Shopping for a Home? Check Out These Three Possible Exceptions to Standard Property Deeds

In past centuries, a property deed in Australia consisted of a rolled sheet of parchment detailing every previous owner of the property. Now, the title or deed you receive when you buy a property won't be a sheet of parchment or contain a list of previous owners, but it is essential to proving you own the property.

However, there may be a few rare cases where you may be offered a home without a title or with an unusual type of title. Here's are just a few examples that you should know about.

Titles Not in the Name of the Previous Owner

Ideally, you should never buy a home if the owner's name is not on the title. However, if the home is held in a trust for the owner, the trustee will appear on the title rather than the owner's name. For example, if a minor inherited a property, it would be held in a trust for him or her and may not have his or her name on the title.

Homes Purchased with Vendor-finance Mortgages

Vendor-finance mortgages are financed by individuals or small companies. In exchange for a higher interest rate, these lenders carry the mortgage for the new homeowner, and the homeowner makes payments directly to them.

This arrangement continues while the homeowner works to improve his or her credit or increase his or her income so he or she can apply for a conventional mortgage. When they can, the homeowners take out a conventional mortgage and pay off the vendor-financed mortgage.

Under these arrangements—which are also called lease to buy—you do not receive the property title until you take out the conventional mortgage and pay off the price of the vendor-financed mortgage. While you are paying the vendor-finance mortgage, the vendor (or the current homeowner represented by the vendor) holds the property title or deed.

Townhouses or Apartments

If you buy a townhouse, an apartment, or a similar type of property, you will receive a title, but rather than a standard title, you will receive a strata title. This special title is for shared properties. It signifies you own your piece of the property but also notes elements of the property (roofs, walls, outdoor areas, etc) are shared with other owners.

Before buying any home, make sure it has a clear title, and if there are any potential issues, contact real estate professionals like PRS Conveyancing (SA) Pty Ltd to guide you.