Protecting Yourself from the Unknown When You Buy a Property
Visionaries often say that life is full of risks and you must be willing to take them from time to time, if you're going to get anywhere. This is all well and good, but it's not really a great idea to take any risks when you are buying a property, seeing as it is such a large investment for most people. How do you protect yourself, therefore, before you sign on the dotted line and take possession of your new home?
Getting the Right Insurance
You and your representatives may have done a fair amount of due diligence before agreeing to buy any particular property and this is always a good idea. However, sometimes risks can be hidden and may not become apparent until after you've taken possession. In order to protect yourself, you need to take out a title insurance policy.
This is a specialised insurance that is designed to protect homebuyers against any hidden or unknown risks, which may exist when the contract is signed, but may not come to the surface until afterwards.
For example, the local council may assert that a particular structure on the property that you just bought is "illegal," as the correct permits were not taken out when they built it. In some circumstances, they could bring an enforcement action that requires you to remove this property.
A survey may be conducted in the future that reveals defects in the boundary allocation, throwing some doubt over whether you actually own part of the property you paid for.
What if the previous owner (or even a preceding owner) still owes some taxes or rates on the property? Unfortunately, as the current owner you would ordinarily be liable to pay these.
What are the Details?
There are a number of advantages when you take out title insurance. You can opt to pay a one-time premium that covers you ad infinitum and you won't be required to pay any excess on any claims that may materialise. With a no-fault claims clause you won't have to prove that negligence or fault exists, but only need to show that you suffered a loss based on covered matters.
Is This Really Worth It?
Just think how valuable this could be. Imagine that the local council discovered that the fabulous kitchen extension on your home was not approved, when it was constructed. They may issue a demolition order, especially if a defect is found on further investigation. In this case, you could claim against your title insurance and would likely receive funding to pay for the demolition and reconstruction of this extension.
Making Sure That You Are Covered
Have a word with your conveyancing solicitor, in order to get the right type of insurance for your transaction.