House and garden stock photo
Title insurance is a risk management tool. Photo – Shutterstock.
  • Title insurance offers buyers a cost-effective way to mitigate risk
  • Thornlie insured claimed $8,568 to rectify a bore encroachment
  • Caveat emptor principle applies to most real estate transactions in Australia

Title insurance is a risk management tool that many conveyancers and solicitors offer to buyers as part of the settlement process. But many buyers are unaware of the benefits of such a policy, and how it can protect them against potential risks.

In Australia, title insurance policies are available from two insurers. The policies cover buyers for risks such as unapproved building work, registration gap, fraud, forgery and identity theft, boundary and survey defects, planning and title defects and outstanding rates, taxes and levies.

Policies are available for residential, strata, rural-residential, commercial and vacant land. If you already own a property, owners may also have the option of an existing owner policy.

Perhaps the easiest way to highlight the benefit of having such a policy is through a case study.

Example: Stewart Title insurance (Nov 2020)

In this case, the insured purchased a property in Thornlie in WA. Several years after settlement, the insured and the neighbour discussed replacing the boundary fence and the insured obtained a boundary and contour survey for this purpose.

The survey revealed that part of the insured’s bore was located on the neighbour’s property and the neighbour required the encroachment to be rectified. The insured made a claim which was accepted by Stewart Title.

To fix the encroachment, it was necessary to decommission the existing bore and replace it with a new bore which was relocated within the insured’s legal boundary.

The total cost of the claim was $8,568, covered in full by the Stewart Title insurance policy which the owner had taken out at the time of their purchase settlement.

Upon finalisation of the claim, the insured said,

“We are grateful to the team at Stewart Title for helping us with our claim, the experience was fantastic from the first phone call and all the way through to settlement of our claim.

We would recommend anyone buying a property to take out title insurance from Stewart Title. Thanks again to you and the team for making a stressful situation easier to deal with”.

When considering the importance of a title insurance policy, we must recognise that throughout much of Australia, properties are purchased under the principle of caveat emptor, which is Latin for “let the buyer beware”.

Prospective property owners are expected to perform their due diligence before purchasing a property, to make sure they are satisfied with it. A title insurance policy provides buyers with the peace of mind for risks that may be difficult or impossible to foresee at the time of purchase.

Buyers should consider their unique circumstances when determining whether a title insurance policy is appropriate for them.

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