Understanding investment in Australian real estate

Australia has one of the most sophisticated and transparent real estate sectors in the world. This, combined with a stable political environment, a wealth of natural resources and a burgeoning services sector, provide compelling reasons for Chinese investors to invest in Australian real estate.

Torrens title and common law

Nearly all land in Australia is registered under the Torrens system, under which title to real estate is created by the act of registration in a central register. Normally the person who is recorded as the owner of a parcel of land cannot have their title challenged or overturned. Each state and territory has its own real estate legislation and registration system, but they are all based on the Torrens title system. Real estate law in Australia is governed by relevant state or territory legislation and case law. Some areas of land, typically rural, have not yet been converted to the Torrens system and remain under old system (common law) title.

The Torrens system is based on a guarantee of registered title by the states and territories. Legislation in most states and territories provides for the compensation of persons who suffer loss as a result of the operation of the system in certain circumstances. In order to obtain the protection of registration under the Torrens system, transfers of land, mortgages, easements, restrictive covenants and profits à prendre must be registered. The consequences of non-registration are that the holder of the unregistered interest has an equitable interest only, and the interest will be defeated by the registration of a later dealing. The interests that can be registered vary between states and territories. Some rights that are purely contractual between the parties and which are not capable of being registered include licences, rights of first refusal to acquire land and options to purchase.

Michael Wadley heads Blake Dawson’s China Practice.

PC Feng is a legal consultant in Blake Dawson’s Shanghai office.