Please explain Title Insurance in plain English...

It has been a long and tiring month and I just can't seem to get my head around title insurance. Any help would be much appreciated.

This is my second purchase - my first purchase was an apartment back in 2009 and I did not purchase title insurance then, nor was it even recommended to me. I just checked my final settlement statement, definitely not on there. Now, that purchase was a brand new apartment, could this be why there was no need for title insurance – because I was purchasing from the developer?

A bit of background about the property we are currently purchasing: it is a duplex half, but it doesn't have common property - the land has been divided between each 'half' and we are responsible only for our land. The property had been owned by a woman for over forty years, and she passed away at the beginning of the year. Her daughters inherited all of her estate and are now selling the family home. When we first put an offer on the property I asked for a copy of the certificate of title, and this had the deceased owners name on it. This has since been changed into the daughters’ names as the executors of her estate and we have received a copy of the new certificate of title.

I am just trying to get my head around why we need this title insurance. On the factsheet it states covered risks are:

• Unapproved Alterations
• Registration Gap
• Fraud, Forgery & Identity Theft
• Planning & Title Defects
• Outstanding Rates, Taxes and Strata Levies

So...

Unapproved Alterations
Alterations to the strata unit without the required Council and/or Body Corporate approvals of which you are unaware at the time of purchasing the strata unit.
We have had a pre-purchase building inspection done and have been advised that there is a carport that would not be approved by the council. Therefore, because we have been advised of this, does this meant that if the council came out and told us to remove the carport, then the title insurance company would not cover us? Note – the carport does show on the survey plan that we have received from Landgate, but I am guessing that this doesn’t actually mean that it is approved – just that Landgate are aware of it. Is that right?

Registration Gap
Someone else lodges a dealing which prevents your interest from being registered or recorded.
Absolutely no idea what this means – who could lodge a dealing and why would they? The only thing I can think of is if there is a long lost brother or something who comes out of the woodworks and wants a stake in the property – is that what this means, or am I interpreting this wrong?

Fraud, Forgery & Identity Theft
Loss due to fraud, forgery or identity theft which results in you being deprived of your ownership of the Strata Unit.
So, in our situation, do you think we are pretty safe? Unless someone is pretending to be the daughters of the original owner, and trying to sell it... is that what this means?

Planning & Title Defects
Loss due to non-compliance with zoning and development laws, unregistered easements and & covenants, lack of legal access, defects in title to the Strata Unit.
Not sure about this one. Our settlement agent is doing searches with the utility companies and the local council, so shouldn’t we be able to find out if there are any problems prior to settlement?

Outstanding Rates, Taxes and Strata Levies
Outstanding Rates, Taxes and Strata Levies (including special levies) on the property which you are now liable for as the current owner of the Strata Unit.
There are no strata levies on this property, so that one is fine. Also, as we are buying the property early July, we will more than likely receive the full lot of rates at settlement. Shouldn’t my settlement agent be able to tell if there are outstanding rates etc when they do all the searches? And what taxes could be outstanding? This property has been in the family since the early 70’s, so I am pretty confident they are all paid up to date.

Please let me know if I am interpreting everything correctly and advise if there are other things I should be considering.. .

Thanks heaps!
 
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