The promise of Torrens title — and its crucial exception

/

Victoria’s Torrens system is designed to give buyers security. Once you’re registered on the title, you’re the legal owner. That idea is captured in section 42(1) of the Transfer of Land Act 1958 (Vic):

42(1) The registered proprietor of land or of any estate or interest in land … shall, except in the case of fraud, hold the land or estate or interest subject to such encumbrances as may be notified on the folium of the Register … but absolutely free from all other estates and interests whatsoever.

But this absolute protection has always had limits.

Right underneath, section 42(2) states:

(2) The land of any registered proprietor shall be subject to—

(a) the interests of any person in possession or in receipt of the rents and profits thereof;

(b) any easement howsoever acquired subsisting over or upon or affecting the land; and

(c) any estate or interest in land which upon the coming into operation of this Act was subsisting in favour of any person other than the proprietor and which would have been binding upon the proprietor had this Act not come into operation.

For practical conveyancing today, the courts and practitioners read this as covering:

  • Persons in actual occupation (even without a registered interest),

  • Easements, including those acquired by long use (prescription) or implied by law,

  • Short leases under three years where the tenant is in actual occupation.

It means that despite what the title says, buyers take subject to these interests.

Real examples from Victorian practice

In over 25 years of conveyancing across Frankston, Melbourne and wider Victoria, we’ve seen countless situations where section 42(2) bites — often after a buyer or agent tried to “save time” or cut corners. Here are just a few drawn from actual matters (anonymised, but exactly what can happen):

The tenant no one told you about

A couple bought a unit in the south-east suburbs. The contract said vacant possession, the Section 32 didn’t mention a lease, and the title showed no registered lease.

When they arrived on settlement day to pick up the keys, they found a family still living there. It turned out the vendor had privately leased the unit for 18 months. The tenants were in actual occupation and paying rent. Under section 42(2)(a) and (c), that short lease bound the new owners — who had to wait it out.

Why did this happen? They relied on paperwork alone and skipped a final inspection. The property manager had also failed to properly terminate the lease.

The driveway that wasn’t fully yours

In another matter, a buyer purchased a block in a bayside area. The title plan didn’t show any easements. But there were old ruts and a well-worn track down the side.

Neighbours had been using that strip to access their garage for over 30 years. Under section 42(2)(b), an easement by prescription had arisen through long use.

The buyer, who thought they’d build a fence, found they couldn’t. Their builder had to redesign plans, costing thousands.

Why the law places this responsibility on buyers

Under Victorian law, including the Sale of Land Act 1962 (Vic), the vendor must disclose certain things in the Section 32 Statement — like planning overlays, building notices and services. But there is no requirement to list every informal occupation or use that might exist under section 42(2).

It’s deliberately buyer-beware. Courts have repeatedly confirmed that buyers are expected to:

  • Physically inspect the property,

  • Ask direct questions about who is living there,

  • Look for evidence of long use,

  • Make sure the contract terms truly match reality on the ground.

If you don’t, you still take subject to these hidden interests.

The temptation to cut corners — and why it’s dangerous

We see many buyers trying to save a few hundred dollars by skipping a building and pest inspection, relying on the agent’s reassurances about occupation, or waiving final inspections to “speed things up.”

Under section 42(2), this is exactly how trouble starts.

  • A three-minute drive by instead of a proper walk-through might miss someone quietly living in a bungalow out back.

  • Ignoring an old track across the property could conceal an unregistered right of way.

  • Rushing to sign off without a last inspection might mean finding the property still tenanted on settlement day.

Trying to save $500 today can cost $25,000 or more fixing boundary disputes, lost rental income or redesigning plans.

Tying it back to other common traps

We’ve written before about other risks where buyers try to shortcut:

  • Why you should never settle on a Friday (because fixing last-minute issues then becomes a nightmare). Read it here.

  • The dangers of nomination clauses in contracts, which many buyers misunderstand. Read it here.

  • The problems that come up at final inspections when buyers didn’t document condition early. We cover that here.

These are all part of the same theme: doing it properly from day one costs less than fixing it later.

A final thought from decades in the game

As a licensed conveyancer who’s spent decades protecting buyers across Victoria, my advice is simple:

Don’t cut even the smallest corner. The one time you don’t do a final inspection, skip asking about occupation, or decide you’ll “take a punt” on what that old track is — that’s often when it comes back to bite you.

The law under section 42(2) of the Transfer of Land Act 1958 (Vic) is clear. What’s on the title isn’t always the full story. The courts won’t unwind your contract just because you didn’t know.

Take the time, do the small checks, and work with a professional who knows how to spot these risks early.

Kind regards,

David Dawn
Licensed Conveyancer
Victorian Property Settlements
PO Box 11220 Frankston VIC 3199
david@quick32.com