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What is this Title insurance thing?
Title insurance protects property owners from loss arising from six risk categories:
- Title fraud. If someone steals your identity and then sells your property you are covered. Likewise if someone fraudulently mortgages the property leaving you with a debt and a bank standing over you demanding repayment and threatening to sell your property up from under you, you are covered.
- Unapproved structures. If the property you buy has improvements which should have council approval but don’t, you are covered, provided you didn’t know about them.
- Survey or boundary defects. If the fences or buildings or other improvements on the property encroach on the neighbouring land, you are covered, again provided you didn't know about the defect when you took out the policy.
- Planning & Title Defects. If you were unaware at the time of buying the land that there were breaches of planning, zoning or development laws, or unregistered easements & covenants, or lack of legal access to the property, you are covered.
- Registration gap. If a caveat or some other dealing is lodged (ie after settlement) which prevents your interest in the property from being registered, you are covered.
- Outstanding rates and Taxes. If there were outstanding rates or taxes against the property from the previous owner which are now your responsibility, you are covered.
Are these common? No but when they do happen, they are hugely expensive, often catastrophically so.
Why do we offer it and what do we get from it?
Goldfields Settlements advises most buyers of the existence of title insurance and sends them an application form. Whether buyers actually take it out is entirely up to them. We do this because we think it is sensible and very cost-effective risk management.
We also don’t want buyers with a claimable loss coming back to us some time in the future and demanding to know why we didn’t tell them of the existence of this relatively cheap and simple way for them to have avoided their problem.
We get the satisfaction of knowing we have recommended a good risk management tool to our buyer clients. Aside from that we receive no monetary remuneration other than the odd free lunch from their sales rep.
How much does it cost? For residential properties up to $500,000, it costs $363 in a one-off premium paid after settlement. For higher value and commercial properties the premium is higher but it’s not until the properties are worth millions before the premiums cost thousands.
A couple of other things:
- No fault claims process which means you don’t have to prove fault or negligence, just that you’ve suffered actual loss
- No excess on claims. In other words the whole claim is paid.
- No cap on claims apart from the policy amount (usually the purchase price of the property).
- Existing owners can take out a policy. Increasingly, sellers are taking out title insurance policies just to make sure they are covered in case of things they didn’t know about the property which preclude or hold up it’s sale.
For further information go to the Stewart Title Australian website: www.stewartau.com
DISCLAIMER: The above advice is intended to provide a summary and is not intended to be relied on in any particular case. It should NOT be construed as legal advice. For detailed advice specific to your circumstances you should seek specific advice from an appropriately qualified professional.