In this uncertain trading environment, businesses looking to improve their due diligence and assess creditworthiness of customers need to thoroughly investigate the assets owned by an individual or company.
In the same way that searching the PPSR helps you understand who has security interests in your debtors’ personal property, property searches reveal who has interests in your debtors’ real property. In addition to credit searches, businesses can benefit from conducting property and land title searches to gain a full picture of their potential and existing customers’ assets.
CreditorWatch’s integration with the award-winning InfoTrack portal gives our customers access to a comprehensive range of property searches with quick access to information about people, companies and property directly from their dashboard.
Creditors can better assess their customers, debtors and guarantors by understanding the details and value of their properties and title information. Property reports provide valuable insights to help businesses accurately assess creditworthiness and personal guarantees, mitigate credit risk and assist debt recovery.
In this article, we explain the information that creditors can obtain from a land title search, property valuation report, common property and national property ownership search.
Land title searches
A land title search can be used for various purposes, including assessing creditworthiness. Besides confirming details such as the legal description and property identifier number (PIN), land titles provide information such as the property owner(s), mortgages, easements, covenants, caveats and leases associated with the property. Conduct a land title search to get the complete picture of a property, its limitations and potential red flags.
A land title search reveals the following:
- Land owners
View the names of all the owners of a piece of land; understand who owns the property and who is connected to the property. This gives you an idea of how much equity your debtor actually has in a property.
If you see that your debtor or guarantor is not the person listed on the title, or if there are multiple owners, this could be a red flag as they may be declaring assets that they don’t fully own.
If you see that the property has gone through multiple owners within a short period of time, there could be an issue with it. This could potentially indicate that your debtor may not be owning this asset for long.
If there is a mortgage on the property, the bank holds the Certificate of Title, rather than the property owner. Mortgage repayments may be factored in as a liability when assessing creditworthiness.
An easement is a right given to someone who does not own the property to use the property for a specific purpose – for instance, giving utility companies right of way to access services or infrastructure. Easements can restrict the use of the land and affect the property’s profitability and resale value.
Covenants are rules and conditions that determine the land information such as the use of the land, what can be built on it and how this can be done. The encumbrances and ownership of land could affect the value or intended use of the land.
A caveat is a warning that someone else has an interest in the property. This may prevent the owner from conducting certain dealings such as selling their property.
This shows tenants which have an interest in the land. This may restrict the owner from property sales, creditors from obtaining possession of the property or any other entities with interests in the land use.
By revealing these details associated with a property, a land title search can inform a credit manager’s decision on a land description and whether a property can be used as security to obtain or refinance a loan. When taking personal guarantees or director guarantees, this provides a better understanding of the type of assets an individual has in their name and how much equity and control they have in it.
Property Valuation Report
A property valuation report provides a professional assessment of the market value of a property. This is based on the condition of the property, recent and relevant sales history and other relevant market data. Discover property information such as rates, size of land, construction and condition, immediate issues to be addressed and comparative sales in the area.
Businesses can use property valuation reports to gain insights into the value of assets owned by potential or existing debtors. This information can be obtained instantly or within a few hours, depending on the state government or territory.
National Property Ownership Search
A national property ownership search reveals all the properties owned by an individual or company in Australia. Instead of manually searching each state and territory land public register, businesses can just provide the individual or company name and receive the results of a single national search within a couple of hours.
This comprehensive and time-saving search helps with assessing creditworthiness, addressing bankruptcy matters and assisting debt recovery.
Protect your business and strengthen your due diligence with property and land title reports. If you’d like to learn more and gain further information about how you can leverage these insights for your business, get in touch with us today.