Torrens title

Torrens title is a system of land title where a register of land holdings maintained by the state guarantees an indefeasible title to those included in the register. The system was formulated to combat the problems of uncertainty, complexity and cost associated with old system title, which depended on proof of an unbroken chain of title back to a good root of title.

The Torrens title system was introduced in South Australia in 1858, formulated by then colonial Premier of South Australia Sir Robert Torrens. Since then, it has become pervasive around the Commonwealth of Nations and very common around the globe.

In the United States, only Iowa has all its land under the Torrens system; other states with a limited implementation include Minnesota, Massachusetts, Colorado, Georgia, Hawaii, New York, North Carolina, Ohio and Washington.

Background

Common law

At common law, land owners needed to prove their ownership of a particular piece of land back to the earliest grant of land by the Crown to its first owner. The documents relating to transactions with the land were collectively known as the "title deeds" or the "chain of title". This event could have occurred hundreds of years prior and could have been intervened by dozens of changes in the land's ownership. A person's ownership over land could also be challenged, potentially causing great legal expense to land owners and hindering development.

Even an exhaustive search of the chain of title would not give the purchaser complete security, largely because of the principle "nemo dat quod non habet" ("no one gives what he does not have") and the ever-present possibility of undetected outstanding interests. For example, in "Pilcher v Rawlins" (1872) the vendor conveyed the fee simple estate to P1, but retained the title deeds and fraudulently purported to convey the fee simple estate to P2. The latter could receive only the title retained by the vendor - in short, nothing. :Edit: The case referred to here was actually decided in favor of the subsequent purchaser of the legal title, over the owners of the equitable title. The courts of equity could not bring themselves to decide against a totally innocent (without notice) purchaser. (Pilcher v Rawlins (1872) 7 Ch App 259, Court of Appeal, viewed in Bradbrook, MacCallum and Moore, 2007, Australian Property Law; Cases and Materials, Lawbook Co., NSW)

The common law position has been changed in minor respects by legislation designed to minimise the searches that should be undertaken by a prospective purchaser. In some jurisdictions, a limitation has been placed on the period of commencement of title a purchaser may require.

Deeds registration

The effect of registration under the deeds registration system was to give the instrument registered "priority" over all instruments that are either unregistered or not registered until later. The basic difference between the deeds registration and Torrens systems is that the former involves registration of instruments while the latter involves registration of title.

Moreover, though a register of who owned what land was maintained, it was unreliable and could be challenged in the courts at any time. The limits of the deeds registration system meant that transfers of land were slow, expensive, and often unable to create certainty of title.

Creation of the Torrens system

In order to resolve the deficiencies of the common law and deeds registration system, Robert Torrens introduced the new title system in 1858, after a boom in land speculation and a haphazard grant system resulted in the loss of over 75% of the 40,000 land grants issued in the colony (now state) of South Australia. He established a system based around a central registry of all the land in the jurisdiction of South Australia, embodied in the Real Property Act 1886 (SA). All transfers of land are recorded in the register. Most importantly, the owner of the land is established by virtue of his name being recorded in the government's register. The Torrens title also records easements and the creation and discharge of mortgages.

The historical origins of the Torrens title are a matter of considerable controversy. Torrens himself acknowledged adapting his proposals from earlier systems of transfer and registration, particularly the system of registration of merchant ships in the United Kingdom. James E. Hogg, in "Australian Torrens System with Statutes" (1905), has shown that Torrens derived ideas from many other sources and that he received assistance from a number of persons within South Australia. Stanley Robinson, in "Transfer of Land in Victoria" (1979) has argued that Ulrich Hübbe, a German lawyer living in South Australia in the 1850s, made the most important single contribution by adapting principles borrowed from the Hanseatic registration system in Hamburg.

Nevertheless, it cannot be denied that Torrens' political activities were substantially responsible for securing acceptance of the new system in South Australia and eventually, in other Australian colonies and New Zealand. He oversaw the introduction of the system in the face of often vicious attack from his opponents, many of whom were lawyers, who feared loss of work in conveyancing because of the introduction of a simple scheme. The Torrens system was also a marked departure from the common law of real property and its further development has been characterised by the reluctance of common law judges to accept it.

Overview of the Torrens system

The Torrens title system operates on the principle of "title by registration" (i.e. the indefeasibility of a registered interest) rather than "registration of title". The system does away with the need for a chain of title (i.e. tracing title through a series of documents). Each parcel of land is given a separate folio in the register and is identified by reference to a registered plan. The folio records the dimensions of the land and its boundaries, the names of the registered proprietors, and any legal interests that affect title to the land. The State guarantees title and is usually supported by a compensation scheme for those who lose their title due to its operation.

There are other parcels of land which are still unregistered.

The Register

The land register is the central aspect of the Torrens system. Originally the register was a bound paper record, but today the register consists of computer information.

On the first registration of land under the system, the land is given a unique number (called a folio) which identifies the land by reference to a registered plan. The folio records the dimensions of the land and its boundaries, the name of the registered owner, and any legal interests that affect title to the land. To change the boundaries of a parcel of land, a revised plan must be prepared and registered. Once registered, the land cannot be withdrawn from the system.

