Owning a property is a dream for all. Yet, we can’t help but feel anxious before investing a significant portion of our hard-earned money into a property, fearing unexpected losses and legal issues. This is where one must consider ‘Title Insurance,’ a safety net that protects a property investment against unforeseen title defects and legal claims. It gives financial security and peace of mind.

But first of all, let’s learn what title insurance covers and how it eliminates financial risks in this blog post. Starting with the basics:

Title Insurance Coverage:

Your title insurance is a shield against certain hidden costs and legal complications arising from a ‘dirty title.’ It can cover various risks unknown at the settlement date, such as outstanding loans, title errors, and illegal structures. Some policies may even offer coverage for risks known at the settlement date, but they usually require an additional premium and adherence to specific conditions.

Here are some things title insurance can cover for you:

Illegal Building Work:

If the previous owner of your property has carried out any building work that is unapproved or non-compliant with the building codes, your title insurance can cover the costs to demolish or repair those problematic structures.

Unapproved Alterations (For Strata Properties):

Title insurance also covers any unapproved alterations made by previous owners or occupiers of a strata property, ensuring you are not liable for correcting these issues.

Boundary/Survey Defects:

With title insurance, you can also resolve issues with incorrect property boundaries without bearing the costs yourself. It usually involves relocating or removing fences that were built in the wrong places.

Claims During Registration Gap:

After purchasing a property, you typically have a gap between the transaction and when it’s officially recorded in the Land Registry. Sometimes, others may lodge a claim for the property you purchased during this period, blocking your interest. If this happens, title insurance can cover for you.

Title Fraud, Identity Theft, and Forgery:

Title insurance can also protect you against any disputes arising from fraudulent claims, forged documents, or identity theft. Without this policy, you may have to incur heavy costs by yourself or your ownership could be affected.

Planning and Zoning Issues:

If your property has issues with compliance with planning and zoning laws (unidentified before the settlement date), your title insurance can cover the costs associated with rectifying the problems.

Outstanding Taxes and Rates:

At times, properties may have outstanding rates and taxes that are undisclosed during the sale process. In these scenarios, you can raise a claim and get your title insurance to pay these dues, ensuring you are not burdened by these unexpected obligations.

Ineligible Title Insurance Claims:

Not every policy covers every risk, so select your policy mindfully. Consider what is and isn’t covered before taking out the insurance. While we’re on the topic, let’s see what title insurance doesn’t cover.

Native title claims (claims by Indigenous Australians)
Environmental contamination
Defects known before settlement
Violation of zoning or council laws with new unapproved structures
Defects caused by the buyer or that arise after the policy is taken out

Therefore, it is extremely important to read through a policy carefully and understand its features. This reduces the risk of being caught short with a rejected claim.

Cost of Title Insurance:

Whether you are investing in a vacant lot, a strata property, a villa, or an apartment, title insurance can protect your investment. Getting the insurance is also incredibly affordable, with only a one-time premium valid for the entire life of your ownership. You don’t even need to pay extra in the event of a claim.

A lot of people worry that their premium may go to waste if none of the claimable scenarios arise—that’s not true. Remember that it is one premium for the whole span of your ownership, which is a small price to pay for comprehensive protection against the potential risks you have otherwise.

When Should You Consider Title Insurance:

If you are about to invest in a property, it is automatically the right time to think about title insurance. You can find out whether or not you need this coverage by asking yourself a simple question: ‘Could I cover the costs of any of the scenarios listed above?’ or ‘Would I want to?’

Suppose your answer to this question is NO, then it’s time to take out title insurance from a reliable provider. This gives you better financial security and peace of mind, ensuring the transaction remains trouble-free.

Plus, you can consider the following factors.

Was the property previously owned by someone else?
Is the property in an area with complex zoning laws?
Is the property part of an estate or trust? — More likely to have lingering title issues
Is it a strata or multi-unit property? — Higher risk of unapproved alternations

Who Should Know About Title Insurance:

Anyone who is participating in property transactions should be familiar with title insurance, as it can help mitigate significant risk. Here are three groups of people that can benefit much from knowing this policy.

Buyers:

Title insurance can save buyers thousands of dollars if and when certain unforeseen events occur after the settlement. Illegal buildings, incorrect boundaries, and unapproved alternations are all examples of it. Thus, it pays to do a little research about title insurance beforehand.

Conveyancers and Solicitors:

Professional conveyancers and solicitors know that hidden issues can crop up even when everything is checked meticulously. These could be outside their control, and having a title insurance policy can help both them and their clients.

Lenders:

Lenders also take on a certain portion of risk when they finance your property mortgages, so they try to mitigate it using lender title insurance. It includes protection in the following cases-