What is Title Insurance
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You might have heard your solicitor at some point in the conveyancing process mention the idea of purchasing a policy of ‘title insurance’. This is not building and/or contents insurance.

Title Insurance is an insurance product which covers certain of the ‘gaps’ in the conveyancing process that may prevent you from enjoying good title to all of your property.

It certainly isn’t compulsory but we think it is usually a sensible addition when making an investment in residential property.

WHAT DOES TITLE INSURANCE COVER?

Title Insurance covers purchasers of properties against a grab-bag of risks relating to:

• illegal/unapproved building works;
• encroachments;
• unpaid rates and taxes;
• fraud and forgery;
• dealings with the property by third parties after exchange but before the incoming purchaser settles and is registered on title, and
• various other matters.

SHOULDN’T MY SOLICITOR / CONVEYANCER BE LOOKING AT THESE THINGS?

A good solicitor / conveyancer will certainly do searches on unpaid rates and taxes and other charges on the property and those searches are usually (but not always) conclusive.

However, we note the following:

• there is no certain way to check for encroachments unless a survey is conducted (which can be expensive);
• there is no certain way to check that all structures on the building are council-approved if council documentation is not available; and
• fraud and forgery is sometimes beyond the control of your solicitor/conveyancer – and there has been a recent spate of this with the advent of e-conveyancing (see further below).

Further, you and your solicitor might discover a particular structure (e.g. a garage or pergola) on a property is not council-approved but the probability of Council taking action against such things might be low enough that you still wish to proceed with the purchase. In these instances, it might be possible to purchase a ‘known risk’ policy from the title insurer.

RISK OF FRAUD IN CONVEYANCING ON THE RISE?

There was a controversy last year when a Masterchef contestant became the victim of a fraud conducted on PEXA.

While there’s always risk of fraud in high-value transactions, whatever the forum, the incident has raised awareness among people about fraud in the conveyancing process. Our inquiries of title insurers have indicated that buyers will normally be covered in the event of a ‘MasterChef-style’ fraud event.

HOW MUCH DOES IT COST?

Title insurance is relatively inexpensive and requires only a one-off premium paid to the insurer at settlement. Prices range from $400 – $2000 for a policy, normally depending on the purchase price. You can get a free quote for a title insurance policy on our website.

CONCLUSION

A purchase of a property is one of the most significant transactions a person will ever enter into. In our view it is not really possible to over insure in these instances, and a title insurance policy may be a sensible investment.

Please do not hesitate to contact our office on (02) 8315 3118 should this article raise any queries.

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