Title to commercial property in Australia is recorded under the Torrens system, with each state and territory maintaining its own land titles register. The title certificate identifies the registered owner and shows any registered interests in the land: mortgages, leases, easements, caveats, and other encumbrances. For a buyer, the title certificate is one of the first documents reviewed and a key source of information about constraints on use, third-party rights, and pending disputes.
This guide covers the principal types of registered interests, how each affects value and use, and the buyer-side framework for title review.
Title is what the buyer is actually acquiring. The registered interests reveal what someone else can do with the land. A clean title is the default expectation; encumbrances should be understood, priced, or removed before settlement.
The Principal Title Interests
Registered proprietor
The current legal owner of the land. May be an individual, company, or trustee. The buyer is acquiring from this party.
Mortgages
Registered security interests in favour of lenders. Discharged on settlement when the seller's loan is repaid.
Leases
Registered leases (typically those over 3 years). For commercial property with tenants, the leases are typically registered and visible on title.
Easements
Rights granted to others (typically neighbours or service providers) over the land. Right of way, right of access, drainage, utility services. Run with the land; the new owner inherits them.
Covenants
Restrictions on use, typically limiting what can be built or done on the land. Restrictive covenants can be substantial constraints on redevelopment.
Caveats
A claim of interest in the land lodged by a third party. Does not transfer ownership but blocks dealings until resolved.
1 Caveats Explained
A caveat is a notice on title that a third party claims an interest in the land. The caveator may be claiming a beneficial interest under a trust, a contractual right, or an equitable interest. The caveat does not confer ownership but prevents the registered proprietor from dealing with the land (selling, mortgaging, leasing for over 3 years) without resolving the caveator's claim.
Common reasons for caveats
- A previous unsuccessful buyer claiming a beneficial interest under a contract.
- A spouse or family member with potential family law interests.
- A creditor with a court order or claim.
- A trust beneficiary claiming under the trust deed.
- An adverse possession claimant.
Effect on the buyer
A caveat on title at the time of contract typically requires resolution before settlement. The vendor must either remove the caveat (with the caveator's consent or by court order) or the contract is unenforceable.
2 Easements
An easement is a right granted to a third party to use the land for a specific purpose. The most common types:
Right of way
The neighbour has a right to cross the land to access their own property. Common where a back lot has no street frontage.
Drainage easement
The local council or neighbour has the right to discharge stormwater or sewage through the land. Limits what can be built over the easement.
Utility easement
Water, electricity, gas, or telecommunications providers have the right to maintain infrastructure across the land. Limits building over and excavation near the infrastructure.
Access easement
The neighbour has a right of access for specific purposes (maintenance of their building, fire escape, light over the land).
Easements run with the land. The new owner inherits all registered easements. Buyer-side review identifies the location and impact of each easement on use and future development.
3 Restrictive Covenants
A restrictive covenant is a binding restriction on the use of the land, typically benefiting an adjoining or related parcel. Common restrictions:
- Building height limits.
- Setback requirements.
- Use restrictions (no industrial use, no licensed premises, no specific business types).
- Architectural or material requirements.
Restrictive covenants can be substantial constraints on redevelopment. They typically cannot be removed without the benefitted party's consent or a court order extinguishing or modifying the covenant.
4 Mortgages and Discharge
The vendor's mortgage is typically discharged at settlement. The lender provides a discharge of mortgage in exchange for repayment of the loan. The discharge is registered shortly after settlement; the buyer's title is clean.
Buyer-side review confirms the discharge process is in place: the vendor's solicitor has communicated with the lender, the discharge fee is agreed, and the timing fits the settlement schedule.
5 Registered Leases
For commercial property with tenants, leases over 3 years are typically registered on title. The registered lease binds the new owner; the buyer takes subject to the existing lease terms.
Buyer-side review compares the registered lease (the legal document) with the disclosed lease (what the vendor has supplied) and the tenancy schedule (the summary of what the vendor says is in place). Discrepancies are flags for further investigation.
6 Other Registered Interests
Building agreements
Local council building agreements relating to permitted use, density, or special conditions imposed by planning consent. Run with the land.
Section 88B instruments (NSW)
Documents recording covenants and easements established at the time of subdivision. Reviewed alongside the title.
Strata plan
For strata lots, the strata plan defines the lot boundaries and common property. Reviewed in conjunction with the strata title certificate.
7 Buyer-Side Title Review
- Title search. Current certificate of title with all registered interests.
- Underlying documents. Copies of registered easements, covenants, leases, and other instruments referenced on title.
- Plan review. Survey plan showing easement locations and lot boundaries.
- Section 10.7 certificate (NSW) or equivalent. Local council planning certificate showing zoning, overlays, and constraints.
- Cross-reference. Title interests reviewed against the building, planning, and tenant disclosures.
- Solicitor review. Legal review of all interests and their implications.
- Action items. Caveats to be removed, easements to be relocated, covenants to be modified or accepted.
8 Common Buyer-Side Issues
Caveat blocking settlement
A caveat that the vendor cannot remove before settlement makes the contract unenforceable. Either the vendor resolves the caveat or the buyer terminates.
Easement materially affecting use
An easement that wasn't disclosed during marketing but materially affects the building's use or development potential. May warrant price adjustment or termination.
Restrictive covenant limiting redevelopment
A covenant preventing a planned redevelopment. May warrant termination or restructuring of the redevelopment plan.
Discharge not arranged
The vendor's mortgage discharge is not arranged with sufficient time before settlement. The buyer's solicitor follows up to confirm; standard practice is to require evidence of discharge arrangements.
Frequently Asked Questions
Can I lodge a caveat to protect my purchase?
Yes, the buyer can lodge a caveat on contract signing to protect the equitable interest until settlement. Standard practice on substantial commercial transactions.
Are unregistered interests binding?
Some unregistered interests can bind a buyer in specific circumstances (e.g., unregistered leases under 3 years where the tenant is in possession, certain trust interests). The general rule under Torrens is that registered interests are binding; unregistered claims face higher proof requirements.
What happens if an easement is wrongly registered?
The party with the easement burden can apply to court to extinguish or modify the easement. Specific grounds and procedures are state-administered.
Are old covenants enforceable?
Generally yes, if properly registered and benefitting an identifiable party. Some old covenants have become unenforceable due to changes in surrounding land use; specific legal review is required.