An illegal 3rd bedroom underscores the value of title insurance | Garth Brown

Here’s an interesting lesson for property investors…

marketing computer plan house pen  calculatorThe 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 $40,000 for adding an extra bedroom to the unit.

The new owners were confused as they had not done any work to the apartment.

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 $40,000 and,

2. They had to return the unit to its original condition.

Not only are they out of pocket $40,000 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.


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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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