Property Titles – The Legal Documents
The Property Title: What Is It?
It seems only right that we should start with the beginning, namely what is a property title? Basically, a property title is a fancy piece of paper with lots of legalese that provides information on the property, including the owner, any liens against it, easements, covenants, caveats and more. Essentially, if it affects the property, then it will be listed on the property title. Land titles are much the same, except they pertain to land rather than structures.
Lenders: What Titles Do They Like?
As has already been mentioned, lenders don’t really like taking unnecessary risks, which is why they are so conservative in terms of the type of property they are willing to accept as security. Note that this is also valid if the property title being offered as security belongs to the guarantor rather than the borrower. So, to save yourself time, money and heartache, if you know exactly what property and land titles are acceptable to lenders beforehand, you will know what to look for when you are shopping around for a home. Below you will find the titles that most lenders will accept without issue.
Torrens Title
The torrens title is generally the most commonly encountered type of property title. It features one document that guarantees ownership and is registered with the state government, meaning that there are limited unregistered transactions or disputes. Home and land titles are usually torrens titles.
Strata Title
The strata title is a type of torrens property title that is applicable to buildings with multiple residential units because it refers to the unit itself but also includes a percentage of the common areas, such as stairwells. So, if there are 10 units in a building, the strata title will include ownership of the unit as well as 10% of the common areas. A strata corporation is created with the express role of handling maintenance and insurance. Expect the lender to check how well the strata corporation has been run when you present a strata property title.
Community Title
A community title is much like a strata title, with the exception that it can pertain to an entire neighbourhood rather than a single, multi-unit property. This way an entire community can centralise general maintenance of common areas, including gardens, tennis courts and can also pay for other services such as security and so on.
Company Title
A company title usually refers to a single unit in a flat but it differs from a strata title in that the owner of the title doesn’t actually own the real estate but has the right to occupy a particular area of the building, such as a certain apartment, by owning shares in the company that owns the building outright. Generally, a company title is a bit more complicated to finance and you should probably speak to a mortgage broker to get their advice.
If the property which you intend to bring as security has a different property title than those mentioned above, finding a lender to accept it could be quite difficult. This also applies to land titles. Therefore, if it is the property you are intending to purchase, you should consider an alternative, just in case you can’t find a lender to accept the title in question.
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