What Is Real Property?

Property is a physical or intangible entity that is owned by a person or persons. In this article, we determine what is real estate, which is a combination of land and improvements to or on the land which a persons owns by right. This can be a strata unit, warehouse, residential dwelling, commercial property, vacant land, Crown title, leasehold interest and perpetual leasehold interest. We will not go into great details as to all of these systems, but discuss the main property types here.

Title systems under the Real Property Act 1900 cover such titles as Strata Titles, Community and Neighbourhood title, Torrens Title.

At the time of colonisation in Australia, all land was owned by the Crown (1791 to 1831). The governors of the time (Macquarie and Phillip) issued land grants on behalf of the Crown. A great development took place in 1825 when the system for selling land to individuals for value was introduced. Free grants were abolished however the Crown still retained rights under the initial grants, which is most cases ran with future owners of the land (i.e. notification on the Certificate of Title stating “Reservations and Conditions under the Crown Grant” or “land excludes minerals and is subject to a right to mine” which provided that all minerals below a certain level were owned by the Crown, gold, oil). There are also certain statutory rights, or easements that you cannot disturb the soil to such as extent that it interferes with your neighbours statutory right of support. Natural acts of God such as erosion are an exception.

Torrens Title
The Torrens system registration was introduced by Sir Richard Torrens in 1858 to establish a system of registration of land and in NSW in 1900. Upon registration of the land at the Land Titles Office, the owner received a Certificate of Title authenticating ownership of the land. The NSW Government guarantees the validity of the title. This is the most common form of title and is a system of title by registration and security of title is not guaranteed until it is recorded in the Land Titles Office. This is an important issue as it not only refers to the transfer of land, but also to any mortgage, discharge of mortgage, caveat, naming a few dealings, attached to the land.

Old System Title
This transfer of title was known as a “Conveyance” in that the vendor must “convey” good title to the purchaser. This system of transfer, was done by way of Deeds and recorded at the NSW Land Titles Office and are recorded in the General Register of Deeds and gives the owner a legal right rather than an equitable interest. This system of transfer of land differs from the Torrens Title in that the Torrens title system is proof that you own the land on registration at the Land Titles Office and you receive a Certificate of Title evidencing your ownership, which is not the case with Old System title. A good root of title of a minimum of 30 years must be established after which the purchaser is deemed to “accept” any defects in title (such as boundary definitions).

The Land Titles office is currently transferring old system titles (most commonly found in the inner city suburbs such as Randwick, Surry Hills) to the Torrens title system. These are recorded as a Folio Identifier with exceptions such as “Limited or Qualified Title”. Limited title is noted by the Land Titles Office where they have not been satisfied that the boundaries of the land are accurate (uncertain as to survey) and qualified title being if no transactions. Qualified title is one in which the title is inconclusive, and subject to subsisting interests.

Strata Title was developed in Australia in 1961 and is a form of title that is in most cases, a vertical system of title and gives you the legal ownership of a portion of a building or structure. It can also comprise ground level villas, duplexes or townhouses, commercial, retail etc. With apartments or units, you only own the area within the unit to the layer of the coat of paint, wallpaper after which it is owned by the Owners Corporation. Strata title still falls under the gambit of Torrens Title.

Community Title is not a separate form of title, but is a sub-section of Strata Title. Put simply, it is a subdivision of horizontal land (like strata) with vertical areas but has “vertical” areas of “community association” such as gyms, swimming pools, parklands to be used by all members of the association (as opposed to your own Lot) and is in a sense, an estate. You own your lot, but also have right to greater lifestyle should you wish.

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