Torrens title
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| Property law |
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Torrens title is a system of land title where a register of land holdings maintained by the state guarantees 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 depends 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 a complete Torrens system; other states with a limited implementation include Minnesota, Massachusetts, Colorado, Georgia, Hawaii, New York, North Carolina, Ohio and Washington.
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[edit] Background
[edit] 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.
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.
[edit] 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.
[edit] 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. 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.
[edit] Overview of the Torrens system
The Torrens title system was designed to obviate the need for a chain of title and the necessity of tracing the vendor's title through a series of documents. The fundamental principal of the Torrens system is title by registration rather than registration of title (i.e. the indefeasibility of a registered interest). Essentially, Torrens is a system of State guaranteed title that is usually supported by a compensation scheme for those who lose their title due to its operation. Further, each parcel of land is identified by reference to a numbered deposited plan. Each lot of land is the subject of a separate folio in the register. 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. There are other parcels of land which simply await conversion.
[edit] 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.
[edit] Three principles of Torrens System
The Torrens system works on three principles:
• 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 was to sell 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, like 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.
[edit] Adoption
Other Australian colonies introduced similar legislation between 1862 and 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.
[edit] 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.
