Stewart Title Insurance: Is Title Insurance Worth It When Buying Property
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Buying a property is an exciting process, but it can also come with risks that are not always obvious at the time of purchase.
You might have your finance approved, your building and pest inspection completed and your solicitor reviewing the Contract. However, what happens if an unexpected issue with the property's Title or history comes to light after settlement?
This is where title insurance can provide an extra layer of protection.
Let's break it down.
What is title insurance?
Title insurance is designed to protect property owners against certain unknown and pre-existing risks affecting their property or title.
Unlike traditional insurance policies that are generally paid annually, title insurance is typically purchased with a one-off premium and can provide cover for the duration of your ownership, subject to the terms and conditions of the policy.
For a Purchaser, it can provide valuable peace of mind knowing that you have an additional layer of protection against certain risks that may not be discovered until after settlement.
What is Stewart Title?
Stewart Title is a global title insurance provider offering title insurance products in Australia for residential and commercial property transactions. The policies are designed to provide protection against a range of potential risks associated with owning a property.
Depending on the policy, this may include cover for certain issues such as:
- Unauthorised building work carried out by a previous owner;
- Certain encroachments and boundary issues;
- Certain zoning and planning issues;
- Fraud, forgery or identity-related issues affecting your ownership;
- Certain issues affecting your legal access to the property; and
- Other covered Title defects or risks that existed before you purchased the property.
The exact cover will depend on the policy, so it is important to review the relevant policy documents before deciding whether title insurance is right for you.
Why might a property buyer consider title insurance?
One of the biggest benefits of title insurance is the peace of mind it can provide.
Some property issues are difficult to identify through ordinary due diligence. A property may have a long history of ownership, renovations, extensions or alterations, and not every issue will necessarily be obvious when you purchase it.
Subject to the terms of your policy, title insurance may provide protection against certain losses or costs associated with the issue. That means you are not necessarily left dealing with an unexpected property problem entirely on your own.
Title insurance and older properties
Title insurance can be particularly appealing when purchasing an older home.
Older properties may have undergone renovations, extensions, conversions, alterations or other works over many years. In some cases, it can be difficult to establish exactly when the work was completed or whether all necessary approvals were obtained.
Title insurance can provide an additional level of protection against certain unknown risks associated with the property's history.
What about strata properties?
Title insurance can also be worth considering when purchasing a strata property.
Apartments and townhouses can come with their own set of considerations, particularly where previous owners have carried out renovations or alterations.
Depending on the policy, title insurance may provide cover for certain risks associated with unauthorised alterations or other title-related issues.
As always, the specific policy wording should be considered carefully before purchasing cover.
Is title insurance worth it?
For many purchasers, title insurance can be a worthwhile investment for the additional protection and peace of mind it provides.
The cost of a title insurance policy is generally a one-off expense, which can be relatively small when compared with the overall cost of purchasing a property. Whether it is right for you will depend on the property you are purchasing, its history and your individual circumstances.
It may be particularly worth considering if you are purchasing:
- An older property;
- A property with previous renovations or extensions;
- A property where the approval history is unclear;
- A strata property;
- A property with unusual boundaries or access arrangements; or
- A high-value property where an unexpected issue could have significant financial consequences.
Title insurance vs traditional property searches
It is important to remember that title insurance works alongside the usual conveyancing process and property searches.
Your solicitor will still review the Contract, conduct appropriate searches and identify matters affecting the property that can be discovered through the usual due diligence process.
Title insurance can then provide an additional layer of protection for certain risks that may not be known or discoverable at the time of purchase.
The Lawgix takeaway
Buying a property is a significant investment, and nobody wants an unexpected title or property issue to turn their dream purchase into a costly headache.
While no insurance policy can cover every possible risk, title insurance can provide valuable additional protection against certain hidden risks associated with a property and its title.
For many buyers, the appeal is simple: greater peace of mind when making one of life's biggest purchases. Because when it comes to property, a little extra protection can go a long way.
