The 3 Reasons Why You Should Consider Title Insurance for Strata Properties
Thinking of buying an apartment or townhouse? These types of strata properties can be a great way to enjoy a high quality of life because you’ll get access to shared areas and amenities that are paid for through your regular strata levies. You might even have access to a communal pool, gym or rooftop area if you’re lucky!
If you are buying a strata property, then title insurance
can really be worth considering. With one payment you can gain cover for a number of property ownership risks that can crop up with an apartment, townhouse, villa or other strata title property. Here are three of the key reasons to look into title insurance.
Reason #1: Outstanding strata levies could be the problem of the next owner (you!)
Your regular strata levy payments go towards maintaining shared facilities and property such as driveways, buildings, pools and gardens. However, it’s important to check your Contract of Sale carefully, because if the previous owner’s strata contributions aren’t up to date it could possibly fall to you to pay the outstanding balance. You can factor this into the equation if you know about it – but what happens if a surprise outstanding strata fee pops up after you’ve bought the property? You could potentially be liable to pay it as the new owner.
If you have title insurance in place, then you could make a financial claim for outstanding strata fees, charges or land tax owed by the previous owner, if these weren’t disclosed to you at the time of sale.
Here’s a recent example from one of our NSW clients who purchased a strata property. Despite always paying her quarterly strata levies on time, her statement kept showing an outstanding instalment of $1,672.15. Strata management advised this was for outstanding strata levies from the previous year, payable by the previous owner.
The client made a claim through her existing title insurance policy, and we reviewed the conveyancing file. We realised that at the settlement of the property purchase, the conveyancer had only adjusted for strata levies for the current quarter at the time of settlement and missed the outstanding strata levies from the previous quarters.
Our residential strata policy provides coverage for the insured party in the case of rates or levies adjustment error, even if the error was their conveyancer’s mistake – as long as it was an honest mistake.
As such, First Title paid the outstanding amount of $1,672.15 for this client.
Reason #2: Previous owners can leave a legacy
Each strata property comes with its own by-laws that set the rules for sharing common property – these often discourage things like making permanent changes to the building structure, or installing the wrong type of external door that would look out of place for the building. Unfortunately, some strata owners discover that the previous owner of their property has made unapproved changes to common property – and in some cases the new owner could be ordered to repair or demolish the changes at their own expense.
If you have title insurance in place you could make a claim for cover to repair or demolish any unknown unapproved alterations made to your strata unit by previous owners, should your relevant council issue an order to do so.
Reason #3: Common property ownership risks can occur with strata titles
There can be some property ownership risks to purchasing a property of any type. These could include undisclosed planning and zoning regulations that stop you from using your property as your home. They could include identity fraud, where your land is sold to another owner or where a fraudulent mortgage is taken out against your property. The risks can also include losses caused by errors contained in public property searches when you buy the property. Although these risks don’t happen to every property owner, the fallout can each be expensive and inconvenient if they do happen.
If you have title insurance in place for your strata property, you could make a claim for errors on property searches and enquiries, planning and zoning problems such as the above, and fraud relating to your property.
Buying a strata property can provide a great way of life together with modern amenities and affordability – as long as you have the right protections in place. You can get a quick quote
to see how affordable the one-time premium can be with First Title Insurance in Australia, or request cover now
if you have your property details ready to go. You can buy title insurance before settlement and it will activate as soon as you become the owner, or you can purchase it at any time after you purchase your property.
Is this the only insurance I should take out for a strata property?
Home, contents and title insurance are all worth considering for your new place. Typically speaking you won’t need to buy ‘home’ or building insurance for a strata property, as the building structure is usually covered in your compulsory strata insurance. However it’s important to check your strata report to be 100% sure your building is covered, and also to take out contents insurance if you’d like cover for your personal belongings.
Have questions? The team at First Title is here to help with all of your enquiries about title insurance at 1300 362 178.