A transfer of ownership of a parcel of land is effected by a change of the record on the register. The registrar has a duty to ensure that only legally valid changes are made to the register. To this end, the registrar will indicate what documentation he or she will require to be satisfied that there has in fact been a change of ownership. A change of ownership may come about because of a sale of the land, or the death of the registered owner, or as a result of a court order, to name only the most common ways that ownership may change. Similarly, any interest which effects or limits the ownership rights of the registered owner, such as a mortgage, can also be noted on the register. There are legal rules which regulate the rights and powers of each of these interests in relation to each other and in relation to third parties.

The State guarantees the accuracy of the register and undertakes to compensate those whose rights are adversely affected by an administrative error. Claims for compensation are very rare.

Effect of registration

The main difference between a common law title and a Torrens title is that a member of the general community, acting in good faith, can rely on the information on the land register as to the rights and interests of parties recorded there, and act on the basis of that information. A prospective purchaser, for example, is not required to look beyond that record. He or she does not need even to examine the Certificate of Title, the register information being paramount. This contrasts with a common law title, which is based on the principle that a vendor cannot transfer to a purchaser a greater interest than he or she owned. As with a chain, the seller's title is as good as "the weakest link" of the chain of title. Accordingly, if a vendor's common law title is defective in any way, so would be the purchaser's title. Hence, it is incumbent on the purchaser to ensure that the vendor's title is beyond question. This may involve enquiries and an examination of the "chain of title".

The registered proprietor of Torrens land is said to have an indefeasibility title. That means that only in very limited circumstances can his or her title be challenged. These are set out in the legislation, and is subject to rules made by courts. For example, in Victoria these are set out in section 42 of the "Transfer of Land Act 1958". A court can also adjust rights as between parties before it, and order changes to the register accordingly.

Indefeasibility of title

Indefeasibility of title applies to the registered proprietor or joint-proprietors of land.

Different States have different laws and provisions. The following relates to Victorian jurisdiction where the Torrens system is manifested in the "Transfer of Land Act 1958" (Vic). Upon registration of his interest and subsequent recording on Title of his interest, the registered owner's claim to his interest in that land is superior to all other interests in the land other than the circumstances listed in s.42 "Transfer of Land Act 1958" (Vic).

This section indicates that the registered interest holder will be free from all encumbrances other than inter alia: • THOSE listed on the title;

• THOSE claiming the land on a prior folio (s42(1)(a));

• WHERE the land is included by wrong description on the part of the Registrar and the proprietor is not or has not derived title from a purchaser ‘for value’(s 42(1)(b);

• PARAMOUNT interests (s 42(2)(a)-(f)) - these interests, although even possibly unregistered, are 'superior' to interests that are registered.

Additionally, there exist exceptions or circumstances that can 'penetrate' the indefeasibility. Common factors that, when evidenced by a party, may penetrate and defeat the registered holder's claim include:

• FRAUD - where fraud is committed by the registered interest holder [principle of immediate indefeasibility] ;

• IN PERSONAM - where it can be shown that there was some contractual promise or undertaking by the registered party vis-a-vis the unregistered party.

• INCONSISTENT LEGISLATION - where legislation is enacted after the Torrens legislation is inconsistent with the Torrens legislation, the later piece of legislation will prevail; • VOLUNTEER - where the registering party acquires the interest for no consideration (e.g. bequeathed in a will). Note, contrast with Victorian law, in NSW volunteers will become indefeasible.

Three principles of Torrens system

The Torrens system works on three principles: [T Rouff "An Englishmen Looks at the Torrens System" (Law Book Co, Sydney, 1957).]

* Mirror principle - the register (Certificate of Title) reflects (mirrors) accurately and completely the current facts about a person's title. This means if a person sells an estate, the new title has to be identical to the old one in terms of description of lands, except for the owner's name.

* Curtain principle - one does not need to go behind the Certificate of Title as it contains all the information about the title. This means that ownership need not be proved by long complicated documents that are kept by the owner, as in Private Conveyancing system. All the necessary information regarding ownership is on the Certificate of Title.

* Insurance principle - provides for compensation of loss if there are errors made by the Registrar of Titles. Note that this is not relevant to oil companies due to maximum claims.

Adoption

Other Australian colonies introduced similar legislation between 1862 and 1875. The Torrens title system was introduced to New South Wales with the commencement of the Real "Property Act" on 1 January 1863. [http://www.lands.nsw.gov.au/land_titles/land_ownership/torrens_title] New Zealand also adopted a similar system in 1875.

Nevertheless, it has since become popular throughout the globe as it addresses two major problems identified with poverty in the third world by Hernando de Soto: that of uncertainty surrounding land ownership, and confusion around land transactions.

Civil law

The more or less equivalent concept in the French civil law is that of the cadastre.

Strata title is an enhancement of Torrens Title intended for apartment buildings and house type units.

References