What is a Limited Title?

Many people will be familiar with the terms Torrens title and Strata title. These words describe the relationship with the property that you own to the land around it.

If you buy a property in a new subdivision, there’s a very strong chance it will be on Torrens title. If you buy a unit, villa or townhouse, it will probably be on strata title.

These, however, are not the two only options. When you prepare to sell your home, your chosen solicitor will prepare a contract for sale. The contract will outline what title it is on.

If your place is on ‘Limited title’ you could have a few problems. With the limited title, the boundaries have not been defined by a survey. So, in theory, part of your house could be on someone else’s block.

From a day to day perspective this shouldn’t make a big deal. There are plenty of homes on limited title throughout Newcastle.

In one recent sale, we accepted an offer from a buyer and during the finance approval stage, the bank valuer knocked back the loan approval due to this limitation.

There are plenty of homes on limited title throughout Newcastle.

In this case, there was a shared driveway. This combined with the fact that the buyers only had a 5% deposit was deemed too risky for the bank. They approved the loan but only on the condition that the title was converted to Torrens title (with the limitation removed).

As my vendor was very motivated to sell, they agreed to cover the cost of this and we set the wheels in motion. The first step was to have a survey completed. We called around all of the local Surveyors in Newcastle and found that the fastest turnaround we could hope for was one month. Fortunately, it came back with the boundaries very close to the existing fence line. Luckily, there were no disputes but the owner had to get the approval from both neighbours to adjust the boundaries slightly on the title.

Once approved this was then sent to Sydney’s Land Property Information department where it was officially converted to Torrens title. This process is happening as we speak but we have been told it will take another 2-4 weeks to turn around. Once we have that the banks will need to adjust their records before the finance can formally be approved and prepared for settlement.

This process has been extremely stressful for my client. The extra 4-6 weeks of waiting means that she has had to delay the settlement of the property she is purchasing and risks being charged penalty interest by the seller of the property they have agreed to purchase.

We could have decided to not move forward with these particular buyers but their offer was the highest by some distance and we were also concerned that the shared driveway might cause similar issues with another buyer.

The cost will end up being around $5,000 – ouch. A painful and stressful experience. It is the first time that I have had to deal with this. Limited title is not uncommon. In fact I have had 12 so far this year. Every house and situation is unique in this job. Some sales so through smoothly, but that is not always the case.