Knowing Your Documents: What Is a Certificate of Title? 

Paperwork or documentation is a staple of every property transaction, whether it involves a house, a car, or any asset. It provides a written record of the procedure, which the parties involved can refer to ensure the accuracy and completeness of the undertaking.  

One example of these documents is the Certificate of Title. In this blog, let us learn what a certificate of title is, its purpose, and why it is important in every property transaction.  

What Is a Certificate of Title?

In the world of real estate, a certificate of title is a document that makes the property ownership of the holder official. It is a statement of opinion on the title’s status issued by a title insurance company, a government authority, or a relevant agency. 

The primary purpose of a certificate of title is to verify the ownership of the asset, which ultimately protects the owner’s rights and provides records of applicable encumbrances or liens against the property. The sellers are required to transfer the certificate of title to the buyer for real estate transactions. 

Importance of a Certificate of Title 

1. It provides proof of ownership. 

If you own valuable property, proof of ownership is essential to establish your legal rights with regard to the building or land. With this, you will have control over the property, giving you the entitlement to use, possess, sell, or transfer it when the time comes. Aside from protecting your rights, a certificate of title will also provide you with security as the legal owner of the asset. 

2. It protects the parties involved.  

The certificate of title includes details about encumbrances and liens. But what are they? 

An encumbrance is when a party, who’s not the owner, makes a claim against a property. It is not limited to money-related matters, but also property use restrictions and easements. Such a claim can negatively impact the property’s transferability, reduce its value, and restrict its free use. 

On the other hand, liens are more focused on monetary claims, usually resulting from a lawsuit by a creditor. With a lien, the creditor will have the right to seize and sell the property to ensure payment or satisfy the outstanding debt. 

With these details on the certificate of title, fraud will be prevented, and there will be more transparency in property transactions. Hence, it gives protection to the interested parties as well as the owners. 

3. It simplifies the transfer process. 

The certificate of title specifies the chain of ownership, which will then simplify the property and title transfer. That is why it is crucial to have a certificate of title when buying, selling, or transferring a property. 

4. It helps evaluate the asset. 

All the information included in a certificate of title, such as the property description, encumbrances and liens, title search, and financing decisions, will help the interested parties evaluate the asset. This way, it will be quicker to identify the price for the asset to avoid over or underpaying. 

More importantly, the details about the owner will make the ownership verification easier and prevent fraudulent transactions.  

What Does a Certificate of Title Include? 

As previously mentioned, a certificate of title includes vital information about the transaction to establish ownership and the legal status of the property. Here are some components that the document may reflect: 

• Land or Property Description: Certificate of titles have property diagrams with the description and lot & plan number of the exact property. It may also include detailed information about the asset, such as the address, lot description, etc. 

• Owner Information: An individual, a corporation, or multiple parties can own the property. That is why the certificate of title specifies the ownership structure aside from the name of the property’s rightful owner.  

• Encumbrances and Liens: As stated, the document records encumbrances and liens against the property. This way, the parties involved will know what they need to handle during the transaction. 

• Survey and Boundary Information: Some situations call for the need to include the property’s physical boundaries in the certificate of title., especially when potential issues may arise concerning its boundaries. 

• Important Dates: The date of transfer and issuance must also be on the certificate of title.  

• Title Insurance Information: If there is a title insurance for the property, the certificate of title can also state the name of the insurer, policy number, coverage, and other important details about the insurance policy. 

Need to Understand Your Documents a Little Bit More? Let Us Help You! 

Melbourne Conveyancing Group won’t just answer, “What is a certificate of title?” We can also provide legal advice for your property transactions and help you understand the documents and forms involved in the process. With our experts, you can easily navigate every sale, purchase, or transfer. We service different cities in Australia. Just call us on 0426 385 900 to learn more.