Taxpayers face a potential bill in the tens of millions of dollars to compensate people affected by two major errors made by the state's Land and Property Information office.
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The state government will offer to purchase 205 properties potentially affected by an F6 motorway to Sydney's south, whose owners received incorrect information about the motorway's impact.
The owners of 377 properties affected by a new M5 tunnel section of WestConnex will also be offered $5000 each, plus legal costs, because of the errors.
Finance Minister Victor Dominello on Friday released a report into compensation options for those affected by the errors in 2014 and 2016, where the LPI failed to load files detailing the potential impact of the motorway routes into a searchable system.
As a result of those errors, hundreds of purchasers obtained properties without knowing that they may be on a future motorway route. The errors occurred when LPI staff failed to incorporate new information about the roads into a "Central Register of Restrictions" (CRR), a system used by property conveyancers to check for potential government projects.
The report, by professors Alan Fels and David Cousins, found the government should move quickly to compensate those affected by the errors, which had been caused by "informal and poor processes".
The government accepted the majority of the report's recommendations.
The recommendations accepted include a proposal to compensate those who purchased a property after receiving inaccurate advice from the CRR, but who suffered little detriment, with $5000 and legal costs.
The government also accepted a recommendation that people who purchased a property after receiving inaccurate information, but who did suffer a detriment, should be offered $30,000, or the opportunity to sell the property to the government.
If the government does buy the property, it will pay the purchase price plus $75,000 and stamp duty and other costs.
Mr Dominello said the purchasers of 205 properties were in this situation. These properties were located on the F6 corridor, a motorway reservation through Arncliffe, Rockdale, Kogarah and Sans Souci.
The government, however, rejected a recommendation to pay $500 in compensation to people who had received incorrect information about a property but did not buy that property.
The LPI has since been privatised for $2.6 billion. Fairfax Media has reported that former LPI staff said the LPI had been in a "state of chaos" ahead of its privatisation, but the government says the errors were not caused by staff changes.
The errors were discovered only in October last year when a conveyancer checked with LPI as to why the CRR showed no impact of the F6 motorway on a home, when their client had received a letter about the impact.
The discovery of the failure to upload information between June and October 2016 led to an investigation that showed information relating to the new M5 element of WestConnex had not been uploaded from 2014.
Mr Dominello said: "We apologise to all those impacted by the CRR error. It is unacceptable and has undoubtedly caused stress and angst among those affected.
"This was a concerning incident and our priority is ensuring property owners receive the necessary information and support."
Labor's finance spokesman, Clayton Barr, said the government should adopt all of the report's recommendations.
"In its headlong rush to sell the land titles registry it was getting rid of expert staff and trampling over the corporate knowledge of decades," Mr Barr said. "Up until the government's pre-sale restructure the registry's record was unblemished."
