How title insurance can save the day

The Institute we are a member of came across a very interesting case recently that underscores the values of Title Insurance.

Several months after a successful sale and purchase of a home unit – the new Owners received a Letter from Council advising them they would be fined $40K for adding an extra bedroom to the unit.

The new Owners were confused as they had not done any work to the apartment.Home umbrella

It turns out the previous Owner had converted the two bedroom unit into a three bedroom unit.

Renovations were done WITHOUT Council approval or approval from the Owners Corporation!

From my experience some investors do this by constructing a gyprock wall down the middle of a Bedroom converting it into another bedroom, enabling more rent to come from the property and increase their (ROI) Return on the Investment.

The unfortunate Purchasers in the above case were now placed in a no-win position:

1. They had to pay the hefty fine of $40K, and,
2. They had to return the unit to its original condition.

Not only are they out of pocket $40K but they now have a two bedroom instead of a three bedroom unit – already a property devaluation.

This case not only underscores the value of Title Insurance but the absolute necessity for any prospective purchaser to have a Building Report done prior to the sale.


For many years Brown & Brown Conveyancers have recommended the value of Title Insurance and to this end we always take out a Title Insurance policy for our Clients; the policy covers illegal structures and in the above situation would have saved the new Owners by compensating them for this unpleasant surprise.

Additionally we also suggest to the Purchaser to undertake a Building Report, we have also written about Pest & Buildings Reports.

Of course the final decision to have a Building Report is up to the Buyer but when we hear of cases such as the above one with an Illegal Bedroom that has cost the new owner a significant penalty then the wise course is to go the extra mile and seek as much prior information about the property you are intending to purchase BEFORE you make a decision.

As we have said many times the buyer is the one that has to be on guard and apply the maxim Caveat Emptor “ Let the Buyer Beware”.

Want more of this type of information?

Garth Brown


Garth Brown is the Founder and Director of Brown and Brown Conveyancers one of Sydney’s leading Conveyancing Firms. With 20 years experience as a practicing Conveyancer he has assisted hundreds of Clients to navigate through the maze of conveyancing issues when buying and selling property. Visit

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