There is no doubt that the introduction of the ‘Torrens’ system into the Queensland property market in 1861 ushered in an era of strong economic and financial growth.
However, much has changed in the last century and a half since the first Torrens statutes introduced the concept of ‘indefeasibility of title’ in Queensland. The risk environment which existed in the 1800s is fundamentally different to the risk environment which exists today.
For legal practitioners, this risk ‘landscape’ has been largely shaped by the emergence of massive scale urban development and the introduction of state and local government planning and development laws, regulations and policies.
Whilst the recent introduction of mandatory seller disclosure in Queensland provides buyers with an important additional layer of protection against title related defects, the seller disclosure regime does not capture all of the potential title related risks which a buyer may inherit from the seller.
In this regard, property transactions in Queensland are still very much guided by the doctrine of “caveat emptor”.
This article will briefly examine the limits of the protections afforded by the Torrens Title system in Queensland and will discuss how title insurance operates to ‘fill the gaps’ in respect of the state ‘guarantee of title’.
The concept of ‘Indefeasibility of Title’.
Although details of the Torrens system vary from state to state, a similar basic framework exists in all jurisdictions. The main object of the Torrens system is to make the land title register conclusive (in most cases, subject to exceptions) without a buyer having to look behind the register, as was the case with “old system title” where it was necessary for legal practitioners to investigate the historical chain of title deeds to establish a “good root of title”.
In Queensland, the effect of ‘indefeasibility’ is that the State guarantees the title of persons who become registered as proprietors without fraud on their own part (see section 184 of the Land Title Act 1994). That is, the registered proprietor of an interest in a lot holds that interest “free from all other interests”.
Conveyancing risks which fall outside of the Torrens system ‘safety net’
However, once a buyer’s interest becomes registered under the Land Title Act 1994 (LTA), it does not mean the property is immune from title related defects under common law or to express exceptions to indefeasibility of title which result from overriding statutes or statutory encumbrances.
Since Federation in 1901, Queensland has seen the introduction of robust building, planning and development laws which are now inextricably linked to conveyancing practice. Such laws regulate:
- land zoning
- residential subdivisions
- town planning and development
- construction of residential and commercial buildings; and
- environmental planning and controls.
This means that owners of Torrens title land in Queensland do not have unfettered freedom to build whatever they want on their land and a breach of these laws and regulations may impact upon the owner to deliver “good title” to a purchaser. Accordingly, legal practitioners now have to concern themselves with legislation which may impact upon their client’s ability to use the land, regardless of the protections afforded by the indefeasibility provisions of the LTA.
Common Law Defects in Title as “Exceptions” to Indefeasibility
At common law, a defect in title may arise in circumstances where the vendor is “unable to convey the full estate which it promised to convey to the purchaser” (quoted in Griggs L, Tasmania Law Reform Institute paper entitled Vendor Disclosure: Final Report No 5 September 2005).
In this regard, undisclosed boundary encroachments have been found to constitute a defect in title (see Svanosio v McNamara 96 CLR 186 and Horning v Pink 1913 13 SR (NSW) 529), together with other defects such as the failure of building work to comply with plans and specifications (see Long v Worona Pty Ltd (1973) 1 BPR 9109), undisclosed covenants and undisclosed public or private rights of way (see Yandle v Sutton (1922) 2 Ch 199 and the existence of sewer mains, or other pipes, connections or structures of supply authorities or services (Micos v Diamond (1970) 92 WN (SNW) 513).
Accordingly, a purchaser may very well obtain an “indefeasible title” under the LTA but this will offer no protection against common law defects in title which arise as a result of non-compliance with building, planning and development laws or arise as a result of boundary encroachments or undisclosed easements or covenants. Losses resulting from such defects fall outside of the compensation provisions of the LTA.
Unapproved Building Works
The issue of unapproved building works represents a significant practical problem for legal practitioners and their clients in Queensland.
