The Ultimate Title Insurance Guide
Title insurance can protect against financial loss in a range of unfavourable situations that can arise for property owners.
But exactly what is the purpose of title insurance – and do you need title insurance for your own property? Keep reading to find out all you need to know.
Firstly, what is title insurance?
Title insurance is a unique type of property insurance that can guard against a number of different issues or disputes to do with owning a property, such as:
- incorrect boundaries
- unapproved works
- zoning issues, or
- unexpected charges relating to the property.
A title insurance policy requires a simple one-off premium that provides cover for the entire time you or your beneficiary owns the property. Caps and exclusions can apply, but with a First Title policy there’s no excess to pay if you need to make a claim. The process to request cover is a simple one, and you can simply set and forget your policy unless you ever need to make a claim.
Who should know about title insurance?
It’s good to be familiar with title insurance whether you own property, are planning to buy property or are helping clients to buy their dream property. Here are three key groups of people who can benefit from knowing about title insurance:
Property buyer title insurance could save property buyers many thousands of dollars if certain unforeseen events occur after they purchase their property. Here are just a few examples from First Title policy holders:
- In a case where it was discovered a garage and carport had been illegally built on the property by a previous owner, the total claim covered was $100,000
- Where a survey revealed a neighbouring wall had been built onto a policy holder’s property without their knowledge, the total claim covered was $18,000
- Where a policyholder unexpectedly became responsible for a 36-year-old sewerage and buildings works defect, the total claim covered was $75,000.
If you’d like to get cover for a property you’ve already purchased, don’t worry – there’s also title insurance for existing owners.
Conveyancers and Solicitors
Conveyancers and solicitors will know that even with meticulous attention to detail, unknown and hidden issues can still crop up for clients’ property purchases. These may be outside the conveyancer’s or solicitor’s control, or even happen through good faith errors such as miscalculating outstanding rates or taxes. Title insurance can be a worthy recommendation to your clients to ensure peace of mind, for both them and for you.
Lenders take on a certain amount of risk when they help to finance property mortgages, but certain risks can be reduced using lender title insurance. This can include:
- Protecting against the unenforceability of a mortgage with a Residential Loan Protection Policy
- Title insurance coverage for commercial mortgage transactions through a Commercial Mortgage Lenders Policy.
What can title insurance protect from?
So, what is a title insurance policy designed to cover for a typical property buyer? Let’s look at what could be covered if you’re purchasing a home and choose to take out title insurance:
Good fences make good neighbours – but what if you discover a fence was built in the wrong place before you owned your property, and extends onto your land? A successful title insurance claim could assist with financial assistance and administration support to rectify this.
Unapproved building works
Someone else’s dodgy DIY shouldn’t be your problem – but it could be, if it’s discovered that a previous owner built unapproved building works on your property that you didn’t know about at purchase. If you have title insurance, you could submit a claim for financial cover in this situation.
Encroaching structures can affect a property owner in several ways. First, if someone built a garden wall or structure that intrudes on your land without your knowledge or consent. Second, if you discover a previous owner of your property built a structure which encroaches onto a neighbour’s land – and they want the issue fixed pronto! Third, if the existing boundaries of your property have been incorrectly recorded with the Land Titles office. With title insurance, you could submit a claim for any of these situations.
Errors on property searches and enquiries
Simple mistakes and miscommunications can happen to the best of us, and from time to time these can even happen amongst local councils, conveyancers and solicitors. If you find out that land taxes, council rates, water rates or other charges were incorrectly declared or calculated, you might find yourself responsible for an unexpected bill. In these cases, you could apply for a claim with your title insurance policy.
Planning and zoning issues
Imagine finding your perfect property, buying it, and then finding out about a previously undeclared zoning law that means you can’t use it for your home. Unfortunately, this does happen, but a successful title insurance claim could provide financial cover and support.
Fraud and forgery can spell bad news for property owners. It could become a nightmare if scammers take out a fraudulent mortgage against your property, or even sell your property to another owner. These cases are rare but when they do happen, they can be devastating, and title insurance can be a saving grace.
There are distinct title insurance policies for different property types because residential property can have different ownership risks to commercial property, vacant land, strata properties and so on. It’s important to always review the Policy Documentation to see what is and isn’t covered.
Should I get title insurance?
The answer to the question, “do I need title insurance?” will of course depend on your personal situation and choice. Many property owners and buyers will consider title insurance at the same time they consider home, contents and other insurance cover. When deciding whether you need title insurance, it’s worth weighing up the potential costs of dealing with the scenarios above. Alternatively, title insurance could offer great value with just one payment, and your property could be covered for a range of ownership risks.
Have questions? Get in touch!
The First Title team are here to assist you with helpful information and clear policies to get your property protected. You could begin with a quick quote, or contact us with any questions you might have.
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