When you buy a property in Australia, you receive clear and unencumbered ownership, but there could be concealed legal issues standing in the way. There are many title defects that buyers may not discover until after settlement, such as boundary disputes or unapproved structures. They can significantly affect your enjoyment, use or ability to sell your property. From unexpected easements to unpaid rates or errors in the legal title, these defects often don't become apparent until after settlement. Our article breaks down real-world title defect examples, why they matter and how Title Insurance from First Title can help protect you from the unexpected.
Understanding Title Defects in Property Law
Wondering what is a title defect? It’s a hidden legal issue that can impact your ownership rights, use of the property or your ability to pass it on. These defects may not be obvious and may not be discovered during the usual property searches or due diligence. That’s why protection, such as Title Insurance, matters.
Title Defect Examples
Title defects can take many forms, some of which are more obvious than others. Here are a few title defects that may affect property in Australia:
- Unregistered easements
Someone may have a legal right to access or use part of your land, but it's not recorded on the title. - Unapproved building works
Structures built without the requisite council approvals may lead to enforcement activity or even require costly rectification. - Errors in the public record
Mistakes like incorrect owner names, property boundaries or missing documents can create legal complications. - Undischarged mortgages
There may be an outstanding mortgage of a prior owner still registered against the title, which may affect your ability to refinance or sell the property. - Fraud or forgery
Title can be transferred or altered by fraud, e.g., forgery of signatures or impersonation.
How Title Defects Affect Property Owners
Title defects can create serious complications for property owners, often at the worst possible time. Impacts include:
- Delays or blocks to property sales, refinances, or development
A defect on the title can stall transactions or make it difficult to get council approval or financing. - Legal disputes with neighbours, councils, or previous owners
You may face claims over boundaries, access rights or unauthorised works — issues that often require legal resolution. - Reduced property value or costly fixes
A title defect can lower the value of your property or force you to spend thousands to resolve the issue.
How to Check For a Title Defect
Identifying title defects usually involves a mix of legal checks and property investigations:
- Title searches, vendor disclosures and due diligence
Your conveyancer or lawyer will review the title and disclosure documents to identify known issues. - Building reports and surveys
These can uncover unapproved structures, boundary encroachments, or other physical risks not visible in paperwork. - Some defects may remain hidden
Not all issues are obvious at the time of purchase. Some may only surface years later.
How Title Insurance Can Protect You
Title Insurance may help to safeguard you from financial loss caused by unknown title defects that existed at the time of purchase but weren’t discovered during standard checks. It provides cover for a range of risks, including:
- Undisclosed easements or encumbrances
Hidden access rights or restrictions affecting how you can use your land. - Mistakes in title records
Errors in ownership details, boundaries or registration documents. - Existing structures that breach planning laws
Buildings or renovations done by previous owners without council approval. - Fraudulent transactions or signatures
Protection if the title was affected by forgery, impersonation or other fraud.
You pay a one-off premium, there’s no excess and your cover lasts as long as you own the property for added peace of mind.
What Title Insurance Doesn’t Cover
While Title Insurance offers valuable protection, it doesn’t cover everything. Some key exclusions include:
- Known defects disclosed before purchase
If an issue is identified during the buying process, it won’t be covered. - Physical damage to the property
Title Insurance protects legal ownership, not structural or cosmetic damage. - Risks created by the new owner
Any actions you take that cause title issues — like unapproved works — aren’t included.
The Value of Title insurance
Title Insurance is a one-off investment that helps to protect you from many unexpected title defects which could otherwise cost you thousands. Title Insurance gives you peace of mind that your legal ownership is safeguarded long after settlement. For home buyers, owners and investors, it's a further measure of protection that complements the work of your conveyancer or solicitor.
And it’s easier than you think, simply contact First Title now for a quick quote.
