Origins of limited title certificates
NSW had a different system of land ownership before 1862, which changed when the Torrens Title system was introduced as part of the Real Property Act 1863. “Old System” land titles followed the British Common Law conveyancing system. This meant a separate deed was prepared every time the land was mortgaged or sold. Ownership proof meant having a chain of these deeds.
Under the Old System Title, landowners were expected to retain evidence of the complete chain of documents that proved ownership of the property, which would go back generations. It was cumbersome and complex as the number of documents related to a single parcel of land could increase, and there was always the chance of the documents getting destroyed or lost.
When the Torrens Title System was introduced, it became somewhat easier to demonstrate property ownership, as the ownership is registered under the title. NSW Land Registry maintains a register of land holdings, which provides definitive evidence of ownership and simplifies the process of transferring property.
The central register for NSW land held under the Real Property Act 1900 is the Torrens Title Register. Under this system, the State Government guarantees land title to the registered owner. It eliminates the need for traditional deeds and significantly reduces the risk of fraud or ownership disputes.
During the conversion process from the Old System to the Torrens Title, the Land Registry couldn’t survey every single property, so they issued a ‘Limited Title’ to show that the boundaries weren’t clearly defined. Although the title limitation can be removed with NSW LRS, it requires additional time and expense.
What are the problems with limited title properties?
A property owner is not obliged to remove the limitation on the title certificate, and a limited title is still a valid form of proprietorship. However, having a limited title may lead to several issues.
Boundary disputes
Some boundary issues include encroachment on land by neighbours, disputes when buildings are close to the boundary, issues over trees, etc. Removing the limitation means that the boundaries are clear, protecting you from potential disputes and ownership claims down the track.
Harder to sell
It can be challenging for sellers to market and sell a limited title property. Finding potential buyers willing to overlook these limitations or have the means to
address them may require more effort and time. It may also mean negotiating a lower price.
As a seller, it is essential to disclose all information regarding the limitations of your property to potential buyers. Seeking professional advice from agents and property lawyers can help sellers follow the regulations and ensure all necessary documents and agreements are in place for a smoother transaction. While there is a cost involved in conveyancing, it is important to consider how an experienced conveyancing solicitor can help ensure your rights are protected in these matters.
Risks of a limited title property for buyers
Potential buyers may have some additional risks to consider:
Getting finance
Financing a ‘Limited Title’ property can be more complex. If the property boundaries aren’t clearly defined, there is always the risk of other parties making an interest claim on the parcel of land. This can make it difficult for lenders to approve a home loan, especially as they are concerned with the property’s saleability. In many cases, the lender may require a lodged plan of survey with the NSW LRS before considering your loan application.
Additional costs
Purchasing a Limited Title property often involves extra expense and additional work to satisfy lender requirements and complete the conveyance process. Buyers should be prepared for these potential hurdles that could cost several thousands of dollars over the purchase price.
Can the title limitation be removed?
Title limitation can be removed by lodging a Plan of Delimitation with NSW LRS, which would mean a conversion from the ‘old system’ to the ‘Torrens Title’.
This must be a plan of survey and is the only method to resolve the limitations associated with the title.
A Plan of Delimitation starts with a Registered Surveyor surveying the property boundaries. The surveyor will first research the titles of the land, visit the site, complete the boundary survey and lodge the deposited plan of survey with NSW LRS. Once registered, the process can take 4 to 8 weeks to get approved.
How much does it cost to get a title limitation removed?
Removing a title limitation can cost anywhere from $3,000 to $16,000. The main cost is engaging a surveyor to survey the boundaries and lodge a plan of delimitation to NSR LRS. There may also be bank fees to update the title once removed. Buyers may also need to consider the legal costs involved. These fees can vary depending on the extent of the limitation and the complexity of the case. Consulting with a legal professional before proceeding can help you better understand the costs.
It is important to carefully consider these costs when deciding whether to pursue removing a limitation from a property title. In some cases, doing so may not be financially feasible or beneficial. However, in others, the long-term benefits of having a clear title may outweigh the initial expenses involved.
Should you get a pre-purchase survey plan?
If you are purchasing a property with a limited title and intend to subdivide or redevelop it, it may be sensible to get a pre-purchase survey plan to check the boundaries as expected.
This survey can identify existing encroachments that can lead to boundary disputes, correct boundary lines, flooding risks and more so you can determine whether to proceed with the purchase.
Buying a limited title property? Speak to an experienced property lawyer
For those interested in an older property with a Limited Title, the process does not have to be a deterrent but a point of preparation. While additional steps and costs exist, having an experienced property lawyer in Sydney, such as RS Law Group, who understands Limited Title properties, can make a huge difference in a successful purchase process. The big difference between a property lawyer and conveyancer is that a lawyer can provide legal advice on the implications of limited title properties and how that can impact buyers.
We understand the process of getting the limitation removed and can guide you through it if desired. Our experienced professional network includes surveyors with considerable experience in this area, ensuring the process is seamless and stress-free.