Under the Queensland seller disclosure legislation which came into effect on 1 August 2025, a seller is only required to disclose (at the time of signing the contract) an unsatisfied show cause notice or enforcement notice under the Building Act 1975 or under the Planning Act 2016, or whether seller has been given a notice or order, that remains in effect, from a local, State or Commonwealth government, a court or tribunal, or other competent authority, requiring work to be done or money to be spent in relation to the property.
Importantly, the seller is not required to disclose information about the:
- current or historical use of the property
- current or past building or development approvals for the property or breaches thereof, or
- existence of any unapproved works on the property or any known breaches of building, planning or zoning law/regulations.
It is well settled law in Queensland that the existence of unapproved building work which may create a potential risk of a future statutory charge or burden upon the property arising from a show cause notice does not constitute a defect in title (McInnes v Edwards [1986] VR 161, Carpenter v McGrath 1996 40 NSLR 39). On this basis, a seller is under no statutory or common law obligation to disclose the existence of unapproved works to a buyer.
The seller is only required to disclose a show cause or enforcement notice which has already been issued by a local government authority and is in force. Nonetheless, should the unapproved building works be discovered by a local government authority after the contract is completed, then the risk of compliance with a subsequent a show cause notice issued by the local authority passes to the buyer.
The existence of the show cause notice then becomes a defect in the buyer’s title until the show cause notice is complied with and notice is withdrawn.
Importantly, a show cause notice or enforcement notice may be issued by a local authority on any property where the local authority is satisfied that unapproved building works have been carried out, and it is irrelevant whether the current owner was responsible for carrying out the unapproved works.
The legislation empowers the local authority to issue notices and orders to “the owner of the building or premises”. Therefore, a buyer may become liable to comply with a notice issued by a local authority for unapproved works carried out by a predecessor in title.
Accordingly, given that the current law in Queensland:
- does not obligate a seller to disclose the existence of unapproved building works as opposed to an unsatisfied show cause or enforcement notice, and
- the standard contract offers no rights or remedies to the buyer which might result in the termination of the contract.
It is unlikely that a seller will voluntarily make such disclosures in the contract nor agree to make the contract ‘conditional’ upon the seller rectifying any unapproved building works.
In terms of financial loss, costs associated with rectifying or demolishing unapproved structures can be substantial, as well as resulting in a significant diminution in value of the property.
Boundary Defects
Another area of conveyancing practice which represents a significant risk to buyers in Queensland is boundary defects/encroachments.
In Queensland, like the rest of Australia, losses arising from building encroachments and boundary discrepancies fall outside of the state ‘guarantee” of title provided by the provisions of the LTA.
Under the Queensland seller disclosure legislation, a seller is not required to disclose the existence of boundary encroachments or other boundary discrepancies.
Boundary risk relates to potential discrepancies between the physical and legal boundaries of the property. There is often a perception by purchasers in Queensland that the physical boundaries, such as fences and walls, represent the legal boundaries of the property. However, as legal practitioners know, there is a fundamental difference between the physical and legal boundaries of a property.
If a buyer client purchases a property which turns out to have a boundary discrepancy, then resolving that boundary defect will necessarily involve the participation and in many cases the co-operation of the client’s neighbour. If the neighbour is not reasonable then the boundary discrepancy can lead to a boundary dispute.
It is considered a prudent conveyancing practice in Queensland for legal practitioners to advise clients to obtain a survey of the land. However, in practice, the overwhelming majority of clients do not obtain a survey report.
As there are no statutory warranties concerning the accuracy of boundaries and limited contractual remedies for boundary encroachments, the buyer takes on the risk that the property is burdened by boundary discrepancies or encroachments at the time of purchase.
Under the standard REIQ Contract for Sale (clause 7.5), it is the buyer’s option to survey the land. If the buyer surveys the land prior to completion and the survey discloses a boundary encroachment which is “material” then the buyer may terminate the contract or claim compensation.
If the survey discloses a boundary encroachment which is not “material” then the buyer may claim compensation against the seller but will not be entitled to terminate the contract or delay settlement.
The question of whether an encroachment is “material” is problematic as the term “material” is not defined in the contract.
