Why Do You Need Title Insurance Policy?

Title Insurance in the West is an age-old concept and is a part and parcel of the realty and mortgage business in the West. Property consultants believe that the availability of title insurance products will boost private equity investment in Indian real estate since most of the institutions are very particular about clear titles. While many companies are planning to tap this huge potential sector, four to five foreign title insurance companies are keen to do business in India on this product. Title Insurance Policy protects you against loss in the event of defective titles, forgery, frauds in realty transactions.

Title Insurance

The word “title” is a legal term that means you have legal ownership of property. When you buy a home you need to ensure that the people selling it actually have legal title. With increasing demand for residential and industrial properties across India, there is scope for frauds in the realty transactions. Title insurance is very common in the US and Europe. It marks clear distinctions between a legal and illegal property. According to insurance officials and real estate experts, six out of every 10 court cases filed or waiting to be resolved in India relate to property dispute or dispute on property title.

The title insurance companies assure that if they miss any information that may result in financial loss, they will undertake the same. Therefore, Title Insurance Policy protects you against loss in the event of a property ownership dispute or defect of Title ownership like defective titles, forgery, frauds in realty transactions. When purchasing title insurance, it is important to read the policy and ask questions to be aware of the coverage that is provided.

Why you need it

Title insurance is very common in the US and Europe. The foreign title insurance companies are keen to do business in India on this product. It marks clear distinctions between a legal and illegal property. Title Insurance Policy protects you against loss in the event of defective titles and the title insurance companies assure that if they miss any information that may result in financial loss, they will compensate your loss. By insuring your property title, Title insurance protects from encroachments and forgeries. This enables you to mortgage or apply for Loan Against Property since most of the institutions are very particular about clear titles. The possibility of misrepresentation or unexpected liens showing up after a real estate transaction are quite possible. Title insurance will provide legal defense and reimburse the owner of the policy for any losses.

Who Can Apply for Title Insurance

Title insurance is increasingly finding favor among homeowners and lenders in many parts of the world to protect themselves from possible risks associated with buying property. Title Insurance Company mainly offers two types of title insurance one for property owners and another for property Lenders.

• Owners’ title insurance: Owners’ title insurance protects the buyer from all loss or defects in a title. The owner’s policy assures a purchaser that the title to the property is vested in that purchaser and that it is free from all defects, liens and encumbrances except those which are listed as exceptions in the policy or are excluded from the scope of the policy’s coverage.

• Lenders’ title insurance: Lenders’ title insurance protects the lenders such as banks and financial institutions. Policies for lenders protect their interests in the mortgage and assure its validity and enforcement.

The premium rates will be a function of the value of property, the nature of transaction, which means the size of the purchase, the past history of the real estate property, costs relating to title search and the legalities involved in the title search. The premium rates varies depending of property rate, cost of title search etc.

Title Insurance Process

When purchasing real restate, buyers want to be certain that the sellers own the property and have the legal right to transfer ownership. The Title experts initiates title search. The issues a title search may uncover are unpaid taxes or mortgages, judgments against previous owners, mechanic’s lien, easements or other court actions or recorded documents which can affect your ownership. The title insurance company issues a report and issues an insurance policy in support of its findings. However, title searches are most often carried out before contract is completed between parties and its thumb rule is that properties should be registered to provide title insurance in new owner’s name.

Title Insurance coverage

A property owner or Lender can protect themselves from possible risks thorough title insurance. When purchasing title insurance, it is important to read the policy and be aware of the coverage that is provided. The title insurance policy coverage will last as long as the property owner owns or his heir has interest in the property. Following are important coverage available under Title insurance.

• Comprehensive insurance coverage against losses related to the property’s title.

• Loss or damage as a result of defect of Title ownership

• Defective recordation or Mistakes made during the Title Search such as unpaid property taxes, missed interest from an heir, Unpaid Tax liens, etc.

• The owner’s protection lasts as long as the owner or any heirs have an interest in or any obligation with regard to the property.

• Incorrect signatures on documents

• Variety of encroachments and forgeries after title insurance is issued

• Defective title such as Errors or omissions in deeds, Mistakes in examining records, undisclosed Heirs, Forgery.

According to experts, foreign title insurance companies are keen to do business in India on this product. For e.g. First American (India) provides the technology, expertise and a comprehensive selection of title and settlement services to meet its customers’ needs in India. Property consultants believe that the availability of title insurance products will boost private equity investment in Indian real estate since most of the institutions are very particular about clear titles. The digitization of land records and educating property owners or new property buyers will make title insurance a part of the property transactions.