National Summit on Improving the Administration of Land and Property Rights: BRISBANE : 16 November 2004 SESSION 4 : Perspectives from the Users of Land & Property Rights & Restrictions (the Demand Side) National Summit on Improving the Administration of Land and Property Rights


About First Title: About First Title First Title is the pioneer of title insurance in Australia and New Zealand and has been licensed to carry on business in Australia since 1996. First Title operates under the authority of the Australian Prudential Regulation Authority. In Australia and New Zealand, First Title has issued over 100,000 policies. In 2003 alone, First Title insured more than 6% of all Australian home loans and paid more than A$1.3 million in claims. First Title is a registered company with ASIC and holds an Australian Financial Services licence as well as being registered with the Insurance Enquiries and Complaints dispute resolution scheme. visit our website www.firsttitle.com.au


What do Users of Land Information want?: What do Users of Land Information want? Lawyers / Conveyancers Manage risk for client Service client Reduce unnecessary administration Reduce professional indemnity liability Buyers / Sellers / Lenders Manage risk / a no-fault, quick means of getting indemnified for property ownership / lending losses Achieve timely settlement Minimise cost Administrators of Land & Property Rights Holistic Land information Manage risk, minimise government liabilities


Slide4: “In 1858 Torrens introduced the system named after him to overcome the weakness of the English Property Law then operating in Australia. The weaknesses were: too complex, too costly, uncertain, too slow, created a low value of credit of value against the land. It is interesting to speculate how Torrens would rate the regulatory regime now existing nearly 150 years after his simplifications.” The case for Refocusing and Re-engineering Land Administration to better meet contemporary and future needs in property rights and market. Lyon Cottrell Daniel November 2004


Conveyancing Custom & Practice : Conveyancing Custom & Practice Title Search Different property inquiries to check for resumption proposals 6 property inquiries to check for other adverse affectations Environmental investigation for contamination Land tax Local government rates Water rates Survey of the boundaries Building permit compliance search Zoning compliance search; Orange Grove? made against the subject property, but what about next door…


Australia - Current Landscape: Australia - Current Landscape Fragmented property rights information Increasing incidence of fraud, particularly by organised crime State not Federal electronic conveyancing initiatives - more fragmentation? Numerous ‘bottom up’ solutions from private companies Pressure on conveyancing professionals’ fees Majority of claims against solicitors in Canada, UK, Hong Kong and Australia are conveyancing and mortgage processing related Proven difficulty in recovering against the supposed ‘State guarantee’ of title


United States – A Bottom Up Solution?: Title Credit Mapping Employee Screening Property Crime Statistics Demographics Flood Information Zoning Information Business Information Property Marketing Trends and Recent Sales Document Imaging and Storage Valuation Services United States – A Bottom Up Solution?


What is Title Insurance ?: What is Title Insurance ? ‘Title’ describes the way a person owns land. ‘Title Insurance’ is no-fault insurance policy that insures the ‘title’ or legal ownership of land for an owner or lender. Subject to policy terms & conditions a title insurance policy insures owners that they can use their property without interference, for their intended purpose and that their interest in land would be acceptable to a reasonable purchaser. Title Insurance is used by owners and lenders not only to protect their interests but also to make the process of land acquisition/disposal or the process of funding more efficient.


Not Just “Title” Insurance, ROR Insurance: Ownership Will be vested in the insured Good and marketable, free of defects Defects caused by fraud/forgery Encroachments by structures / boundary issues Violation of restrictive covenants Inadequate, absent easements Registration gap risk Legal Expenses Insurance Duty to defend insured Legal defence costs do not reduce policy amount Enforceability, validity & priority of mortgages Valid and enforceable Has correct priority Not Just “Title” Insurance, ROR Insurance


What does Home Owner’s GOLD insure?: What does Home Owner’s GOLD insure? Home Owner’s GOLD is a no-fault ROR insurance policy for a purchaser of residential property in New South Wales (other states to follow). The policy insures loss arising from: Circumstances that would have been shown in 11 different property inquiries; Building and Zoning Certificate issues; Boundary issues replacing need for a boundary survey; Fraud / forgery; Good and marketable title; Use of land; Encroachments; Breaches of covenants / inadequate easements; Registration gap problems. Unlimited rent for an alternative property if the insured property cannot be used because of a claim. Automatic inflationary uplift in the amount of insurance up to 200% of the purchase price. Legal Expenses insurance to defend covered matters.


A Risk Management Tool?: “Many of the risks of conveyancing errors and omissions are transferred from legal practitioners and their professional indemnity insurers to title insurers. This is likely to offer relief from rising PI premiums and claims” Pamela O’Connor Senior Lecturer, MONASH, Victoria “Title insurance – Is there a catch?” A Risk Management Tool?


Title Insurance in New Zealand: Title Insurance in New Zealand Latest edition of the definitive text on land law, “Land Law in New Zealand” by Hinde, McMorland and Sim, now includes a section on Private Title Insurance (see paragraph 9.102) The REINZ has formally acknowledged the availability of private title insurance as an alternative to state compensation. “Our solicitors have confirmed that the terms of your policy provide cover against a number of risks that may not be adequately identified during the course of a legal due diligence investigation… …We therefore support the introduction of title insurance into New Zealand as a means of assisting in a more efficient and a safer process for the sale and purchase of real estate”


Panacea?: Panacea? Holistic registry, on-line, of all RORS Ability to view surrounding properties No-fault insurance for all users; owners and lenders Consistent, nationwide approach to information and fees


Slide14: Reference Section


Title Insurance Policies: Title Insurance Policies Commercial Property Mortgage Lender’s Policy Property Owner’s Policy Residential Property Residential Loan Protection Policy Home Owners Property Inquiry Policy (NSW) Home Owner’s GOLD


Australian & New Zealand Title Insurance Policies – Some Statistics: Australian & New Zealand Title Insurance Policies – Some Statistics Number of Policies Issued


Feedback on Interstate Land Titles Service: Feedback on Interstate Land Titles Service


Feedback on Interstate Land Titles Service: Feedback on Interstate Land Titles Service


Claims Experience: 2003 Claims by Value and Type (by Date of Claim Payment) Claims Experience


Strength of Parent: Leading diversified provider of business information and related products & services Established in 1889 based in Santa Ana California 29,000 employees 1,800 offices 13 Countries Listed NYSE FA Rated A+ AM Best A- Standard & Poors Three main business segments: - Title & Information Services - Real Estate Information Services - Consumer Information & Services Currently insure more than 20% and is involved in 90% of US property transactions– residential and commercial The First American Corporation Strength of Parent