So you’re about to settle on a new house or property. What types of conveyancing mistakes can arise throughout the settlement process, and more importantly, what can you do to minimise and manage these risks? Read on for a quick and helpful guide on conveyancing errors and what happens if your conveyancer makes a mistake.
What are the responsibilities of a conveyancer?
A professional conveyancer is qualified to draw up the legal documentation that’s required for any real estate transaction in some states and territories. If you’re selling a property, your conveyancer may be preparing the Contract of Sale for the transaction. If you’re buying property, your conveyancer can help you understand and negotiate the terms of sale. Given that you’ll ultimately be responsible for any debt or negative interest that applies to the property as the new owner, a professional conveyancer can also help you to conduct due diligence on costs and conditions involved in the settlement.
What types of conveyancing mistakes can occur?
While not overly common, several conveyancing errors could cause significant dramas and costs if they do occur:
- The conveyancer failing to take into account outstanding rates, land tax or strata levies, either by their actions or if incorrectly informed by the appropriate authority. Title Insurance can help to cover this risk.
- Important clauses being left out of a Contract of Sale, which could have lasting repercussions for the property owner.
- Human error, such as poor version control or missing disbursements, which may be more likely through manual settlement than e-conveyancing.
- Cases of conveyancing fraud or mortgage fraud often occur through electronic channels, such as email. While these platforms have increased their security lately, it’s certainly worth being diligent.
What happens if my conveyancer made a mistake?
If your conveyancer makes a mistake — for instance, fails to notice an easement, boundary issue or legal restriction — the consequences may potentially be dire and costly for you. These errors might not reveal themselves for many years, only becoming apparent when you attempt to sell, renovate or develop the land. Even though you may have limited recourse for payment under professional indemnity claims, the process remains open-ended and requires you to actively pursue the conveyancer, or their insurer, for reimbursement. This may even require the cost and difficulty of legal proceedings. Title Insurance may provide an alternative means of recourse. in these circumstances, indemnifying you against a wide range of conveyancing errors with one premium payment, freeing you from the consequences of someone else’s mistake. The Title Insurance policy provides protection for you as long as you hold the property.
What is Title Insurance?
Title Insurance protects property buyers against financial losses arising from title defects or issues with a property’s title unknown at the time of purchase. What does title insurance cover? More than you think. From encroachment to hidden easements, there are many ways it can help to protect your investment, particularly as purchasing a home may be the largest investment you may make in your lifetime. Title Insurance protects against existing issues that are likely to affect property ownership rights, such as unpaid taxes, liens against property, fraud or forgery. It ensures that the buyer legally has clear ownership of the property and that any claims made against the title are resolved.
How can someone manage or mitigate conveyancing risks?
There are some simple and effective ways to minimise the chance of these affecting your property purchase:
- Doing your research when choosing a conveyancer. Do they have good reviews? Have other people had an easy and reliable experience with this provider?
- Asking a new conveyancer about their processes and practices. For example, using modern software can be an important aspect of risk management strategies for conveyancing practitioners, as it can reduce human error.
- Consider Title Insurance to cover against a wide range of conveyancing risks and other property ownership risks. For example, in a successful claim, you could be covered if rates, land tax or strata levies were incorrectly calculated by your conveyancer.
- Providing all the information to your conveyancer as they need it and maintaining clear and timely communication, which is likely to support effective risk management for conveyancers.
In the overwhelming majority of cases, property settlement is a relatively straightforward and accurate process. Where it’s not, the strategies above can help to minimise fallout.
Other Conveyancing Errors To Be Aware Of:
Unregistered Easements and Liens: These are legal rights or debts attached to a property that haven't been officially recorded. They can affect access, usage or ownership and may become the buyer's responsibility after settlement.
Incorrect boundary descriptions: Legal property boundary faults can lead to disputes with neighbours or building control. These errors often originate from flawed or outdated surveys and need to be corrected to avoid potential legal problems.
Protect Your Property with One Simple Step
Title Insurance from First Title may provide you affordable peace of mind with your home purchase, protecting you from many unexpected conveyancing mistakes that could otherwise prove costly. While conveyancers play an important role in scrutinising property deeds and contracts, even the most diligent review may not always identify every defect. Unregistered easements, boundary description defects, zoning non-compliance or fraud mistakes can go undetected for years after settlement. When they eventually do surface, they can result in court proceedings, deprivation of use of land or unexpected financial detriment.
With Title Insurance, you pay a single premium for a protection that lasts as long as you own the property. It shields you from risks that conveyancers may not search for — or simply may not anticipate — such as fraudulent documents, errors in public records or previous liabilities tied to the land. Title Insurance offers greater peace of mind and future protection, whether you’re buying a home or an investment property.
Gain a quick quote, or request cover today for your upcoming property purchase.
