Insurances prior to buying

Discussion in 'The Buying & Selling Process' started by Burramys, 27th Oct, 2018.

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  1. Burramys

    Burramys Well-Known Member

    Joined:
    28th Jun, 2015
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    370
    Location:
    Melbourne
    My conveyancer has advised me that there are two forms of insurance that could be taken out.

    The first is a caveat preventing the vendor from selling the property again. The cost for this is $156. The second is title insurance. This provides insurance for
    "illegal building structures, fraud and forgery, misdirection of land, adverse possession, encroachment and boundary disputes, easements, access and zoning problems, unregistered interests and issues regarding the registration gap - all of which can result in a significant financial loss."
    Gosh, I had no idea that buying a property was so risky. Title insurance is $500.

    The fences have been there for ages and I'm comfortable that they are the boundaries. A long time ago I read that even if the boundaries are not quite on the fences, if the fences have been accepted as the boundaries then that is where they are, at least for small variations.

    There is an easement, and a shed is close to this; I will check. From the aerial photo it seems that the shed is over the easement. I'm unsure if this is so, and if so if there was permission. The easement continues along the back fence of about a dozen properties on the plan, and about half seem to have sheds or similar over the easement.

    Apart from that it seems to be just another sale, a development maybe 15-20 years ago, zoned residential, nothing unusual.

    My broker said that as I have paid a 10% deposit, if there's a fire or the like prior to settlement then the vendor's insurer may pay 90% of the insured amount. This strikes me as interesting. I don't own the place yet, so why should I insure it?

    Advice is sought on the above - should I take out some or all of these insurances? If the shed is over the easement, is this a problem? TIA.
     

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  2. JasonC

    JasonC Well-Known Member

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    I’ve always taken building insurance as soon as I’ve exchanged contracts - I wouldn’t want to be relying on the seller having building insurance on a place I’m contracted to buy.

    I’ve never lodged a caveat and don’t think I’ve taken out title insurance. Did your conveyancer “recommend” them or just offer it as an option?

    Regards,

    Jason
     
  3. d_walsh

    d_walsh Well-Known Member

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    Australia
    I have always been offered caveat & title insurance as an option... Never used title insurance and only lodged a caveat for my PPOR purchase as vendor was a foreign investor (residing overseas).

    You should do your research to understand how / when you might claim under title insurance, then decide if you want it.

    +1 for building insurance on exchange. Very important.
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    The only title insurance I've ever taken out has been engaging a surveyor to check boundaries, location of structures etc, solicitors for title searching, strata searches and building inspections - all of these mobs have professional indemnity insurance If they stuff up.

    As for building insurance, some states require you to take it out once your contract goes unconditional - your solicitor and insurance broker should be able to advise whether you have an insurable interest and If they'll pay If you make a claim.
     
  5. Burramys

    Burramys Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    370
    Location:
    Melbourne
    Many thanks. My conveyancer said "We highly recommend you lodge a caveat". The title insurance is more muted, just a list of what can go wrong. The policy is with Stewart Insurance, which seems to be this
    Stewart Insurance Group
    The website is quite poor - too many things bouncing around, faded body copy and no details of substance about what they do, at least none that I can find.

    My conveyancer said that there were no building permits in the last seven years, which I had seen. However a shed maybe 3 X 5 metres may not need a permit. The conveyancer said that I could get Building Regulations Certificate, covering the last 10 years. I'm not sure that this is needed. The key fact that needs to be determined is if the shed is over the easement, and if so, what remedies if any are available to me.

    I was going to wait for a valuation, but now I'll have that done next week, with insurance.

    The contract says that the vendor will sell me a house as seen by me at the OFI, the day I signed the contract. If the house ceases to exist due to, say, fire, would not the contract be void? The reason for there being no house or a partly damaged house may well be outside the control of the vendor, but the result is the same.
     
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