholders have a say in the management of the company through voting rights at company meetings.

There are some drawbacks to company titles when compared to other forms of property ownership. For example, the company can restrict the sale or transfer of shares, which can make it more difficult to sell or finance the purchase of a unit. Also, shareholders are not considered to be the legal owners of the property, which can limit their rights and legal protections compared to freehold or strata title ownership.

The use of company title structures in Australia has declined in recent decades, and many existing company title properties have been converted to strata title ownership. However, some company title buildings still exist, particularly in older inner-city areas.

6. Community title

Similar to strata title, a community title applies to a group of separately-owned properties that are part of a larger development, such as a townhouse complex or a gated community. However, it provides more flexibility in terms of the types of properties that can be included in the community, such as detached houses, duplexes and other types of free-standing dwellings.?

Each property owner has individual ownership of their property, as well as a share in the ownership of common property, such as driveways, gardens, swimming pools and other shared facilities. The owners' corporation, made up of all the owners in the development, is responsible for managing and maintaining the common property and enforcing the community rules and by-laws.

Another important difference between community title and strata title is that the former allows for more flexibility in the way that the common property is managed and maintained, by allowing for different levels of responsibility and contribution among the owners.

7. Old system title?

An old system title was used before the introduction of Torrens title and is based on historical deeds and documents that establish ownership and transfer of land. This system is no longer used for new properties, but some older properties may still have an old system title.

Looking to buy a high-quality investment property? Auswide Buyer’s Agency can help. To discuss your options, book a free consultation with Ashish Malhotra.