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Basic Concepts

Torrens Systemtitle by registration

Joint tenants or tenants in common

Strata titleBodies corporate

Certificate of Title

Contract for the sale of land

Off the plan purchase and stamp duty considerations

Direct/indirect investment

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Relevant legislation

State legislation: TLA

Property Law Act

Residential Tenancies Act

Retail Tenancies Act

Subdivision Act

Sale of Land Act

Owners Corporations Act.

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Contracts for the sale of land

Instruments Act 1958 requires that contracts for the

sale of land be evidenced in writing

Contracts for the sale of land must identify the parties,

property (Vol and folio number), price and settlement

date S. 32 ( S of L Act) pre contractual disclosure doc

provided to prospective purchaser before contract

signedread text for contents of s.32

Note distinction between fixtures and chattels

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Torrens System - Land title registration

The Torrens system is a system of title by registration

as distinct from registration of title. ( Breskvar v Wall1971) title rests upon act of Registrar General inregistering documents

Executed transfer, contract of sale, duplicate

certificate of title = transfer of title (note: outstandingmortgages must be discharged)

Interests such as mortgages, restrictive covenants andeasements may be entered upon the Certificate of

title.. These are referred to as Generally registered interests have priority over

unregistered interestsnote paramount interests

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Torrens System - Land title registration

Contracts for the sale of land must be evidenced in

writing Executed transfer, contract of sale, duplicate

certificate of title = transfer of title (note: outstanding

mortgages must be discharged)

Interests such as mortgages, restrictive covenants and

easements may be entered upon the Certificate of

title.. These are referred to as

Generally registered interests have priority overunregistered interestsnote paramount interests

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Land title registration- flats and apartments

Legislation- Subdivision Act 1998

developer registers plan of subdivision with TitlesOffice after Council approval, On sale of each lot thepurchaser receives separate Certificate of Title

Common property is that part of the land on thesubdivision plan that is not owned by individualmembers .

Members of the Owners Corporation own a share inthe common land in proportion to their part of thesubdivision

common property managed by the OwnersCorporation of which the owners of the strata titlesare members

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Land title registration- flats and apartments

Functions and powers of Owners Corporations

contained Regulations: Power to appoint a Professional Owners Corporations

Manager

all members of Owners Corporationsmust contributeto the costs of management and maintenance ofcommon property

hold funds of Owners Corporationsin trust

Public liability insurance for common property

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Land title registration- flats and apartments Note: statutory duties and remedies available to shareholders is

not available to members of the Owners Corporationsalthough

the text argues that some common law remedies maybeavailable to protect and enforce the rights of members.

An administrator may be appointed when the OwnersCorporationsis not operating in the interests of its members, isoperating inefficiently or incompetently managed, necessary to

protect the interests of the members. When an administrator is appointed the Owners Corporations

and committee cease to function, functions taken over byadministrator.

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Indefeasibility

Registration of title is conclusive evidence of title

in the case of fraud of the person becomingregistered .

S. 42 the registered proprietor of land shall exceptin the case of fraud hold such land subject to such

encumbrances as are notified on the title. T.L.A.(Vic) The title cannot be set aside because of

irregularities in the registration process,- one of two joint proprietors of land

forged the others signature to a mortgage in favourof an innocent third party.. Immediate indefeasibilityconcept

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Indefeasibility

- registration occurred through

fraudulent act of agent- defeasible title - wifes signature forged on

a mortgage. Bank officer falsely attested the wifessignature therefore bank had a defeasible interest.

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Indefeasibility/defeasibility

Company seal affixed by people who were notDirectors. Mortgagees solicitor did not check directors

or signatures. Held that no obligation to make inquiries

and upheld validity of mortgage held by bank.

-

mortgagor argued mortgage invalid as company seal

on mortgage document not witnessed by director (as

was the requirement). Mortgagor argued themortgagees solicitors reckless in not checking

company details fraud means actual dishonesty..

Held that mortgage valid.

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Co owned property

Joint tenants

Tenants in common

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MORTGAGES

Securities -general concept- transaction whereby acreditor, in addition to the personal promise of the

debtor to repay the debt is given some rights over the

property of the debtor, in order to enforce the

contractual debt obligation. an interest in propertywhich secures payment or performance of the

obligation.

secured loans have the advantage that in the event of

default on the the repayment of the debt, the creditoris entitled to exercise remedies over specified property

of the debtor in preference to unsecured creditors.

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Mortgages Definition:

the mortgage is a financial device by which an owneror would be purchaser of land borrows money. In

simple terms..a form of loan contract by which a

borrower (mortgagor) offers his/her land as a

security to the lender-banker (mortgagee)..The

property is held by the bank as security until the loan

plus interest is repaid.

M

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Mortgage

Mortgages are one form of security taken out by thecreditor/lender over real property. Traditionallymortgages over property involved the transfer of thetitle to the creditor/lender/FI until monies owing paid.

Mortgages under the TLA are statutory charges whichdo not involve a transfer of land but when registeredconfer on the mortgagee certain rights and obligations.

Distinguishing features:

statutory charge created by registration of the

mortgage (mortgagees interest) on the registered titleof the mortgagor

right of redemption by mortgagor on repayment

capacity of mortgagor to further deal with property by

creating other mortgages over the same property or

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priorities

The priorities of competing mortgages of Torrens landis determined according to the principles of

indefeasibility:

between two registered mortgages- first in time a registered mortgage has priority as against an

unregistered mortgage

two unregistered mortgages- usually first in time

unless fraud or similar circumstances

Paramount interests

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Mortgagees remedies on default

Sue for breach of contract

enter into possession ( become responsible asowner/occupier)

power of salemust exercise good faith

power to appoint a receiver personal action against mortgagor

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Caveat Definition:

Lodged with the Registrar- General as a means ofpreserving the priority of an unregisteredproprietary interest in Torrens land. A statutoryinjunction which prevents the alteration of theregister- freezes the title- requires the Registrar towithhold any further registration until the caveatornotified and given the opportunity to take legalaction

Caveat- beware

caveator - lodges caveat

Caveatee- against whom lodged.

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Caveat

means of preserving unregistered interest

must relate to an interest in land not a source of title but warning

failure of a prior interest holder to protect interest bylodging a caveat may result in that interest being

postponed to a later interest- essentially givesprotection so a registered mortgagee who hasduplicate C/T would not need to lodge a caveat toprotect a subsequent mortgage given to same

mortgagee.

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Off-the-Plan

Stamp duty savings under the Duties Act (Vic) 2000,s 21(3)

Stamp duty ad valorem on transfer and mortgage Transfer / sale price less a deduction for construction

costs

completion dates for registration of S/D- 18mths

Recision of the contract by the purchaser Implied term of contract that vendor must use best

endeavours to register and complete constructionwithin time period

Conditional contracts Read Etna v Arif

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Best endeavours

The Courts have held that developers have an

implied obligation with Off The Plan contracts to usetheir best endeavours to ensure completion of

building work and registration of subdivision prior to

the deadlines specified in the contract

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Retention of title (Romalpa) clauses

The seller reserves title over goods until finalpayment is made, and provides that if the goods aresold to a sub contractor, the purchaser is to accountto the original seller for the amount outstanding. Suchclauses provide that if the buyer fails to pay for thegoods or goes into receivership or liquidation theseller can recover the goods.

Chattels, the subject of retention of title clauses, onceincorporated as fixtures in a building render theclause ineffective.

Distinguish between chattels and fixtures 1) degreeof annexation 2) purpose of annexation