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Introduction
i Ownership of real estateFreehold title and leasehold title are used for ownership of real estate in Australia.
Freehold title is the prevalent form of ownership. A freehold owner has the right to sell, mortgage and lease the real estate. Freehold title has no time limit; the title is in perpetuity. A freehold owner has the right to gift the real estate by will to their beneficiaries.
Houses, commercial buildings, farms and vacant land are freehold title.
Strata title, also known as community title, is the form of freehold title found in residential complexes with apartments and town houses, and in commercial complexes with offices, shops and industrial units. The term 'strata' derives from the word 'stratum', which means 'layer'. It was introduced to permit separate ownership titles in multi-storey apartment blocks. As in the case of freehold title, strata owners have the right to sell, mortgage and lease the real estate and have the right to gift the strata title real estate by will to their beneficiaries.
Strata owners are members of a legal community known as a body corporate or owners corporation, which owns and is responsible for the building fabric: the walls, floors, ceilings, external windows and external doors, the roof and common areas such as driveways, gardens and swimming pools. The body corporate raises strata levies to pay for repairs and upkeep, such as for the roof, balconies and facades, building insurance and fire compliance. Strata owners must also observe the strata by-laws or rules applicable to their strata scheme. For instance, permission is required for renovations, and there are restrictions on short-term rentals and rules for use of the common facilities.
Leasehold title in Australia comprises Crown leases and private leases.
Crown leases are found in some rural properties. In the Australian Capital Territory, all real estate is leasehold title, and ordinarily is a 99-year Crown lease. Crown leases are found in maritime and foreshore areas.
Private leases are for fixed periods. They are used for residential dwellings and for commercial premises.
For the sake of completeness, there are four other forms of title:
- company title (or stratum title), which is found in some older residential apartment buildings;
- native title, which often coexists with pastoral and mining leaseholds;
- water access licences, which are found in rural areas and give access rights to draw water from rivers; and
- old system title, which is a near obsolete form of title.
Ownership of real estate is recorded in the land registry (land titles registry or land services office) in each state and territory. The name of the legal owner of the real estate is recorded in the land registry. Trusts are recorded in some states. Affectations and encumbrances, such as easements, covenants, restrictions, mortgages, caveats and leases, are also recorded.
Every parcel of real estate in Australia has its own certificate of title. The title system for property in Australia is known as Torrens title or Real Property Act title. It was originated by Robert Torrens, who in 1858 introduced the system to provide a register of real estate ownership titles administered by the state to replace the old system title that required proof of title through a chain of title comprising conveyances and mortgages, among other things.
Certificates of title can be searched online for a fee.
Australian legislation confers a state guarantee of good title (indefeasibility of title) on the person who is recorded as the owner of the real estate on the certificate of title kept in the land registry. Because of the title guarantee, no title insurance is necessary in Australia.
iii Choice of lawEach state and territory has its own property law and conveyancing practices that apply to real estate in their jurisdiction. Each state and territory has its own form of contract for sale of real estate. Real estate transactions (conveyancing) are handled by lawyers (solicitors), conveyancers and settlement agents.
