When you settle your new property with Metro Settlements, you’ll receive some information from us about ‘title insurance’. This insurance, whilst common in the US and other countries, is relatively new to Australia.
These days, it seems you can get insurance for anything and everything. Perhaps you’re wondering whether you really need to take out yet another policy?
In this blog post, we’ve put together some information to help you decide whether you need title insurance.
What is title insurance?
Title insurance is different to your other property-related insurance products such as:
- Home building insurance
- Contents insurance
- Landlords insurance
- Lenders mortgage insurance (that your bank/lender may require you to take out)
Stewart Title describes title insurance as:
A specialised type of insurance that provides home buyers with protection against certain unknown and hidden risks which may exist at the time of purchase.”
Do I need title insurance?
Your team of property professionals may include your Settlement Agent, Building Inspector, Surveyor and so on. All of these people will work diligently to carry out a wide range of checks on your prospective property.
However, it’s important to keep in mind that some risks may not always be known or discovered prior to settlement. This is where title insurance is beneficial and can help give you peace of mind.
Our Licensee, Katelyn, says:
Title insurance is a fantastic risk management tool that our clients can use.
I recommend familiarising yourself with the product. Take into account the property you’re purchasing, the conditions of your Contract, and your personal circumstances. Then, you can decide whether to take out a policy.”
Who offers title insurance?
Stewart Title is Metro Settlements’ preferred provider and offers a variety of policies, including Residential Purchaser and Residential Strata Purchaser.
Further information on their full range of products can be found on their website.
What does title insurance generally cover?
Cover is provided for a broad range of risks. Stewart Title’s Residential Purchaser Policy offers coverage for actual loss caused by risks such as:
- Illegal Building Work: unapproved structures (e.g. patios, sheds, extensions) that have been built by any previous owner of the property. This includes work that has been done without the required Council permits as well as work which does not comply with those permits.
- Registration Gap: the time between settlement and when your bank or Settlement Agent lodges the transfer with Landgate. Potentially, someone else can lodge a dealing (e.g. a caveat or mortgage against the seller) that then prevents your interest from being registered.
- Fraud, Forgery & Identity Theft: loss due to fraud, forgery or identity theft that results in you being deprived of your ownership of the property. This also extends to someone else claiming ownership of a part or all of the land by adverse possession.
- Boundary & Survey: forced removal or relocation of a structure because it encroaches over an easement or on to the neighbour’s property and any adverse matter affecting Title that would have been revealed in an up-to-date survey report.
- Planning & Title Defects: loss due to non-compliance with existing zoning and planning laws, unregistered easements and covenants, access orders, access rights or a right of way, lack of legal access, and defects in title to the land.
- Outstanding Rates, Taxes and Levies: outstanding rates and taxes on the property that the insured is liable for as the current owner of the property.
- Unpaid Local Infrastructure or Local Improvement Levies: errors made by your Settlement Agent or Solicitor or the Local Council/Shire regarding unpaid local infrastructure or local improvement levies that may result in an encumbrance being registered on the Title (that is, a debt that you will need to pay even if you weren’t responsible for creating it).
- Unmarketability: loss on resale of the property because of the existence of a covered title risk.
I know that there’s an unapproved structure on the property. Can I still be covered?
Sometimes a seller will disclose to you on the Contract that the shed or some other structure on the property was built without the necessary approvals. Similarly, your Conveyancer may uncover a risk associated with the property. These are referred to as ‘known risks’.
Policies are available for these ‘known risks’, to give you that extra peace of mind. For more information, speak to your Conveyancer.
How much does title insurance cost?
The premiums will depend on the purchase price of your property. Your Conveyancer can give you an exact cost for your specific property.
Generally speaking, for a property valued at under $1million, you won’t pay more than a low one-off premium of $700.00*.
Okay, I want to take out a policy – what do I do now?
Once your Contract is unconditional (that is, your finance has been approved and all other conditions of the Contract have been satisfied), Metro Settlements will send you some further paperwork. These documents will include a form to nominate whether you want to take out title insurance.
If you’d like to take out a title insurance policy, simply fill these forms out and send them back to your Conveyancer. We’ll take care of the rest!
Upon receipt of your completed order form, Stewart Title will issue a policy and tax invoice for the one-off premium. We’ll make an allowance for this premium on your settlement statement, and pay it on your behalf once settlement is effected.
You’ll then receive your final policy documents from Stewart Title and can relax, knowing that you’re covered!
*Correct as at 31 March 2017
Note: Like all insurance policies, a Stewart Title Policy excludes certain risks from cover. For full details on cover and exclusions from cover refer to their website.