Forward registration land titles
01 Feb 20
Exchange contracts now settle later! Small deposit required (Typically 5 - 10 % of the land purchase price or less) to lock the contract price of the land and contract build price for a delayed settlement. Sound interesting?
- What’s the difference between a property title and deed?
- What’s the difference between an untitled and titled lot of land?
- What are the risks associated with buying an untitled lot of land?
In this blog we’ll help you navigate the complexities of forward registration land titles and understand the facts before you sign on the dotted line.
On the go? Here’s 30 seconds of take outs:
- A land title, titled deed or certificate of title is an official document or record that details current ownership and other title information for a property.
- Unregistered or forward registered blocks of land can help you get your foot in the door of the property market before you have all your financial ducks lined up. But there are some risks!
- Capital Properties can help you decide what move is right for you with a free discovery session. Find out how to book one today.
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A land title, title deed or certificate of title is an official document that details the current owner and title details of a property.
The certificate of title records details including:
- Current ownership details with full name
- Volume and folio or title reference number
- Survey plan number and type
- Encumbrances and notifications including mortgage
- Whether there is a caveat against the title
- List of any unregistered dealings
What is the difference between a property deed and title?
Property deeds and titles refer to two separate legal concepts.
All original property deeds are archived at each state or territory land registry office.
Land registries now only issue an electronic copy of the certificate of title, also known as a land title search.
A title is a legal way of saying you own a right to something. For real estate purposes, the title refers to ownership of the property, meaning that you have the rights to use that property.
Land and Titles Register is a state base electronic system where the certificates of titles are stored and can be requested.
Titled / registered lot of land
A titled block of land is land that has been registered with the lands and title office with an official record of who owns it through a Certificate of Title.
This means that the bank can let you can gain funding or loan approval and when the property settles the land title can transfer into your name as the official owner. It’s at this point you can start the process for building approval to construct a house.
Untitled / forward registered lot of land
Untitled land is land that is offered for sale by a land developer but is likely to be in the early stages of the development and earthworks. For example, the roads, sewer, or services may not be completed, and the land has not had Development Application (DA) for the subdivision approved by the local council. Untiled blocks are typical of new land estates stage releases.
Find out more about titled land vs untitled land.
Why should I buy an unregistered block of land?
- Do you require long settlement period?
- Are you almost there with your savings but still require 3, 6, 9 or even 12 months to save the rest?
- Are you keen to receive any land value increases, with no interest payable and then settle when you’re ready?
Nothing beats dangling the carrot close enough for you to take a couple of nibbles! One of the best things about forward registered land (also known as unregistered land) is that for all intents and purposes as soon as you exchange the land contract you have a foot in the door – you are in the property market!
The contract ensures that your land price is locked in, in the case of a long land title registration you could gain some equity along the way even before you settle.
You just need to do your bit and position yourself for finance approval once the title is issued.
What risks do I need to know about?
In New South Wales and Victoria, once you enter a land contract and certain timings are fulfilled the land contract in most cases is unconditional. Meaning there are no conditions to be met for settlement. As soon as the land is titled, settlement will be earmarked and if your unable to settle by the required dates penalties can be enforced or the contract voided and your deposit lost.
In Queensland, most new land subdivision contracts are ‘subject to finance’ which can be less risky.
So, while there are many upsides to purchasing an untitled block it does come with some risk.
Buying unregistered land requires you to sign a Contract of Sale with a developer who will develop and register the land for you.
You’ll generally pay a deposit equal to 10% of the land value depending on the land developer. Some land developers only require $5,000 deposits.
Developers are notorious for giving unrealistic time frames for land registration, so be prepared for delays.
The contract may include a sunset clause, if the developer doesn’t deliver the land in a set period of time the contract can be voided, and deposits refunded. Problem with this is you risk losing the potential gains you may have had.
The contract essentially states that the developer promises to deliver a block of land at some point in the future for an agreed upon price.
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