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Conveyancer Pushing Title Insurance

Discussion in 'General Property Chat' started by Cherrychan, 8th Aug, 2016.

  1. Cherrychan

    Cherrychan Member

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    I’m currently purchasing a cheap property that went under mortgagee sale. It’s an old 80’s brick place that is completely original with no additions, no sheds, no new building etc. I’ve managed to buy it 20k under the already low asking price leaving a nice buffer.

    Now when talking to my conveyancer she said that due to it being a mortgagee sale the contract is quite strict with no way to back out even if there are any issues found once the searches completed.

    The conveyancer at first said there’s not really any use carrying out any searches besides the title search, though she still recommends them. So I said fine don’t worry about the non-necessary searches.

    Now they are trying to push title insurance on me. I don’t really think it is necessary due to everything being original and considering I'll be totally gutting and renovating the place anyway. The only issue I can think of would be outstanding water rates and council rates, but wouldn’t these be addressed normally during the conveyancing process?

    It’s starting to get annoying because it’s been 4 days now into settlement and it really feels as though they are trying to push insurance on me so they can get commission. I’ve bought 3 houses before and never has it been suggested to purchase this cover.

    What’s everyone else’s take on this?
     
  2. JDM

    JDM Well-Known Member

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    Is it even legal for a conveyance to get a commission for pushing title insurance? I wouldn't have thought so. Why don't you ask them why they are recommending title insurance and make a decision from there?
     
  3. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Have also been offered the same thing (In WA) by my settlement agent and she reckons its worth it. Spoke to a BA this morning to see what he reckoned and he hadn't heard of it!
     
  4. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Mine doesnt get any kickbacks and dont think it is legal.

    @JDM is your nickname short for Japanese Domestic Market - thinking Supras and Skylines here :)
     
    Last edited: 8th Aug, 2016
  5. Ghoti

    Ghoti Well-Known Member

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    Its an insurance policy, and it doesn't really fix anything. For example, if you find your neighbor has encroached on your land the insurance may pay you some compensation, though its hard to argue "loss" when you paid BMV for the property as presented. Then again, if it is just realigning a fence they would most likely cover it.

    End of the day the insurer is betting on you not making a claim. What you do depends on your risk apetite and the degree of investigation you did before buying.
     
  6. Joynz

    Joynz Well-Known Member

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    This protects you for things like wrong boundaries.

    I was offered this three years ago when I purchased too. Was pretty cheap and a one-off payment lasts as long as you hold the house.

    I was too cheap to take it up. But do an Internet search and you will see it can be useful.

    If you weren't offered it, and something happened it might be considered u professional of the conveyancer not to have offered it. This way, if anything happens, they can show that they offered it to you.

    If you don't want it, just say no.
     
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  7. JDM

    JDM Well-Known Member

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    It's my initials but it's also made it really hard to find number plates available with my initials in them because they're all on JDM cars already!

    Title insurance is a much bigger thing in non-Australian jurisdictions where they don't have torrens title so you can have someone make a claim of ownership or rights over a property you've bought. Not so much the case in Aus.
     
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  8. John Ferguson

    John Ferguson Well-Known Member

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    My conveyancer puts it like this.


    Because you do not have a clause in your contract protects you against unapproved or illegal works we recommend that you take out title insurance to protect you against those risks.

    We recommend that you take out title insurance to give the best protection against financial loss if the property you are buying has certification defects or illegal works. We will write to you separately about boundary and survey risks.

    We recommend that you instruct us not to search council records before settlement of your purchase to ensure that you do not receive knowledge that may end your ability to claim against your title insurance.
     
  9. JDM

    JDM Well-Known Member

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    Such a backwards concept telling you to not conduct a search as you might discover a problem before you've bought the property. I understand this may limit your ability to claim on the insurance but wouldn't you want to know before paying hundreds of thousands of dollars for a property? I would rather know of unapproved works/council action etc before buying the property and then make an informed decision from there.
     
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  10. Scott No Mates

    Scott No Mates Well-Known Member

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    I dare say that there's an equivalent in Victoria - take a geez.

    Conveyancer's professional indemnity insurance doesn't cover these items. You haven't mentioned whether your conveyancer has ordered a survey or the extent of yor services due diligence.
     
  11. John Ferguson

    John Ferguson Well-Known Member

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    Yes I think there needs to be some more clarity surrounding this insurance and the most appropriate actions to take.

    You would think being aware of any deficeincies before committing to the purchase of the property would be the more logical and fair action.
     
  12. Air_Bender

    Air_Bender Well-Known Member

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    My conveyancer did the same thing but he clearly stated that he would be receiving a commission for lodging with said company. But I decided against it as I didn't believe I needed it.
     
  13. Cherrychan

    Cherrychan Member

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    Being as it was a mortgagee sale, the only concern I have relating to the property would be unpaid water and council rates which I'd want paid out. I'm not concerned about illegal building or boundary issues, I just don't want to be stuck with someone else's unpaid bills. Is there normally a search conducted concerning this? Or is it all worked out without a search?
     
  14. Cherrychan

    Cherrychan Member

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    So they DO receive commission for insurance sales?
     
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  15. RPI

    RPI Property Lawyer, Town Planner Business Member

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    The companies that are big in NSW are trying to push it in QLD by offering us commissions. We have not taken this up.
     
  16. dabbler

    dabbler Well-Known Member

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    My first response to your post though, is your hired help does not sound like much help (and a lot are not mind you)

    Second is, if in doubt, do a survey.
     
  17. Cherrychan

    Cherrychan Member

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    How do I ensure I'm not stuck with unpaid rates etc? Is there normally a search done or is it kind of automatically done with the vendors disbursements at the end?
     
  18. dabbler

    dabbler Well-Known Member

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    All should be done by conveyancer, unless something in contract says otherwise, vendor pays till settlement, you pay once settled as is yours then. There should be adjustment/s one way or other.
     
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  19. Air_Bender

    Air_Bender Well-Known Member

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    Bingo! But he was upfront about it from the get go.

    I will most likely be using him again for all my future purchases purely because of his honesty and excellent conveyancing services.