What is Torrens Certificate
A Torrens certificate is a document issued in a small number of states which assigns unassailable ownership of real property to the registered titleholder. The certificate is intended to act as the ultimate authority on the title to a property. The document's legal supremacy makes the recording of deeds unnecessary. Recording deeds is the current, standard practice in real estate transactions. A Torrens certificate is sometimes referred to as the certificate of title.
BREAKING DOWN Torrens Certificate
The Torrens certificate originated in South Australia in the 1850s. Sir Robert Torrens, seeking to simplify and facilitate land sales, created a system in which a certificate of title would bestow ownership upon its holder. This certificate was to be issued to a purchaser following a search of the property’s legal history by a government registrar and would provide future purchasers with an indisputable history of ownership.
Any potential claimant to a property not listed on the Torrens certificate, however legitimate his or her claim, would be forced to petition a government indemnification fund for compensation. The Torrens system includes a government-sponsored insurance policy to resolve title disputes, rather than the private title insurance that is required for the sale of real property today.
The Torrens system spread throughout the British Commonwealth and to the United States in the late 19th century but is in limited use today. In the U.S., it remains an optional alternative to the deed recording system in 10 states.
Today, a Torrens Certificate would appear similar to an automobile title issued by a local DMV. It lists physical details of the property in question, such as boundaries, easements, or rights of way, as well as the name and addresses of individual or corporate owners and any lien holders.
The Torrens Certificate System vs. the Recording of Deeds
Unlike the Torrens system, the recording system maintains all records on a property in a central municipal clearinghouse, often a county registrar. Under the recording system, the land is often referred to as “Abstract Property,” about the abstract held by a municipal authority. Any transfer of ownership under this system requires an exhaustive search which would, ideally, uncover any irregularities in the history of the property. During the late 19th and early 20th centuries, the recording of deeds was far less centralized and automated than it is today. Sir Torrens intended for his system to facilitate transactions under these conditions.
The Torrens Certificate in Action
Torrens litigation is now rare, but as a 2010 Hawaii case demonstrates the supremacy of the Certificate in resolving disputes. In this case, the state of Hawaii claimed ownership of underground and geothermal rights associated with a property whose title had been held by a family estate that planned to subdivide the land for resale.The family owned a 1938 title, issued by the Hawaii Land Court, which did not include the state’s claim to those mining rights. In the 2010 dispute, the Land Court ruled in favor of the estate, stating that the Torrens Certificate as issued in 1938 precluded the state’s assertion of rights to underground assets in Hawaii.