Hi folks
I’ve just bought a vacant block of land in Tasmania and was wondering if I should get title insurance. Searching online is only giving me results from insurance companies who are probably not the best source of impartial advice. Interested to hear others’ thoughts and experiences, cheers.
Perhaps a search for something like ‘title insurance is it worth it’ will give more independent articles to look at.
As your purchase is a vacant block there are some things title insurance covers that won’t be applicable. But there will be some. As a one-off relatively small payment it may be money well spent.
But as always with insurance, the terms and conditions, inclusions and exclusions need to be carefully looked at.
What are your concerns?
I don’t think anyone can say whether or not to buy title insurance, but if you are considering it, it means you may be worried about something associated with the purchase of the vacant lot.
If you are worried about fences being on the boundary or neighbours use encroaching on the land, these can be readily checked by a surveyor. A surveyor can confirm the extent of land you have purchased through a simple land survey, which could be wise investment if the title is old/registered some time ago (any previously surveyed corner pegs are likely to have disappeared over time).
If you are worried the title could have something on it which may impact on you ability to use the land, then a laywer which specialises in property/conveyancing should be able to review the title to identify if there are any issues (such as caveats, easements/others interest in the land or restrictions). Some of these should be identified through property searches by a good conveyancing firm. If you want additional advice, a town planner can also provide advice on land uses and what is required to facilitate that use.
If you are worried there is an error on the survey (folio) plan or title, these are relatively uncommon. A surveyor should be able to review folio plans to identify potential errors.
If you are concerned there might be an error/confusion in the land you have purchased (e.g. the wrong land is on the contract of sale), desktoo assessments were covered here. A surveyor can carry out a simple land survey, such as pegging corners, which is the next step beyond a desktop assessment.
Another factors which might change one’s approach is the type of land purchased - land in a urban subdivision, large rural block through to a lifestyle block in a less developed area where fencing or any land improvements are nonexistent. Rural or ‘bush’ blocks a land survey to establish extent of the land may be important to ensure one knows where their block of dirt is.
Whether one should take out title insurance and/or carry out additional assessments like those outlined above will be dependent on how risk adverse one is. This is something an individual can only weigh up themselves… but, if one has concerns, one needs to determine whether additional assessments are needed or title insurance is taken. Title insurance should also not be seen as the easy option to negate the carrying out of property searches and additional assessments when required. I haven’t checked title insurance terms and conditions, but wouldn’t be surprised if they require some level of searches/assessments to be carried out to mitigate their own insurance risks.
In addition to your comprehensive list of potential issues another is that a prior sale, possibly long past, might have introduced an error or causes the possibility of a claim challenging ownership. While unlikely it is theoretically possible such a situation could arise and for vacant land would be something to assure is covered in a policy.
I think this is from the USA but there are similar posts discoverable from NZ that add some relevancy to ‘things that can happen’ that title insurance might (not necessarily will) help with. One from AU although slightly different as the poster seems a ‘third party’.
These risks ae very low and to meet the requirement of ownership due to occupation is also very restrictive. This website gives some good information, noting that each state laws might be different:
https://cromersurveyors.com.au/content/adverse-possession
In this case, if one buys a property and rates have been paid on the land by the title holder, an adverse possession claim won’t succeed. There are internet myths about neighbours taking land and over ownership of that occupied because the fence was in the wrong location/shed build on a neighbours property etc and had been there for x years. These are more urban myths rather than based on real life situations (possibly as someone read that occupation for x years can lead to adverse possession claim without understanding that there are other high onerous criteria which need to be satisfied). If one finds this situation, legal advice should be sought if there is a claim of adverse possession.
If the boundary is identified in the wrong location by a simple land survey, then the fence may need to be moved. If this was identified through the conveyancing process, the seller (with the neighbour) should be responsible for organising the relocation of the boundary fence to its correct position.
The only other likely claims would be that which occurred recently where a property was sold and a owner placed a caveat on the property to prevent the sale proceeding. Again, these this is a unique and rare event.
Likewise with property being sold fraudulently by scammers. There was a report a few years ago about someone other than the owner selling a property, and owner consent was not provided. Again, these cases are rare and a good conveyancing possibly should have picked it up (by requesting identification of the seller that they are the owner - which is common practice).
@Neonlights might be also able to shed some light on whether the conveyancing firm is recommending title insurance, or has one found our about title insurance themselves based on their own worries. If a conveyancing firm is pushing title insurance, I would be questioning why and what interest they have to sell the insurance. It could be seen as fearmongering to sell a product to receive commissions…
Thanks Gregr. I appreciate your thoughts.
Hi phb
Thanks for your reply. I’m not especially worried about anything in particular - it’s more just the peace of mind that something we missed will be taken care of in the future. As far as I can tell the conveyancing was done thoroughly but I will definitely check everything you suggest, cheers.
Hi Phil
That is actually my main concern. I know it’s unlikely but cripes you’d hate it to happen to you 
Title insurance - an interesting product.
Also a great question as to the whether one can rationally arrive at a logical decision as to need or value.
I failed to find an answer that was objective enough to decide if I would or would not for any future purchase.
For a rational assessment the actuarial statistics would offer the greatest guidance. Knowing if there are clear trends in the types of properties, the frequency of the causes for claims and costs arising might clarify. Although are the insurers required to share such data publicly for all to see?
There’s an absence of hard data and transparency.
It’s readily suggested it’s really a decision from the heart for peace of mind.
Not to say things can’t go wrong.
What we don’t know when we purchase a policy.
Whether those of us who have property purchases with very low risks of claims are subsidising those who take less care or settle on the types of properties most likely at risk.
P.S.
I was left wondering when one pays for a solicitor or conveyancer why their professional liability insurance should not cover the cost of remedy of errors and omissions?
It would seem a lower cost solution to include the risk in a single policy that protects all their customers. One commission, one set of fees and far fewer policies to be written and administered by the insurer. Although those providing conveyancing look to be pushing in another direction. I wonder if they also promote or on sell the product?
I suspect these might be hard to get from insurers. I expect the risks to be extremely low (otherwise it would be regularly in the media, and those working with properties would know - I have worked with property teams in the past for acquisitions and why some simple measures outlined above cover many of the ‘risks’), thus making title insurance a lucrative proposition for those selling the product (either directly or with commissions).
You would expect so if their negligence led to a claim.
It possibly would mean they haven’t followed due process, such as the rates example in the link. Rates get settled through property transfer and not transferred to the buyer.
Musing: It could be that the professional liability/indemnity insurance requires a successful law suit for a pay out. That could be difficult or time consuming/lengthy.
FWIW this is a .com page, not a government page, but it does not list conveyancers as requiring professional indemnity insurance. Is it required in some states?
This from a professional .org
Fundamentals section 7 is interesting as the word ‘negligence’ appears as a criteria. A conveyancer could have done everything without being professionally negligent but still the title went pear shaped for historical or reasons that were yet to make it into the relevant files. Thus title insurance could be useful where the insurer makes good without having to potentially sue the conveyancer.
‘Insurance’ section 2 addresses indemnity insurance and suggests there will/may be legal implications.
