Many potential buyers might go through a 10-page building inspection report recommending the house being sold is structurally sound when a more significant issue is there to be found in the ‘title report’. Are there any unpaid rates? Has the house ever been used as security for a loan or had work carried out which is not declared or is otherwise uninsured? A title report would reveal this.
The inspection obsession, and the blind spot behind it
Building and pest inspections are often prioritized as they involve physical aspects that can be easily observed. For instance, you can physically see mold or termite problems in a building, or a crack in a garage wall. Conversely, a title search doesn’t reveal anything tangible that you can immediately take a picture of. This type of inspection provides a legal perspective rather than a physical one. As a result, many buyers tend to ignore this aspect or simply consider it a formal step that their attorney looks after in the background.
The real issue is that a property may pass all physical inspections but may still have some potential legal problems associated with it without you knowing. For example, there could be easements that legally grant your neighbor a right to build drainage facilities on your property. Similarly, there could be restrictive covenants preventing you from adding another floor to the existing building. In another scenario, someone with a financial claim on the property may have lodged a caveat against it. Such issues cannot be identified by a pest report but can be easily found during a title search and put your seemingly simple purchase in jeopardy.
Why you shouldn’t try to read a title yourself
Title documents may not be immediately understandable to you as a buyer. They are written in a formal, technical format that is typically used for land registry records. For instance, a single sentence mentioning an old easement or a partially discharged mortgage can easily cause a misunderstanding or be overlooked if you are not aware of what you are looking for. Here is where a conveyancer can help you to understand all these details.
A conveyancer doesn’t just obtain the title search, they analyze it and understand which encumbrances should be of concern and lead to the termination of the purchase. They clearly distinguish a decades-old drainage easement that isn’t a big deal from a live caveat indicating that the seller might not have the right to sell at all. Firms like Titlespace do exactly what is needed to assure the buyer that settlements will be made without hidden issues, instead of relying on speculations or the quick assessment from a PDF the night prior.
If there is something wrong, the role of a conveyancer is to figure out what it’s possible to work with and what isn’t. Sometimes an easement can be changed or even deleted. Sometimes it can’t, and you would rather know that months before the sale.
What a title search actually protects you from
A title search confirms that the seller has the legal right to sell you the property. The register itself is regarded as the source of truth for ownership under the Torrens title system. This is indefeasibility in practice – once you become the owner, your title is defended against most other claims. So, you better hope there’s nothing against the land in the register when you go to sell it, years before you discovered someone else’s interest.
A title search also flags mortgages which are registered on the property. Obviously, few sellers volunteer this information. It’s normally expected that a registered mortgage will be cleared at settlement, but a search will make sure that’s the case rather than this turning into a shocking revelation for the buyers when they discover the mortgage wasn’t properly discharged.
Finally, a title search can reveal the existence of rights attached to the land. These can range from easements – which give someone the right to access their own land through yours – to a right of way where you can’t build through a certain corridor of your land, potentially blocking future development plans. Zoning and planning notations tied to the title can also quietly rule out the renovation or subdivision you were counting on.
The cost math doesn’t even come close
The typical up-front cost to uncover all registered interests on a property – not just the mortgage, but caveats, easements, liens or covenants – won’t be much more than lunch.
It’s cheap preventative maintenance in the grand scheme of things. If there are surprises and you pull out of the purchase, you’re not likely to be too much out of pocket at all for the effort. Far less than you’re likely to lose if you find out after the fact that the money you borrowed and thought you paid was never properly released.
Treat it as non-negotiable
Performing your due diligence before buying a home isn’t only about ordering a building and pest inspection to be carried out by experts. It’s also about ordering a title search. That’s the one the lawyers do, to tell you whether the person selling the house really is the owner and, therefore, has the right to sell the home to you. It’s the one that will tell you if you are free to use the property for the purposes you intend, and whether there are any upcoming liabilities that come interspersed with the bricks.
