Title Insurance can be used as a risk management tool in the conveyancing transaction. When buying a property there are many inherent risks which may cause you loss or affect your ownership. Title insurance is 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.
Cover is Provided for a Broad Range of Risks*
- Illegal Building Work
- Enforcement action by a Local Authority in relation to illegal structures which have been built without the required Council permits or which do not comply with those permits of which you are unaware at the time of purchasing the property. For rural properties this cover only applies to the primary residence including sheds, carports and garages used for residential purposes, and any swimming pool, and not to other structures on the property.
- Survey/Boundary Defects
- Any adverse matters that would have been revealed in an up-to-date survey report.
- Registration Gap
- Someone else lodges a dealing which prevents your interest from being registered or recorded.
- Fraud, Forgery & Identity Theft
- Loss due to fraud, forgery or identity theft which results in you being deprived of your ownership of the land.
- Planning & Title Defects
- Loss due to non compliance with existing planning and zoning laws, unregistered easements and covenants, access orders, access rights or a right of way, lack of legal access or defects in title to the land of which you are unaware at the time of purchasing the property.
- Outstanding Rates & Taxes
- Outstanding rates and taxes on the property which you are now liable for as the current owner of the property.
Below are real claims covered by title insurance. These claims demonstrate the value of title insurance policies in providing protection to home buyers and existing home owners against certain unknown and hidden risks inherent in property transactions.
1) Boundary Discrepancy
The insureds obtained a title insurance policy when purchasing their home in regional WA. The home came with a triple garage and garden shed in the backyard. When selling the property several years later, their purchaser discovered that part of the backyard was in fact Crown land, and not on title to the property.
Unknown to the insureds, a previous owner had fenced in the Crown land. Worse still, the garage and shed encroached onto the Crown land. The purchaser claimed our insureds were in breach of contract because the dividing fence, garage and shed encroached over the title boundary. The purchaser threatened to terminate the sale unless the insureds either obtained title to the Crown land for the purchaser or relocated these structures inside the title boundary.
Stewart Title rescued the sale by agreeing to fund the acquisition of the Crown land for the purchaser (including legal and surveying costs) after settlement. If the Crown land could not be acquired, Stewart Title would fund the cost of dismantling and rebuilding the garage and shed (and associated water & electricity services) within the title boundary, re-sitting the fence onto the boundary and re-landscaping the backyard. On the basis of this agreement, the purchaser settled on the sale, which may otherwise have fallen through.
2) Illegal Conversion
The insureds purchased a large piece of land in rural WA, which included a house. Following settlement they approached the local shire to obtain a copy of the house plans to build an extension. The shire informed them there were no such plans and that the house was converted from a barn without a building licence. The shire notified the insureds that the barn was an illegal dwelling and legal action might be taken against them if they continued to use it as such.
Stewart Title compensated the insureds for the full value of the house, and valued as though it were approved. The value of the house was determined by an independent valuation also paid for by Stewart Title.
3) Illegal Conversion of a Storeroom to a Bedroom
The insureds purchased a house in regional WA, which was marketed as a 4 bedroom home. When applying for a building licence to add an ensuite bathroom to the main bedroom, the shire informed the insured that the main bedroom had approval for use only as a storeroom. The room had been converted to a bedroom by a previous owner without the shire’s approval. The shire refused to assess the application for an ensuite bathroom until the bedroom was upgraded to comply with the higher building standards applicable to a bedroom. The insureds were surprised by this discovery, as they had obtained a structural engineer’s report before purchasing the property which did not disclose that the bedroom did not comply with building code standards.
Stewart Title covered the costs of all building works for upgrading the bedroom to comply with building standards including erecting wall frames, waterproofing floors, raising ceiling heights, and “gyprocking” the walls and electrical work.
4) Breach of Building Licence
The insureds purchased their home in a Perth suburb. At the front of the property stood an attractive front entrance gate supported by brick piers. Nothing appeared untoward with the gate and piers at the time of purchase. The orders and requisitions from the local shire confirmed there was a building licence and the insureds’ structural engineer’s report did not reveal any defects in the construction.
Several years later, the neighbour complained to the Council that one of the brick piers encroached onto his property. The shire inspected the property and confirmed that the pier did indeed encroach over the boundary with the neighbour and onto the street in breach of the conditions of the building licence. The shire ordered the insureds to relocate the pier within the property boundaries and then provide a survey report confirming this had been done.
Stewart Title paid for the cost of demolishing and rebuilding the pier and re-hanging the gate within the property boundaries as well as the cost of the surveyor’s report.
5) Outstanding Work Order
The insured purchased a property in the outskirts of Perth, serviced by a septic system. Unknown to the insured, there was an outstanding work order against the property issued by the Water Corporation for the connection of the property to the public sewer and the decommissioning of the septic system. As the new owner of the property, the insured was required to comply with that work order, which involved digging up the driveway.
Stewart Title indemnified the insured for the costs of connecting to the sewer and decommissioning the septic system.
Title insurance does not replace the role of a conveyancer or solicitor. The combination of title insurance with your conveyancer’s or solicitor’s professional advice will provide the most comprehensive protection against risks which may affect your legal ownership of your home.
If you already own your home, you can obtain the protection that title insurance provides by applying for a Residential Existing Owner Policy.
*Please note that we recommend this protection to you on an independent basis and we do not receive commissions or other benefits from Stewart Title.