In Western Australia, a purchaser discovers that a restrictive covenant preventing commercial use was not disclosed in the contract documents. The covenant is registered on title but was omitted from the vendor's disclosure statement. What is the purchaser's most likely legal position?

Q: What is the correct answer to: In Western Australia, a purchaser discovers that a restrictive covenant preventing commercial use was not disclosed in the contract documents. The covenant is registered on title but was omitted from the vendor's disclosure statement. What is the purchaser's most likely legal position?

The correct answer is The purchaser is bound by the covenant as it appears on the registered title. Under the Torrens title system established by the Transfer of Land Act 1893 (WA), registered interests on the Certificate of Title are indefeasible and binding on all subsequent owners. The restrictive covenant, being registered on title, creates a legal burden that runs with the land regardless of the vendor's disclosure failures or the purchaser's actual knowledge. Section 68 of the Transfer of Land Act confirms that registered proprietors take subject to registered encumbrances. The purchaser becomes bound by all registered interests upon settlement, making the covenant enforceable against them despite the non-disclosure.

Q: What background knowledge is needed for this Property Law question?

The Torrens title system, established in Western Australia by the Transfer of Land Act 1893, operates on the principle of indefeasibility - registered interests are conclusive and binding. Restrictive covenants are encumbrances that limit land use and are registered on the Certificate of Title. Under the Property Law Act 1969 (WA), vendors must disclose known encumbrances, and Australian Consumer Law provides consumer protections. However, these disclosure obligations don't override the fundamental Torrens principle that the register is paramount. PEXA facilitates electronic settlement but doesn't change these legal principles. Purchasers should conduct thorough title searches and seek legal advice before settlement.

Q: What is a good way to remember the answer to this Property Law question?

Remember 'REGISTER Rules' - Registered interests are binding, Regardless of disclosure, Even if unknown, Get legal advice, Indefeasible system, Search title thoroughly, Take subject to encumbrances, Enforceable against all, Remedies against vendor only. When facing Torrens title questions, apply 'REGISTER Rules' to remember that registered interests always bind subsequent owners, regardless of knowledge or disclosure. Focus on what's on the register, not what was disclosed.

Q: What exam tip applies to this Property Law question?

For Torrens title questions, always remember: if it's registered, it's binding. Look for the registered interest first, then consider remedies separately. Don't confuse vendor disclosure obligations with the binding nature of registered encumbrances.

Q: How does this Property Law concept apply in Australian real estate practice?

A developer purchases a residential property intending to convert it to commercial use, relying on the vendor's statement that there are no restrictions. After settlement, the council rejects the development application due to a registered restrictive covenant prohibiting commercial use. Despite the vendor's failure to disclose this covenant, the developer cannot ignore it and must either pursue the vendor for damages or seek to have the covenant modified through the courts. The covenant remains enforceable, potentially making the property unsuitable for the intended purpose.

Question

Property LawProperty RightsWAHARD

In Western Australia, a purchaser discovers that a restrictive covenant preventing commercial use was not disclosed in the contract documents. The covenant is registered on title but was omitted from the vendor's disclosure statement. What is the purchaser's most likely legal position?

Answer Options

A

The covenant is invalid due to non-disclosure and cannot be enforced

B

The purchaser is bound by the covenant as it appears on the registered title

C

The covenant becomes void after settlement of the purchase

D

The purchaser can ignore the covenant if they were unaware of its existence