Do I Need Title Insurance in WA?
When you buy a property, your conveyancer carries out certain searches and checks to help identify issues that could affect your ownership. But what about the things nobody knows about, or is yet aware of? Perhaps a previous owner built a patio without council approval. Maybe an extension was approved but wasn't actually constructed in accordance with the approved plans. Or there could be an issue with the property's boundaries that only comes to light years after you've moved in (after all, how many buyers get a boundary survey completed before they settle?).
These are all examples of where title insurance can come help. At North Shore Conveyancing, we offer title insurance to all our buyers once their contract becomes unconditional. It is completely optional, and whether you choose to take it out is ultimately a personal decision based on how you view the risks associated with your property. So, do you need title insurance in WA, and is it worth it?
What is title insurance?
Title insurance is a risk management tool designed to protect property owners against certain title and property ownership risks that may already exist when you purchase but aren't discovered until later. Unlike your building or contents insurance, which protects against future events such as fires or theft, title insurance can provide cover for certain problems arising from past events.
Title insurance policies are available for residential homes, vacant land, strata properties and commercial premises.
Another important difference between title insurance and building or contents insurance is how you pay for it. Rather than an annual premium, title insurance generally involves a one-off premium for cover that continues while you own the property (subject to the terms of your particular policy).
What does title insurance cover?
The exact cover depends on the insurer and policy, so read the Product Disclosure Statement and policy wording carefully. However, generally, title insurance can provide protection against a range of risks, including:
Unapproved or non-compliant building work;
Boundary and survey defects;
Fraud, forgery and identity theft affecting your ownership;
Certain unregistered interests, easements or rights affecting the property;
Outstanding rates, taxes or levies; and
Registration gap risks between settlement and registration of your ownership.
In some cases, a known issue identified during the conveyancing process may be considered for specific cover by the insurer, although this must be assessed on a case-by-case basis.
What about unapproved or non-compliant building work?
For many Perth buyers, this is one of the most tangible reasons to consider title insurance. You might buy a home with a patio, shed, or extension added by a previous owner years ago. What happens if, after settlement, you discover that the appropriate approval was never obtained? There can also be situations where approval was obtained, but the structure wasn't actually built in accordance with the approved plans.
If a local authority subsequently takes enforcement action regarding unapproved or non-compliant work completed by a previous owner, title insurance may cover the current owner, subject to the policy's terms, limits, and exclusions.
This doesn't mean every problem with an older structure will be covered. Poor workmanship, maintenance issues and general building defects are different matters. But we’ve seen first-hand how title insurance helps manage historical risks like unapproved and non-compliant structures.
Why I have title insurance on my own home
I took out title insurance when we purchased our own property. We were buying an older home and knew it had accumulated a few additions over the years (things like a patio and shed). We weren't aware of any particular approval problem, but with an older property, I felt there was a risk that something could emerge down the track.
For me, the one-off premium for ongoing cover while we owned the property made sense. But that's not to say every buyer should make the same decision. A buyer purchasing a brand-new home may assess the risks differently from someone buying a 40-year-old property with multiple additions. Another buyer may simply have a different risk appetite.
Title insurance is exactly that: insurance. You're weighing the policy cost against the risk and potential cost of something going wrong.
Is title insurance compulsory in WA?
No, absolutely not. Title insurance is completely optional. Your bank may require you to have building insurance, but title insurance is a separate product and isn't something you are required to purchase simply because you're buying property in WA. At North Shore Conveyancing, once your purchase contract becomes unconditional, we'll send you information about title insurance and ask you to let us know whether you'd like to take out a policy.
We currently offer Stewart Title insurance and, if you choose to take out a policy, we can organise it as part of your settlement process. However, Stewart Title isn't the only provider; First Title also offers title insurance in Australia. Buyers are free to choose whichever insurer and product they prefer.
Is title insurance worth it?
There's no universal answer. All property buyers may benefit from the protection title insurance provides, but the question is whether you feel the risk of not having that protection is great enough to justify taking out a policy. Things you might consider include the property's age and history, whether there are additions or alterations, what you've learned during due diligence, and your own comfort level with unexpected risks.
Your conveyancer can help you understand the types of issues that may be relevant to the property and the pros and cons of taking out cover.
However, title insurance is an insurance product. If you have questions about whether a specific scenario would be covered, the insurer is best placed to answer them. At North Shore Conveyancing, we can also put you directly in touch with Stewart Title's Perth representative if you'd like to discuss specific concerns before making your decision.
What doesn't title insurance cover?
It's equally important to understand what title insurance isn't. It isn't a replacement for building insurance, a building inspection or the usual due diligence you should undertake before purchasing a property. As with all insurance, policies also contain exclusions, conditions and limits. For example, general wear and tear, poor workmanship or a structural defect aren’t likely to become an insured title risk simply because the problem relates to an addition made by a previous owner.
Always consider the specific policy wording rather than assuming a particular issue will be covered, and if in doubt, contact the insurer for clarification.
FAQs about title insurance in WA
Do I need title insurance when buying a house in WA?
Title insurance is optional. Whether you take it out depends on the property, the risks you're comfortable accepting and whether you consider the protection worthwhile.
Does title insurance cover unapproved structures?
Depending on the policy and circumstances, title insurance can provide cover where a local authority takes enforcement action over certain unapproved or non-compliant structures constructed by a previous owner. Always check the specific policy wording.
Is title insurance a one-off payment?
Residential title insurance is generally purchased with a one-off premium rather than an annual premium, with cover continuing while you own the property, subject to the policy terms.
Is title insurance the same as building insurance?
No. Building insurance generally protects the physical property against events such as fire and storm damage. Title insurance protects against specified risks affecting your ownership or title, including certain historical risks.
Still unsure whether to take out title insurance?
You don't need to decide that title insurance is either "essential" or "a waste of money". Like any insurance, it's about understanding the risk and deciding how comfortable you are carrying that risk yourself. At North Shore Conveyancing, we provide our buyers with information about title insurance once their contract becomes unconditional and can help you weigh up the pros and cons for your particular purchase. If you have specific questions about cover, we can also connect you directly with Stewart Title so you can get the information you need before deciding.
And if you’re planning your next property purchase, we’d love to help with more than just the title insurance decision. From reviewing your contract before you sign, right through to settlement day, North Shore Conveyancing is here to make the process clear, straightforward and well managed. Contact Katelyn today for a quote for your next property purchase.
