You’ve had your offer accepted and you’re excited to get your hands on the keys to your new place. But first, the settlement process will need to take place. If it’s your first time buying property – or even your second or third – it’s worth knowing about the potential settlement pitfalls so you can enjoy a smooth process. Here are three errors and complexities that can sometimes lead to problems.
1. Misinformation from real estate agents or others
Your real estate agent is obligated to tell you the truth about the property you’re buying, but they’re also juggling multiple properties at any one time. Mistakes can be made – because we’re all human! It’s worth checking that everything your real estate agent has told you is included in your final contract, to minimise issues after settlement.
For example, if you were told that the property is zoned for residential use but you find out after settlement that it isn’t, it will be a relief to know this was put in writing.
Having a residential title insurance policy in place could also provide cover, if it turns out you can’t use your land as your home because it isn’t zoned for residential use and this wasn’t disclosed to you prior to settlement.
2. Conveyancing and paperwork errors
Once again, we’re all human and mistakes can be made. Conveyancers, strata committees, councils and other parties can occasionally make mistakes that can sometimes lead to much bigger problems down the track. It will be important to pay close attention to name spellings, address details and terms of sale to ensure they’re all outlined correctly.
Sometimes, you might not know about errors until after settlement. Perhaps a previous owner built a shed or an extension without getting permission from the council, and you only find out about this months – or even years – later. Perhaps you find out after settlement that there’s an outstanding water rate or land tax amount to pay that wasn’t disclosed, or an error in a public property search that affects how you can use your property.
If you have a residential title insurance policy in place, you could submit a claim for logistical and financial assistance to help clear these issues up.
3. Settlement fraud
Although settlement fraud isn’t an overly common occurrence, if you’re unlucky enough for it to affect you it can have devastating effects. In 2019 scammers cloned a Perth settlement agent’s email address by just one character and stole $70,000 across two payments that were intended to go to the agent. In another case, hackers worked their way into the email account of a Victorian conveyancer and reset their PEXA login credentials to reroute settlement funds. PEXA implemented new security controls following this incident to avoid re-occurrence. At times, people have tried to claim an interest in a property via fraud or impersonation.
While e-conveyancing platforms have worked to beef up their security, title insurance for home buyers can provide peace of mind if fraud or forgery relating to the property does become an issue.
There’s a range of residential property insurances to consider when buying a property, but title insurance can prove particularly beneficial across a range of errors relating to settlement and common property ownership risks. This can also include encroaching structures, incorrect boundary fences and illegally built structures on the property. If you’re looking into important home insurance for first-time buyers, then it could be worth getting a quote with First Title.