Surprises on title.

Understanding what you’re actually buying

An encumbrance is someone else’s right over your land. You own the property. The encumbrance stays with it.

Showstoppers

A client suddenly realised before settlement that he needed to release a $400,000 charge from a related transaction from his medical room sale.

A title search confirms who owns the property. It also records every registered interest that limits that ownership.

Title searches are critical. Easements, covenants, registered leases, mortgages, and caveats can all appear on the title. Some are harmless. Others restrict how the property can be used, limit development potential, or complicate your financing.

The title search tells you what’s there. The underlying documents tell you what it means. A proper title review reads both and cross checks against contract Special Conditions.

Common encumbrances

Easements are rights granted to a third party to use part of the land for a specific purpose. Drainage, stormwater, access, and services infrastructure are common in warehouse properties. They run with the land, meaning they bind every future owner, not just the current one. An easement across the rear of a site may be irrelevant if no development is planned. It’s a different matter if you intend to expand the building footprint.

Restrictive covenants limit how the land can be used or developed, often for the benefit of a neighbouring property. They can restrict building height, limit site activities, or prohibit certain uses. A covenant that doesn’t affect the current building may frustrate a future development. One that restricts permitted uses may limit the tenant profile you can attract at lease expiry.

Registered leases bind the purchaser. If the warehouse is tenanted and the lease is registered, you acquire the property subject to it. The tenant’s rights continue regardless of the change in ownership. Confirm that the lease attached to the contract matches what’s registered, and that no other tenancies appear on the title that weren’t disclosed.

Mortgages and charges must be discharged at settlement. This is routine in most transactions. Where the vendor’s security structure is complex, confirm early that the discharge mechanics are straightforward.

Writs can appear on the title where the current owner has unpaid stamp duty, rates, or other government charges. They need to be identified and resolved before settlement.

Caveats signal that a third party is asserting a claim over the property. A caveat that isn’t resolved before settlement can prevent the transfer from being registered. If one appears on the title, it needs to be understood and dealt with before you get to settlement.

Encumbrances that don’t appear on the title

Not every encumbrance is registered on the title. Some arise by operation of law, silently binding the land. Statutory encumbrances are the most common example. A water authority may have the right to access infrastructure on the land if required. Energy and telecommunications authorities carry similar rights in some circumstances. None of these appear on the title. They exist because legislation creates them.

Personal Property and Securities Register charges are another category. The PPSR records charges against personal property (goods being sold with the land). A security interest registered against the seller on the Personal Property Securities Register won’t appear on the title search but can affect the transaction. They need to be identified and dealt with before settlement.

We acted on a sale where a $400,000 PPSR charge surfaced mid-transaction. It took fourteen days to get the release. In a contract with a fixed settlement date, fourteen days of pushing a lender can be a long time.

A title search is the starting point. It isn’t the whole picture.

Where title encumbrances create problems

Problems don’t usually arise because an encumbrance was hidden. They arise because it wasn’t reviewed against the buyer’s specific plans.

A drainage easement that runs across the exact area where you intended to extend the building. An access easement giving a neighbour the right to use your loading area. A covenant that prevents the change of use you were counting on. Each of these was on the title before the contract was signed. Each was visible during due diligence.

They have to be caught and reviewed before the contract is unconditional.

What “sold subject to existing encumbrances” actually means

Most commercial contracts list the encumbrances the property is sold subject to. Only those specified encumbrances remain in place after settlement. Anything registered on the title but not listed in the contract should be discharged at or before settlement.

This makes the contract review as important as the title review. If an encumbrance appears on the title but isn’t listed in the contract, it needs to be dealt with. If it is listed, you need to understand what it means before you sign.

Title, finance, and due diligence

Lenders review the title as part of their security assessment. Encumbrances that restrict use, limit development, or affect the income stream can influence the valuation and the terms of the finance offer. An encumbrance identified after the finance condition has expired may affect your lender’s position at a point when you no longer have a contractual exit.

Use the due diligence period to identify and assess title encumbrances while your conditions are still live.

How we approach title review for warehouse buyers

We obtain the current title search early, identify every registered encumbrance, and request the underlying documents so the specific terms can be read and assessed, not just noted. We review each one against your intended use of the property and flag anything that could affect your operational position, your development plans, or your lender’s view of the security.

Our job is to make sure the legal structure of the land supports your commercial objectives before you commit.