Kiwi property buyers are familiar with searching a LIM report and trusting that other information is good and accurate. But what happens if titles are incorrect or a property search has not revealed nasty hooks? Homeowners could be up for thousands of dollars and hours to remediate the problems on
their title.
But now a new form of insurance, Title Insurance, is available to protect homeowners against the risk of such things as incorrect information on the LIM, houses, decks or fences encroaching on neighbouring land, buildings not covered by permits, unpaid rates or Body Corporate levies.
Common in the USA, Canada, and Australia the insurance is offered by FAST Lender Services, headed by solicitor Jonathan Flaws. Marketed through lenders such Liberty, Blue Stone, Sovereign and Kiwi Bank it is asked for in certain circumstances. For example, if a cross-lease flat plan doesn't match information on the title. Sometimes lenders such as Sentinel purchase the cover on behalf of the homeowner.
Real estate agent Steve Koerber of Barfoot and Thompson is now marketing one of the first properties for which title insurance has been bought by the vendor. The cedar townhouse in Remuerais in zone for Auckland Grammar School so there should be no problem selling it at auction on June 8, but Koerber says the insurance provides added reassurance for potential buyers.
Coverage is for the life of the ownership of the property and the one-off premium starts at $225 for $500,000 property. Conveyancer Lester Dempster is familiar with title insurance from his work in Australia and considers it useful for allaying worry about title issues. "As a licensed landbroker I would recommend my clients take a serious look at this," says Dempster. "When you compare the price of your purchase with the premium it can be very good value and protection."
Consumers' Institute David Russell is less enthusiastic, and cautions vendors and purchasers about paying for protection that may already be provided by lawyers' indemnity insurance and Government guarantees under the Land Transfer Act. He says home buyers should give their professionals time to go through the conveyancy process before deciding whether to pay for title insurance.
