What Is Title Insurance and Do You Need It in NSW?
Your conveyancer will probably offer it. Here’s what title insurance actually covers, what it doesn’t, what it costs, and when it’s worth having.
If you’re buying a home or an investment property in NSW, there’s a good chance your conveyancer will ask whether you’d like title insurance. The textbook answer is that it helps buyers manage the risks of buying property. That’s accurate, but it doesn’t tell you much. So here’s what it really does, and when it earns its keep.
At a glance
- Title insurance covers you for certain hidden legal and ownership problems with a property that nobody picked up before you bought it.
- The most common claim is for unapproved building works left behind by a previous owner.
- It’s a one off premium that covers you for as long as you own the property. It is not a replacement for home insurance, searches or a building inspection.
What title insurance is
Title insurance is an optional policy you take out when you buy a property. It protects you against financial loss from certain problems with the property’s title and legal status that you didn’t know about when you bought it.
Unlike home insurance, there’s no yearly renewal. You pay a single premium, the cover starts from settlement, and it lasts for as long as you own the property.
In plain English
Home insurance protects the house from things like fire, storms and theft. Title insurance protects you from the paperwork side going wrong: a deck that was never approved, a neighbour’s shed built over your boundary, or a rates bill the searches missed.
What title insurance can cover
Every policy is different, and caps and exclusions apply, but cover commonly includes:
- Unapproved building works. The cost of fixing, approving or removing decks, pergolas, sheds, carports, extensions or granny flats built by a previous owner without council approval, if council orders you to deal with them.
- Boundary problems. A structure that encroaches over the boundary, including one built on your land without your knowledge.
- Fraud and forgery. Someone fraudulently selling your property or taking out a mortgage over it.
- Search errors. Outstanding council rates, water rates or land tax that should have shown up in the searches at purchase.
- Zoning problems. Finding out you can’t legally use the property as your home because of its zoning, when that was never disclosed to you.
- Other people’s rights over your land. For example, a neighbour claiming a right of access, or a challenge to your title because the seller sold in breach of Family Court orders.
Example: a claim in NSW
A buyer purchased a 1930s house as an investment. After a flooded bathroom, the owner applied for a building certificate and council found the deck, the shed and several internal alterations, including the bathroom, had all been built without approval by a previous owner.
The title insurer accepted the claim and paid out $100,000 to cover the work needed to bring the property into line. Without the policy, that bill would have landed on the owner.
A building inspection tells you what’s wrong with the house. It won’t always tell you whether it was ever approved.
What title insurance does not cover
Damage to the property. Fire, flood, storms and theft are for your home and contents insurance.
Wear, tear and pests. Dilapidation, poor condition and termite damage aren’t covered.
Things you already knew. Anything disclosed in the contract, or that you were aware of before settlement, is excluded. If your building inspection flags an issue, it needs to be disclosed when the policy is taken out.
Problems you create. Work you carry out after buying, or risks you agree to, aren’t covered.
Does it replace searches or a building inspection?
No. Your conveyancer’s searches and your pest and building inspection are still essential, and title insurance works alongside them.
The gap it fills is real, though. Inspections don’t always identify unapproved work, and survey reports often aren’t available before exchange. Title insurance is there for the problems that slip through anyway.
Is title insurance worth it?
For a one off cost that varies with the price of the property, we think it’s worth serious consideration on most purchases. It matters most when you’re buying:
- An older home that’s been renovated or extended
- A property with decks, pergolas, sheds, carports or a granny flat
- Acreage or a rural residential property
- A strata unit where previous owners may have made alterations
- Without a current survey report
- As an investment, where you won’t see the property day to day
It’s less likely to be needed on a brand new home with fresh approvals, but it’s still worth asking about.
What it costs and how to get it
The premium is paid once, and the price varies depending on the price of the property you’re buying. Location and property type also play a part, and strata policies are usually cheaper than houses. We can give you an exact figure for your purchase.
Ask for a quote while we review your contract
We can arrange a title insurance quote as part of your purchase, so there’s nothing extra to chase.
Tell us anything you already know
Share any issues from your building inspection so they’re disclosed properly. Undisclosed known issues can affect a claim.
Cover starts at settlement
Once the premium is paid, your policy is active from settlement for as long as you own the property.
Buying an older home or one with renovations? Ask us about title insurance when we review your contract.
The short version
Title insurance protects your ownership, not the building. It’s a one off cost that covers hidden problems like unapproved works, boundary issues, fraud and search errors. It won’t replace home insurance or an inspection, but on an older or renovated property it can save you tens of thousands of dollars.
Want a title insurance quote?
Talk to Justin, Julie, Amanda or Nicole. We’ll review your contract, explain the risks, and arrange cover if it’s right for you.
