Why Title Insurance Matters When Buying Property
You just saw the word “insurance” and want to keep scrolling – but just hear us out!
Buying a property is one of the biggest financial decisions you will make in your life. Whether you’re purchasing your first home, an investment property, or commercial real estate, there is always an element of risk involved. One often unknown and overlooked but important aspect in protecting you and your purchase, is a little thing called Title Insurance.
What Is Title Insurance?
Title insurance is a one-off policy that protects property buyers against losses arising from defects in a property’s title that were unknown at the time of purchase. Title Insurance covers defects or property issues that existed at the time of purchase, but were not known by the purchaser. And the best bit, there is no excess on claims!
Shouldn’t these things be picked up during the conveyancing process?
During a property purchase, the Vendor Statement is checked thoroughly to identify any areas of concern. There is a heavy reliance on the Vendor disclosing all material facts about the property. Whilst the Vendor has an obligation to ensure their Vendor Statement is complete and accurate, this is not always the case.
A range of searches such as title searches, plans, and council and water authority records are also checked to identify potential issues. While these searches are essential, they do have limitations also.
Buying a property subject to a Building Inspection can assist in minimising the risk of defects, but is also not foolproof.
Common problems that Title Insurance will cover, do not always appear in standard searches, including:
· Errors in public records;
· Undisclosed easements or covenants;
· Boundary or survey discrepancies - for example fences not built right on the property boundary line;
· Unapproved structures or renovations;
· Building defects or mould issues not clearly visible.
These issues can arise long after settlement and may result in significant financial loss to you and legal disputes.
Luckily That is Where Title Insurance Comes In.
Title Insurance is:
1. Protection Against Hidden Risks - Title Insurance covers you from issues that were not uncovered during the conveyancing process. This includes risks that even the most thorough legal review may miss.
2. A One-Off Premium for Ongoing Cover - Unlike other insurance policies, title insurance requires only a single payment at settlement and provides protection for as long as you own the property. No yearly or monthly premiums!
3. Legal Cost Coverage - If a title issue arises, your policy can cover legal fees and associated costs in defending your ownership rights so that you are not out of pocket.
4. Peace of Mind - Property ownership should be secure. Title insurance provides reassurance that you are protected against unforeseen defects or issues.
Common Scenarios Where Title Insurance Comes To the Rescue
These are everyday situations that are covered by Title Insurance:
· A previous owner carried out renovations without council approval, and the local authority orders costly rectification work;
· A fence is incorrectly positioned, leading to a boundary dispute with a neighbour;
· An undisclosed easement limits how you can use your land;
· The previous owner had building works undertaken that are defective or structurally unsafe.
In each of these cases, Title Insurance covers you against financial loss incurred to remedy the defects.
How Can You Protect Yourself Against These Risks
At Wollerman Shacklock Lawyers, we work closely with Stewart Title to provide our clients with reliable, comprehensive title insurance policies.
Why We Partner with Stewart Title
We are committed to offering our clients the highest level of protection. That’s why we partner with Stewart Title, a globally recognised provider of Title Insurance.
Through this partnership, we ensure our clients receive:
· Comprehensive policy coverage tailored to Australian property transactions
· Efficient and straightforward policy issuance
· Trusted support in the event of a claim
Is Title Insurance Right for You?
Title Insurance is not mandatory in Australia, but it is increasingly recommended as a safeguard particularly in a property market where risks can be complex and costly.
If you are purchasing property, we encourage you to discuss title insurance with our team. We can help you assess your specific circumstances and determine whether a policy is right for you.
Stewart Title Case Studies
Case Study #1
The insured purchased a dwelling and following settlement, commenced renovation works which included stripping down rooms, removing floor boards etc.
During the renovation process, the insured obtained a survey which showed the neighbouring property had concrete foundation ‘blowout’ which penetrated under the insured’s sub-floor area.
The concrete ‘blow-out’ had to be removed before the insured could replace the floor.
Claim Resolution: Stewart Title accepted indemnity and engaged builders to excavate the concrete so that the insured could resume their renovation works.
Claim cost approximately $50,000
Premium paid $544.50
No excess payable by the insured.
Case Study #2
Insured purchased a rural property. Following settlement, the insured approached Council for approval to build an extension. Council required site plan & survey. Survey disclosed significant siting issues relating to the improvements – house, garage, sheds, driveway, water tanks & retaining walls.
Claim Resolution: Stewart Title engaged an accredited specialist to provide advice and options. Negotiated acquisition of that part of the Council land (including unmade road) upon which the improvements have been built. Liaised with Council throughout process of discontinuing use of land as ‘public road’. Stewart Title paid for the land acquisition, legal costs and boundary realignment (transfer of land).
Case Study #3
Insured purchased a 40-year-old house. A number of additions had made over the years, including a spa room. A few years after settlement, the insured decided to rent the property and engaged a property agent who advised that the spa required a safety barrier.
Insured disputed this requirement and approached Council who identified spa room was unapproved and required a safety barrier.
Claim Resolution: Stewart Title engaged planning and building consultants to provide advice and options. The spa room was non-compliant, not structurally sound and required demolition. Insured was covered for demolition and ‘make good’ costs and loss in market value.
Claim cost over $50,000
Premium paid $3633
No excess payable by the insured.
Final Thoughts
Title insurance is a simple, cost-effective way to reduce risk and ensure confidence in your purchase particularly for issues that cannot easily be picked up during the purchase and settlement process. A one-off small payment could save you thousands!
At Wollerman Shacklock Lawyers, we’re here to guide you every step of the way. If you’d like to learn more about title insurance or our partnership with Stewart Title, please get in touch with our team today. Contact our team today to see how we can assist you with your purchase.