In the event of a purported termination of contract in respect of a “material” encroachment, the ordinary and common meaning of the word “material” would need to be considered by the Court based upon the specific facts of the case – Harris & Maher v. Prigg [2009] QCA 47.
There does not appear to be any recourse to the seller under clause 7.5 should a buyer discover boundary encroachments after settlement.
Boundary issues are also problematic because in circumstances where the boundaries are incorrect, a purchaser may not be legally entitled to all of the improvements which the purchaser paid for as part of the sale. Structures such as garages, sheds, carports and even the main dwelling may in fact be located on the neighbour’s land (partly or in full). The neighbour may discover this and demand the structures be removed. Alternatively, the purchaser may discover that fences and other improvements encroach upon their land and demand those structures be removed by the neighbour.
Where a boundary/encroachment issue is discovered, the purchaser may be faced with the prospect of demolishing structures which formed part of the purchase price or otherwise may be faced with the prospect of complicated and costly legal disputes with the neighbours.
Unregistered Encumbrances
Whilst section 184 of the LTA provides that the registered proprietor of an interest in a lot holds that interest “free from all other interests”, a number of statutory exceptions to this principle of indefeasibility may apply which could cause loss to a buyer.
Under the Queensland seller disclosure legislation which came into effect on 1 August 2025, a seller is required to disclose to the buyer (at the time of signing the contract) any encumbrances which are not registered on the title that will continue to affect the property after settlement, such as an unregistered lease, an unregistered agreement in writing or an unregistered oral agreement.
In addition, the seller is required to disclose the particulars of any statutory encumbrances which are not registered on title, such as statutory access rights to maintain and repair infrastructure assets like sewerage and drainage, electricity and gas, and telecommunications.
A statutory encumbrance is defined to mean a statutory charge over land arising from the non-payment of money to the Commonwealth, a State or a local government; or a statutory right to keep infrastructure on the lot; or a statutory right to access land to repair or maintain infrastructure on the lot.
These statutory rights of entry have been held to constitute a form of statutory easement which attaches to the land and is binding on successors in title.
The fact that statutory encumbrances and charges on the land which override the registered proprietor’s ‘indefeasible’ title may exist without notification on the title, represents a significant risk to buyers in circumstances where the seller fails to disclose unregistered statutory encumbrances in accordance with the seller disclosure legislation.
Where a search is not undertaken or is not able to be undertaken to verify the existence of unregistered statutory encumbrances, then the buyer will have no termination rights prior to completion of the contract and after settlement will bear the risk that an undisclosed unregistered encumbrance exists and overrides the buyer’s ‘indefeasible’ title.
Title Insurance as a Risk Management Tool
Title insurance is a specialised type of insurance which operates in conjunction with the Torrens System and seller disclosure regime to provide coverage for risks which fall outside of the safety of the state guarantee of title. Such risks include:
- Unapproved building work leading to future enforcement action requiring rectification or demolition.
- Boundary defects, such as encroachments, resulting in forced removal of structures or loss of land.
- zoning non-compliance leading to enforcement action and loss of use of land.
- unsatisfied conditions of a development consent leading to enforcement action.
- non-compliance with the terms of a positive and/or restrictive covenant or easement leading to enforcement action.
- unregistered rights of way and easements or non-compliance with registered rights of way and easements leading to loss of use of land.
Accordingly, the “title” in “title insurance” complements rather than conflicts with the objectives of the Torrens System, which is to deliver title free of defects, encumbrances and competing interests. Title insurance also provides insurance coverage to buyers for title related risks which fall outside of the seller disclosure legislation, such as unapproved building works and boundary encroachments.
Conclusion
Does title insurance replace the need for Torrens title? The answer to that question is a resounding “no”. Torrens is the cornerstone of the Australian real estate market and land economy. However, it is apparent that many of the practical risks assumed by purchasers today fall well outside of the safety of the Torrens System.
Title insurance is a valuable risk management tool which can be obtained by purchasers and existing owner clients during the course of a conveyancing transaction which responds to some of the complexities and risks inherent in modern conveyancing practice that might otherwise leave a homeowner exposed to loss and damage.
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