So you’ve just purchased a property on the Gold Coast. First of all, congratulations! Now you’re probably ringing around different law firms for a conveyancing solicitor to act on your behalf and assist you with the purchase process. When you’re obtaining quotes you’ll normally be quoted a professional fee, as well as a search fee. This search fee is the cost of the searches your solicitor must undertake on the property, and in most cases the cost of these is simply what it costs your solicitor to order these.
One of the searches that your conveyancing solicitor must undertake is a title search of the property. A title search contains all of the details about the property, including; its owner, legal description and any encumbrances that exist over it. This information is vital to completing the conveyancing process.
What you’re probably not aware of though, is why you will need to pay for two title searches and why undertaking a second title search is so important to your purchase.
The First Title Search:
Upon receiving the signed contract of sale from the real estate agent, your solicitor will first undertake a title search of the property. This initial search is designed to ensure that the details of the property held by the Queensland Titles Registry match those details listed on the contract. This is to ensure that you are actually purchasing the correct property.
Your solicitor will look for the following details from the title search:
- The seller of the property on the contract matches the legal owner of the property;
- The property details, such as title reference, lot number and plan number, match those details listed on the contract;
- Whether any encumbrances exist over the property that are not listed on the contract, and that those encumbrances that are listed are also visible on the title search;
- Whether the seller has a mortgage on the property; and
- Whether a hard copy certificate of title has been issued.
Using this information your solicitor will be able to advise you if any errors or problems exist and will also be able to prepare the necessary documents to complete your purchase, such as completing the required transfer documents.
The Second Title Search:
So why is there a need for a second title search to be conducted? This is probably one of the most important searches that your solicitor will undertake and it must be completed on the day of settlement, as close to the settlement time as possible.
This second title search is designed to ensure that in the time between when the contract of sale was signed and the settlement date there has not been any changes to the property; whether that be a change in owner, or a new encumbrance, such as a mortgage. This is because at settlement the seller is legally required to provide the buyer with a clear title, otherwise settlement cannot proceed.
A good example of why this second title search is so valuable for example is the registration of a mortgage over the property. In most cases a property will have a mortgage over it, but this will be released at settlement and your solicitor will collect a release of mortgage from the seller’s bank. What about though if the initial title search did not show a mortgage over the property, so the conveyancing process continued based on this information, but on the morning of settlement the second title search showed the registration of a new mortgage that did not previously exist. Unless the seller had previously advised your solicitor of this and arranged for it to be released at settlement, the seller will be unable to provide clear title to you, meaning settlement will be unable to proceed, which can cause massive problems for both the seller and you as the buyer.
It’s vital though that a situation such as this is discovered prior to settlement, otherwise things could get a whole lot more complicated.
This is just one of the reasons your conveyancing solicitor will undertake a second title search of the property. If you are taking out a mortgage on the property yourself, your bank will require a clear title search before handing over the settlement funds to the seller.