When building on land, the need for title insurance is paramount.
Apart from the fact that considerable expense is incurred in the building process, particularly when building is embarked upon within the intention of a commercial venture, the investment of capital and the loss of profits to an investment in the event of a defect in title can be disastrous.

Defects in title of this sort may manifest themselves in the form of local council building specifications or requirements that restrict the types of building that are able to be constructed. Sometimes these restrictions extend to the boundary specifications with respect to certain types of property such as those encumbered with waterways or other natural formations.

For these types of property, boundaries may not always be as static and ascertainable as the usual suburban block of land. Often the common law determines these boundaries with reference to legal precedent or statutory interpretation which is liable to change in the fullness of time.

Apart from having the central object of the construction being subverted, the prospective builder on land may well incur further costs in demolishing or altering the construction in order to comply with the regulations which have presented themselves after a supposed clear title has been established.

Marketability

This feature of title insurance is fundamental to the marketability of the property, as when it is made apparent that building restrictions are imposed on a particular property, the availability of buyers for that property may well be altered to a detrimental extent on the purchaser of the newly acquired land. Demand for that property may diminish irreversibly, but with title insurance the purchaser is indemnified against any loss incurred in this event.

When the would- be developer of property is querying ‘do I need title insurance?’ the answer ought to be in the affirmative, when the reality of risk as to title is sought to be balanced with the construction in mind.

The need for title insurance is clearly apparent for all purchasers of property, but when further capital expenditure is envisaged, the alternatives to insurance coverage are meaningless and deserved of reproach.

Usually the vendor or the lender will purchase the title insurance, but however, as parties are able to bargain at arm’s length, it would seem prudent for any purchaser to ensure against these risks, as the turn toward more personal responsibility manifests itself in our communities with the law viewing with relative intolerance an able litigant who displays little foresight to protect him or herself through the mere want of care.

Conversely, the law is quick to reward the conscientious litigant who has shown the foresight to implement the device of insurance.

In regard to commercial activities, insurance of many forms is readily available and is deemed to be an ordinary facet of business activity. Therefore when the prospective builder is asking themselves if they need to buy title insurance, the answer will invariable revolve around the fact that if someone doesn’t purchase it, it will be to their detriment alone as the new owner of property, and so they would be well advised to ensure its existence.

Resources:

http://www.lawyersconveyancing.com.au/news/conveyancing_162_title_insurance.asp

http://www.epa.gov/superfund/policy/ic/pdfs/hawley.pdf

http://www.carrlaw.com/title-insurance.asp