Imagine purchasing your dream home, settling, and moving – only to later discover the property was never really yours.
In 2023, the Queensland Supreme Court found that a couple had no legal interest in the Queensland home they had purchased five years earlier, because the title had never been transferred into their names.
The case concerned a mortgagee auction, and it was found that the mortgagees who sold the property did it unlawfully, as security for a fraudulent loan by a relative of the registered owner.
The owner of the property placed a Caveat over the property to stop the sale, after discovering the fraudulent pursuit.
After the registered owner of the property negotiated with the mortgagees, the Caveat was removed in exchange for $40,000 before settlement.
The couple were unaware of underlying fraud, thus they settled the contract and paid the purchase price, attempting to transfer the title into their names.
Consequently, they were not able to transfer the home into their names because the Register of Titles placed a second Caveat over the property.
This Caveat was exercised after the owner wrote to the Register of Titles office saying her home had been fraudulently mortgaged by criminals.
The mortgagees were not entitled to exercise the power of sale over the house making the sale void.
After a great deal of legal action and procured fees, the couple lost the house as the court found that they only had equitable interest not legal interest. The legal interest was absent because of the insufficient title transfer.
The court ruled that the house still belonged to the registered owner as the mortgage was procured by the fraud of another person and that the lenders were inadequate in their ability to verify whether the registered owner agreed to her house being put up as security.
The purchasers of the property were later awarded compensation under a section of the Land Titles Act in Queensland that protects people “deprived of an interest in a lot” in circumstances such as fraud.
Transfer of Title at Settlement
The transfer of the whole or part of a property can be a complicated and expensive process if it is not handled properly.
A transfer of title is the legal process by which ownership of a property is formally changed from one party to another. The core purpose of the conveyancing process is to ensure that legal title to land is properly transferred and registered.
Property title can be transferred in several ways, including:
- By sale (the most common method);
- By gift;
- By changing or restructuring ownership (for example, adding or removing a party).
Understanding the transfer process is essential to minimise risk and avoid potential legal disputes or claims arising from defective or incomplete registration.
However, complications can arise that prevent a transfer from being registered. One common example is the lodgement of a caveat over the property, which can restrict or prevent dealings with the title until the underlying issue is resolved.
Ensuring that all title issues are identified and addressed before settlement is critical to protecting your legal interest in the property.
Before settlement takes place, a title search should be conducted to ensure there are no caveats or other encumbrances registered on the property. If a caveat appears on title, settlement should not proceed until the issue has been properly investigated and resolved.
What is a Caveat?
A caveat is a form of statutory injunction provided for under the Real Property Act 1900, intending to warn the public that there is an interest claimed in the property, and it can therefore not be sold to another purchaser unless the caveat is lifted.
If you need assistance with transferring a property, contact our experienced team.
