Title Insurance: protecting owners and lenders against inherent risks associated with property transactions
When purchasing a property there are many inherent risks which may cause loss or affect your ownership of the property. Title insurance is a relatively new and specialised type of insurance which offers home buyer’s protection against certain unknown and hidden risks which may be present at the time of purchase.
What does title insurance cover?
Title insurance covers issues such as:
- Planning and title defects.
- Survey and boundary defects.
- Illegal building works and structures.
- Fraud, forgery and identity theft.
- Unpaid rates and levies.
You may be thinking – “isn’t this what I pay my solicitor for to protect my interests?” In short, it is not cost effective for your solicitor to cover everything as this would add several thousand dollars to your conveyancing costs. This is where title insurance becomes invaluable.
What is the cost of a title insurance policy?
A title insurance policy has a minimal fee and is prorated depending on the purchase price of the property. It is a one-off premium, with no excess payable if a claim is made and the policy offers protection for the lifetime of ownership of the property. For example, if you are purchasing a residential title property at a cost of $500,000.00, a title insurance policy will cost you a one-off premium of $434.64. If you are purchasing a residential strata property at a cost of $500,000.00, a title insurance policy will cost you a one-off premium of $335.72.
A real life example.
Following settlement of the purchase of a home, the purchaser/insured noticed building irregularities with the pergola. The insured applied for a building certificate with their local council. Following the inspection, it was revealed that approval for the pergola had not been obtained by the previous owner and no final inspection had been carried out with respect to the carport and tool shed. Council ordered that the structures be demolished. The insurer paid for the demolition and reconstruction of the pergola, carport and tool shed. All correspondence with council and the final inspection by council was handled by the insurer.
Who is our preferred title insurance company?
Our preferred title insurance company is Stewart Title. To find out more about the benefits of title insurance, contact our friendly property law team today.