A title search is a critical step in the process of selling a property. In New South Wales (NSW), a title search reveals important information about the property's ownership, boundaries, and any encumbrances or restrictions that may affect the sale. Conducting a thorough title search helps protect both the seller and the buyer from potential legal issues, ensuring a smoother transaction. This guide explains the importance of a title search, how it works, and provides a real NSW case study illustrating the consequences of neglecting this vital step.
A title search is an examination of public records to confirm a property’s legal ownership and to identify any claims or encumbrances that might affect the property. The search is typically conducted by a solicitor, conveyancer, or title company and includes reviewing documents such as the certificate of title, easements, covenants, mortgages, and any other registered interests.
The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.
In the case of Blackwood v. Cooper [2023] NSWSC 1845, a property seller faced significant financial losses and legal complications due to failing to conduct a proper title search before listing their property for sale. The property, a waterfront home in Sydney's Northern Beaches valued at $3.2 million, was sold without a title search, leading to a costly legal dispute over an undisclosed easement.
The seller, Mr. Blackwood, was eager to sell his property quickly to fund an international business venture. Under pressure to expedite the sale, he relied on a basic online property check instead of engaging a solicitor to conduct a full title search. Desperate to secure the funds, he proceeded with the sale without knowing that an easement existed on the property that allowed a neighboring property owner access to the waterfront.
The buyer, Ms. Cooper, purchased the property intending to develop a private marina. However, after the sale, she discovered the easement that restricted her use of the waterfront, significantly affecting her plans and the property's value. Feeling deceived and distressed, she filed a lawsuit against Mr. Blackwood, claiming that he had failed to disclose the easement.
Ms. Cooper filed a lawsuit against Mr. Blackwood, alleging that he had breached his duty to disclose material facts about the property and that his failure to conduct a proper title search constituted negligence. The court proceedings focused on whether Mr. Blackwood had a duty to conduct a title search and disclose the easement, and whether he had acted reasonably in relying on an online check.
The NSW Supreme Court examined several key points:
The court found that Mr. Blackwood had failed in his duty to disclose the easement and had acted negligently by not conducting a proper title search. The court ruled in favor of Ms. Cooper, awarding her damages to cover the difference between the property's sale price and its true market value with the easement, along with legal fees and compensation for her lost development plans.
The financial consequences for Mr. Blackwood were severe. He incurred legal fees totaling over $80,000 and was ordered to pay Ms. Cooper $200,000 in damages to cover the reduced property value and associated costs. Major assets affected included his business investment capital, which was significantly depleted due to the unexpected financial burden resulting from the litigation.
Australian Consumers’ Association (Choice)
URL: https://www.choice.com.au
Provides consumer advocacy and advice on the importance of title searches and understanding property transactions.
Justice Connect – Property Disputes Advice
URL: https://justiceconnect.org.au
Offers free legal resources and guidance on property disputes and the importance of title searches.
Community Legal Centres NSW
URL: https://www.clcnsw.org.au
A network offering free legal help, including assistance with understanding property titles and encumbrances.
Legal Aid NSW
URL: https://www.legalaid.nsw.gov.au
Provides legal services for those involved in property sales and disputes, including advice on title searches.
Tenants' Union of NSW
URL: https://www.tenants.org.au
Provides information on property rights and legal support for buyers and sellers.