In some instances, a client may purchase a property which is ‘limited title’ but what does this mean?
In short ‘limited title’ means that the boundaries of the land that is being purchased have not been verified by the NSW Land Registry Services. It’s often non problematic for the landowner in that it will most likely not interfere with their use and enjoyment of the land once owned however it may have some consequences for a purchaser’s bank when they try to obtain finance to purchase the “limited title” property. A bank may require a survey to be completed on the property to verify the boundaries of the land and remove the limitation on title, but these surveys come at a significant cost which most purchasers have not accounted for.
Why does “Limited title” exist?
Prior to 1862, New South Wales had a complex system of land ownership which involved having to establish title to a property by examining decades of deeds and records of transactions (‘old’ System). The ‘new’ system which we all know as the ‘Torrens Title’ system provides that registration of ownership is paramount, and whoever is the registered proprietor of a property is the legal owner.
In the process of converting from the ‘old’ system to the ‘new’ system the NSW Land Registry Services did not examine every lot and verify the boundaries of every piece of land in New South Wales or investigate the existence of any easements or rights that may not be identified on the register for each property as to do so would be an impossible task. Therefore, land with the boundaries which was not verified or examined during the conversion to the ‘new’ system remains as “limited title”.
What does it mean for an owner of limited title property?
By now most property owners would know if the boundaries of the land are an issue or have been disputed by an adjoining neighbour. If this isn’t the case, then it is very likely “limited title” will mean not much for an owner of that property.
However, a lot of banks are still cautious about “limited title” as they assume there could be a major misdescription as to the boundaries of the property which would affect their security. For that reason, some banks don’t lend against Limited Title.
What can a Purchaser or an owner of land do to remove the “limited title on a property they wish to purchase?
The limitation can be removed by the New South Wales Land Registry Services with a ‘plan of redefinition’. This is a survey completed by a registered surveyor which takes time and could cost between $4,000.00 and $15,000.00 (estimated) depending on the land being surveyed. Once lodged with Land Registry it can take between 4-8 weeks to be registered and the limitation on title removed.
If you require any advice in regard to limited title on either a property you already own or a property you wish to purchase, please ensure you speak to one of our specialist property solicitors.
This article was published on 20/09/22 and the information is valid only to the date of publishing. This article should be considered merely general and non-specific on the subject matter and is not and should not be considered or relied on as legal, advice. Meehans Solicitors is not responsible in the event this information is relied upon by the reader in the absence of specific legal advice.