Buying property in NSW involves more than reviewing the contract and arranging finance. Buyers also need to understand potential risks associated with the property’s title, existing structures and ownership records.
Stewart Title Insurance is one option buyers can investigate before settlement. It is designed to protect against certain financial losses arising from specified title and property-related risks, subject to the terms, exclusions and limits of the applicable policy.
Understanding what the insurance can cover, what it excludes and how it fits into the conveyancing process can help you make a more informed decision before completing your purchase.
What Is Title Insurance?
Stewart Title Insurance is a type of insurance designed to protect property owners against certain losses associated with risks affecting their ownership or use of a property.
For buyers, the Residential Purchaser Policy may provide protection against specified issues that existed before settlement but were unknown to the purchaser, as well as certain risks expressly covered by the policy. Depending on the policy and circumstances, examples may include particular title defects, certain unapproved building work completed by a previous owner, or specific fraud and forgery risks.
However, not every property issue qualifies for cover. The actual policy wording, applicable exclusions and any property-specific conditions determine whether a claim may be accepted.
What Can Title Insurance Cover?
The cover available depends on the policy selected and the circumstances surrounding the property. Stewart Title Australia’s Residential Purchaser Policy identifies several categories of covered risks.
These can include:
- Certain unapproved building work: Specified enforcement action relating to structures built by a previous owner without the required council permits or in breach of those permits, subject to the policy’s conditions and limits.
- Certain title defects: Specified problems affecting the property’s legal title or ownership rights.
- Fraud and forgery: Certain losses arising from fraud, forgery or identity theft affecting ownership, as defined by the policy.
- Boundary and survey issues: Certain covered circumstances involving encroachments or adverse matters that would have been revealed by an up-to-date survey.
- Specified outstanding charges: Certain qualifying rates, taxes or local infrastructure charges, subject to the policy conditions.
These examples are not a guarantee of coverage. Limits, exclusions and other conditions apply, and the relevant policy must be checked before relying on protection for a particular risk.
What Does Title Insurance Not Cover?
Understanding the exclusions is just as important as understanding the benefits.
Title insurance is not a replacement for building insurance, a building inspection or a comprehensive property assessment. It does not automatically cover structural defects, poor workmanship, general wear and tear or every problem discovered after settlement. For a clearer understanding of a property’s physical condition before settlement, buyers should consider obtaining building inspection reports, which can help identify structural issues, visible defects and potential maintenance concerns before committing to a purchase.
For example, if a building inspection identifies structural damage before settlement, buyers should not assume that purchasing title insurance will cover the cost of repairs. Similarly, discovering an issue after settlement does not automatically mean it is insured. The circumstances, policy date, relevant covered risk and applicable exclusions all matter.
Before taking out a policy, read the exclusions carefully and disclose relevant known issues to the insurer.
Why Consider Title Insurance Before Settlement?
Property transactions involve several checks, including title searches, contract reviews and, where appropriate, building and pest inspections. These checks help buyers identify potential issues before committing to a purchase.
However, due diligence and insurance serve different purposes.
Conveyancing searches help identify information recorded in relevant registers and other property records. A building inspection assesses the property’s physical condition within the scope of the inspection. Title insurance may provide financial protection against certain specified risks that remain covered under the policy.
For example, a buyer purchasing an older NSW home may want to investigate whether previous extensions or other structures have the required approvals. A conveyancer can help identify relevant enquiries, while the insurer can clarify whether a particular risk falls within the policy’s scope.
The aim is not to replace property checks with insurance. It is to understand the available protections and any remaining risks before settlement.
What Should You Check Before Taking Out a Policy?
Before arranging Stewart Title Insurance in NSW, consider these important steps:
-Confirm the appropriate policy. Check whether the Residential Purchaser Policy, Residential Strata Purchaser Policy or another product is relevant to the property.
If you are purchasing an apartment or another strata property, reviewing the strata inspection reports is also important. These reports can help you understand the owners corporation’s financial position, building maintenance history, outstanding liabilities and potential future expenses.
-Review the covered risks and exclusions. Read the current policy wording and confirm any limits, conditions and property-specific exceptions.
-Disclose known issues. Tell the insurer about relevant matters you are aware of and follow its disclosure requirements.
-Confirm the timing. Ask the provider when the policy must be arranged and when cover begins. Do not assume that cover is automatic or retroactive.
-Check the premium and policy amount. Confirm the applicable cost, insured amount and any other conditions before proceeding.
Discuss your concerns with your conveyancer. Ask which property checks are appropriate and whether any identified issues require further investigation.
Reviewing these details before settlement can help you understand what the policy offers and avoid relying on assumptions about coverage.
Speak to Alexis Conveyancing Before Settlement
Every property transaction is different. The type of property, information uncovered during due diligence and the terms of the proposed policy can all affect whether title insurance is worth considering.
At Alexis Conveyancing, buyers can seek guidance on the conveyancing process, property searches and issues that may need further investigation before settlement.
If you are purchasing a property in NSW, discuss any concerns about the title, previous building work or other potential risks with your conveyancer. Taking the time to investigate potential issues before settlement can help you make a better-informed property purchase decision.
Phone Number: 0403 726 223
P.O. Box 4096, Kingsway West NSW 2208
info@alexisconveyancing.com.au
Licensed Conveyancer- Licence No. 05007821
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